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NA banks falling behind customer needs in pandemic: FICO

FICO, a global analytics leader, today released a Customer Identity Management Survey which found many banks across the U.S. and Canada are failing to meet their customers’ online identity fraud and digital banking needs.

Despite COVID-19 quickly turning online banking into an essential service, the survey revealed financial institutions across North America are struggling to establish practices that combat online identity fraud and money laundering, without negatively impacting customer experience. For example, 51 per cent of North American banks are still asking customers to prove their identities by visiting branches or posting documents when opening digital accounts. This also applies to 25 per cent of mortgages or home loans and 15 per cent of credit cards opened digitally.

“The pandemic has forced industries to fully embrace digital. We now are seeing North American banks that relied on face-to-face interactions to prove customers’ identities rethinking how to adapt to the digital first economy,” said Liz Lasher, vice president of portfolio marketing for fraud at FICO. “Today’s consumers expect a seamless and secure online experience, and banks need to be equipped to meet those expectations. Engaging valuable new customers, then having them abandon applications when identity proofing becomes expensive and difficult.” 

The study found that only up to 16 per cent of U.S. and Canadian banks employ the type of fully integrated, real-time digital capture and validation tools required for consumers to securely open a financial account online. Even when digital methods are used to verify identity, the experience still raises barriers with customers expected to use email or visit an “identity portal” to verify their identities. 

Creating a frictionless process is key to meeting consumers current expectation. For example, according to FICO’s recent Consumer Digital Banking study, while an overwhelming majority of consumers (75 per cent) said they would open a financial account online, nearly a quarter of prospective customers (23 per cent) would abandon the process due to an inconsistent identity verification process.   

The lack of automation when verifying customers’ identity isn’t just a pain point for customers – 53 per cent of banks reported it problematic for them too. Regulation intended to prevent criminal activity such as money laundering typically requires banks to review customer identities in a consistent, robust manner and this is harder to achieve for institutions relying on inconsistent manual resources.

Fortunately, 75 per cent of banks in the U.S. and Canada reported plans to invest in an identity management platform within the next three years.  By moving to a more integrated and strategic approach to identity proofing and identity authentication, banks will be able to meet customer expectations and deliver consistently positive digital banking experiences across online channels. 

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