Banking on trust in turbulent times

As economies around the world look to rebuild in the aftermath of lockdown restrictions, the way in which people act and interact as consumers have been irrevocably changed. We’ve switched to a digital-only or digital-dominated economy, seemingly overnight, and the implications for businesses across all sectors has been profound. Nowhere is this better exemplified than in the banking industry.

Trust in the time of COVID-19

More than ever before, retail and investment banks around the world face a pivotal moment in their evolution, as banking transitions from a digital-first towards a digital-only landscape. The pandemic has put severe restrictions on traditional face-to-face or high street banking and forced sections of society that had previously been resistant to or unable to access digital banking to make the shift. This understandably brings with it significant anxiety and fear and, for an industry that has been striving to rebuild consumer confidence since the global financial crisis of 2008, represents a huge challenge.

The banking sector needs to foster trust at a time when the world is facing unprecedented levels of uncertainty and stands on the brink of a severe global recession. Yet without a doubt, a thriving digital economy will be critical for the global economy to bounce back quickly and strongly from this pandemic.

A billion reasons to protect customers

The global banking system processes more than a billion transactions every day, from transfers and domestic and international payments, to loan approvals and the creation of new accounts. Each one of these transactions represents an opportunity for some sort of financial crime, whether that’s money laundering, identity theft, bribery or the financing of terrorism. The global pandemic has only served to accentuate this level of risk. In particular, online fraudsters are looking to target people who are using digital services for the first time as a result of the pandemic, often the most vulnerable groups in our society such as the elderly.

Recent research commissioned by Trulioo found that concerns about online security are higher within financial services than in any other sector, with more than half of people (51%) reporting that they are ‘very concerned’ about identity theft when using financial services sites. Crucially, 90% of people believe that banks have a responsibility to reduce cybercrime through whatever identity verification is necessary.

Building trust from day one

Of course, customers want online banking services to be responsive, intuitive and fast, but it’s important to recognise that, first and foremost, people want to know that their money and their personal data are safe.

Know Your Customer (KYC) and Anti-Money Laundering (AML) practices are now essential while identity verification technology during the onboarding process enables a bank to demonstrate to its customers that it is taking their security seriously from the very outset of the relationship. The same report found that more than three quarters (77%) of consumers claim that the account opening process can ‘make or break’ their relationship with a financial services brand.

Banks simply cannot afford anything other than optimal onboarding and identity verification – fail to deliver this and trust is immediately eroded and in many cases, the customer walks away.

On the other hand, where banks do succeed in demonstrating their commitment to security during these first engagements, delivering a fast, secure and seamless account creation process, they are able to develop a more meaningful relationship with their customers. As many as  84% of consumers report having greater trust in financial services brands that use real-time identity verification during the onboarding process and 71% are more likely to share more personal data.

A layered approach to identity verification

In order to provide first-class onboarding processes and establish trust at the outset of the customer journey, banks need to move beyond a ‘one size fits all approach’ to identity verification. This is why a digital identity network is so powerful – a marketplace of hundreds of data sources, verification processes and tools that leverage network data intelligence to verify and authenticate identities online.

With such a layered approach to identity verification, banks have complete flexibility and choice to apply the most appropriate identity checks at every stage of the customer journey, meaning that they can manage and optimize customer experience while minimizing risk and ensuring compliance against a rapidly changing regulatory backdrop.

Building a global ecosystem of trust for the digital economy

To build and maintain online trust in such a complex and diverse environment is extremely challenging for banks. Indeed, despite rapid digitization across all sectors and regions, the internet continues to suffer from a lack of a critical identity layer that would solve many of these complex problems. While there are layers of protocols and methodologies for transporting data over networks, there is no protocol for transporting assurance. In online transactions, then, there is no standardized way to establish that an individual is who they say they are — the essence of identity. Clearly, this needs to change in order to drive trust, digital access and financial inclusion.

This post first appeared on BankingSector.