Category: Banking

Welcome to our specialized banking category, an expertly curated space where we delve into the exciting world of digital transformation sweeping across the banking industry. Our insightful articles explore a multitude of facets that are actively shaping the future of banking, from the disruptive force of cutting-edge technologies to the shifting paradigms of customer expectations.

As the terrain of the sector undergoes continuous evolution, it becomes increasingly crucial for industry professionals, enthusiasts, and observers to keep abreast of the latest developments and trends. Our in-depth articles serve as a resource, providing valuable insights into how traditional banking institutions are navigating the transition to the digital age, and how emerging fintech companies are spearheading innovative solutions that are redefining the industry’s contours.

Our coverage encompasses a wide array of topics, from the convenience and the ubiquity of digital payments to the transformative impact of regulatory technology and the paramount importance of data security. This comprehensive exploration offers our readers a panoramic view of the digital banking ecosystem. Our overarching objective is to equip our readers with a nuanced understanding of the challenges that lie ahead, as well as the opportunities that digital transformation brings to the fore.

So, immerse yourself in our curated content, enrich your knowledge, spark meaningful conversations, and stay ahead of the curve in this digital banking era. Join us in exploring the captivating world of this sector where the only constant is change. Welcome to the future of banking, with us!

Banking And Fintech In The Metaverse Of Finance

Posted on | by Signzian

Dolce and Gabbana had a peculiar sale last year. Their customers paid $5.7 million to the fashion conglomerate for basically… Nothing. Or that’s what people who do not understand virtual reality would say. In fact, the company sold primarily virtual products for customers to use in the Metaverse. This is why the Metaverse economy experienced retail sales of more than $20 billion with an annual growth rate of around 40%.

This is the mere beginning of using digital assets as a repository of value. It is the beginning of a digital renaissance, encompassing AR, VR, and other digital immersive technologies, which will lead to wide-scale adoption and regulations. Cryptocurrencies will also play a crucial role in this.

Financial institutions must secure their position in this enormous and novel part of the economy by incorporating Metaverse and crypto into their services and business models. This will lead them to a cryptocurrency-fueled metaverse economy.

As the metaverse users increase, financial transactions in the new realm will increase. The government will issue new regulatory guidelines in the coming future. But it is unwise not to adopt early. Banks and institutions should not wait for this. Instead, they should embrace the metaverse economy. Here are some of the ways in which this is possible.

Build And Leverage Trust

Customers usually trust banks more than even the government. This should be utilized in a positive fashion. Tap into the customers’ interests in crypto and digital assets. Despite the standard expectations, 45% of Boomers used cryptocurrencies to make a purchase, compared to the 30% of Zoomers, in 2021.

Mastercard is processing crypto payments and paving the way for other institutions to follow suit. Offering custody services and processing crypto payments help banks prepare for the digital future. Even mortgages, loans, etc., will have digital asset involvement. Banks and banking technology may also leverage their brand identity in user verification and risk management as more peer-to-peer crypto transactors want to trust authentic payment sources.

Metaverse Payment Platforms: Adopt The Boon

Metaverse virtual reality is all set to take over the shopping experience for customers. The fundamental fintech future will be altered to adopt the new paradigm. Financial institutions must process transactions on metaverse payment platforms to accommodate the customers and their needs. A trial pilot by Facebook, the Whatsapp digital wallet is the beginning of this transformation. It offers benefits like zero fees for international transfers, etc. 

These methods have so much potential and versatile applications. For example, such platforms will help fasten transactions and secure the customer’s safety and privacy. Moreover, the institutions can either provide such platforms or integrate the accounts into existing payment apps by utilizing their APIs. But it is noteworthy that most of these apps adapt to phones and screens and ARVR technology.

The metaverse economy is in the infant stage. But once it starts flying, the entire system will soar. This is the ripe time for banks and financial institutions to secure the fintech future. This is where banking technology ups its game a notch with payment platforms.

Integrate With AR And VR Platforms

Providing payment platforms in the new paradigm is essential. But banks need to do more than that. They need to integrate with the metaverse virtual reality. Banking technology must evolve to increase its presence in the Metaverse while ensuring that customers spend more time in it. 

This may be done in multiple ways:

  • Communications with customers- Include AR and VR where it is appropriate.
  • Increase Visual Presence- Transactional experiences should be encapsulating and immersive.
  • Explore the New Age Ads- Advertising is evolving along with technology. Digital billboards, avatars of celebrities, etc.

Banks In The Metaverse

The future of fintech is mainly altering. But it is not unpredictable. We may not be able to say how the Metaverse will affect us or how it will look, but we sure can understand how it can be leveraged. Financial institutions should not wait for regulatory guidelines to adapt to evolving technology. They must learn how to leverage their unique attributes.

Utilizing their attributes to meet the wants and needs of the customers helps and navigate the digital transition successfully. This includes the desire to be a participant in the metaverse and crypto economies. But all these financial institutions and banks need a reliable and trustworthy service source. A resource marketplace where you get all that you require. Signzy can help you with the best customizable APIs and resources with our efficient AI-based rule engine and technology.

About Signzy

Signzy is a market-leading platform that is redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering totally customizable workflows. It gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru, and it has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

Peer-2-Peer Lending- A Future Formed From Fundamentals

Posted on | by Signzian

With a revolution of digitization in the country since 2020, India is set for changes in the P2P lending market. IndustryArc predicts the market size to exceed $10.5 billion by 2026. This is after considering 21.6% CAGR during the forecast period between 2021 and 2026.

Peer-to-Peer(P2P) Lending, follows the practice of lending money to businesses or individuals by other individual lenders. This is usually through online services that match lenders with borrowers. Since 97% of these transactions are online now, P2P lending is synonymous with online P2P lending. 

Traditionally banks are the first option people consider to obtain funds. Perhaps a personal loan at an affordable price might do the trick. Unfortunately, the process of qualifying for a loan is rather tedious and time-consuming. This is why up-and-coming businesses and entrepreneurs widely use P2P lending to acquire sufficient funds for their ventures. This helps them get the investments they need without the hassle of availing bank loans.

How It Works And What Are Its Benefits?

P2P lending enables borrowers to avoid the troubles of bank bureaucracy. They are no longer at the mercy of a bank or financial institution. Instead, a fellow lender helps them raise the money. The lenders get decent returns on their investment too. The transaction is possible with the help of an intermediary P2P platform.

Once both parties divulge their credit history, the P2P platform ensures that neither are serial defaulters. After a thorough risk assessment(With algorithms on past borrowings, etc.) they formulate an idea on the chances of incomplete repayment. They assign a score for the parties. Once a participant is listed, they can list their requirements including the funds they need, the interest rate and the duration.

Individuals without credit history or formal banking methods can also participate. But the P2P platform makes an extra effort for verification. But this is not much of a headache for the borrower when compared to the hurdles in traditional bank loans. Since the P2P platforms provide unsecured loans, it is easier for finalizing the transaction for the participants. As a matter of fact, this is one of the major reasons why it is flourishing. P2P is gaining the attention of youngsters across metros.

The platforms also promote P2P lending as an investment opportunity.  Prima facie it may seem not apt that P2P lending presents itself as an investment, considering that most individuals are the primary interactors. Most platforms advise focusing on the returns and not the nature of the arrangement. The interests are constant and the involved parties are already verified. Defaulting is minimal, and thus it makes sense.

The platforms can offer returns of up to 14% to their investors. Investors can customize these investments according to their needs. They can select one specific borrower or diversify with multiple borrowers.

What’s The Catch and How Can Signzy Help?

The P2P platforms usually charge a fee from the borrower and sometimes the lender.  If everything goes well, the borrower will promptly return the capital with a good interest rate. All parties are satisfied after the process.

But if the borrower defaults, that’s when the problems occur. Things can go wrong rather swiftly. Even though the lender can choose the borrower depending on their risk ranking, many times these rankings may be inaccurate. This can be due to inefficient verification methods or procedures. The fact that there is no collateral here, is relevant. Most of the time, the lender does not even have a recourse.

P2P lending utilizes the fundamentals innovatively. They are useful as long as they are safe. But how do we make sure that it is safe? What measures can the platform as well as the lender take while organizing such a venture?

We at Signzy specialize in providing AI-powered RPA platforms for financial services. We digitize your processes while making sure that each individual is properly verified without fail. P2P platforms that avail of our services get state of the art security and the lenders who wish to enter the P2P marketplace can seek our brand too.

Signzy can completely automate your back-operations decision-making process into a real-time API. This is possible due to a combination of ‘Nebula’ — Our no-code AI model builder and our Fintech API Marketplace of over 200+ APIs. Today we work with over 160+ FIs globally including the 4 largest banks in India and a Top 3 acquiring Bank in the US. Globally we have a strong partnership with Mastercard and offices in New York and Dubai to serve our customers in the 2 geographies. Our Product team of 120+ people is building a global AI product out of Bangalore.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com.

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

Accessing With Account Aggregators

Posted on | by Signzian

In 2021, total digital transactions conducted exceeded 40 billion with an accumulated estimate of over a quadrillion INR across the country. RBI had been brainstorming for a long time to optimize these transactions while creating a more efficient system for payments and keeping track. Account Aggregators(AA) are the latest initiative to resolve this.

What Is Account Aggregators Initiative?

Account Aggregators are RBI’s newest reformation in the payment processes. It allows the collection of user data that can be shared among multiple financial institutions with approval consent every step of the way. This permits institutions to create a better understanding of customers and provide their services, accordingly.

In addition, 8 major banks are joining RBI’s pep for reform. These include State Bank of India, HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, IDFC First Bank, IndusInd Bank, and Federal Bank. The new system with the aid of these many primary players helps the free flow of data between financial information providers(FIPs) and banks. It will especially help loans for MSMEs and other small scale businesses.

Account Aggregators relay user information between financial information providers and financial information users(FIU) during transactions. User consent is mandatory for each step in the process. This is mostly effective for loans and lending, but other payment processes can also utilize it.

What are the Benefits of Account Aggregators?

Account Aggregators create a systematic approach to financial data management among institutions. It is a precise solution for scattered data across financial entities and enables the transfer of consented data without view or processing by the aggregator itself. Users can search and find information

In terms of economic impact, observers are comparing Account Aggregators to UPI. Expectations are that Account Aggregators will bring unprecedented benefits in making payments and lending easier, just like how unexpectedly UPI transformed the economy.

With Account Aggregators, many SMEs can operate without physical branches transforming credit penetration. The ease of access Account Aggregators creates during loan applications, will encourage entrepreneurs and businesses to execute their ideas faster. Since the entire system is overseen by government bodies, chances of fraud and malpractices are nearly nullified.

Data Privacy

One of the major concerns surrounding Account Aggregators is how private the data is. Before the official release, speculations were in the air. RBI was diligent to emphasize how secure the user data will be. Data privacy and user consent are keystones for any transaction and formulate the fundamentals of the framework.

Presently, RBI allows only regulated entities to access the Account Aggregator ecosystem. On top of this, user consent is mandatory along every pitstop in the process. It is important to note that account aggregators themselves are unable to view or access data as they are designed only to relay information between FIPs and FIUs.

What It Means And How Can Signzy Help You

RBI acknowledges the pace at which the information era economy is transforming. Just like UPI, Account Aggregators are a step in the right direction. This will fasten and ease payment services and the lending industry. It is clear that what the nation aims for is a completely digitized economic infrastructure.

Digitizing your services is not simply about digitizing your services. In the cutthroat competition, it is simply not enough to meet the minimum standards. You need to craft a user-friendly, fast-paced, secure system. We at Signzy can help you create the perfect solutions for all your onboarding and KYC related needs.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

Overcome Challenges and Implement Best Practices in Customer Onboarding

Posted on | by Signzian

Efficient and robust customer onboarding banking processes are a vital part of any bank’s compliance checks. Having an easy-to-use and seamless onboarding process allows financial institutions such as banks and NBFCs to keep up with the changing economic landscape. In addition, It leads to a solid ROI and creates a more enjoyable experience for the end customer. 

Customers like to see digital experiences across critical services, especially in the finance industry. In the banking and financial services industry, customers now expect digital experiences across critical services. This is especially significant for client onboarding banking, which is the complete process through which an individual begin theirer journey as a customer or client of a bank or financial institution.

Learn about customer onboarding in the banking sector 

Customer onboarding in banking refers to the steps taken by a bank to welcome a new business customer. To comply with KYC standards, this usually entails acquiring important information about the customer and conducting identity checks.

In banking and financial institutions, customer onboarding necessitates proactive communication and participation from several departments within the bank, including credit, operations, compliance, legal, front office, risk, and tax.

According to Forrester’s study, institutions with partial solutions with basic workflows require two to twelve weeks to enroll new clients. New technology has been introduced by many banks in the last few years to create greater efficiency and a better customer experience.

Key challenges in customer onboarding

An inefficient customer onboarding in the banking and financial services sector is resulting in hefty losses in terms of converting engaged customers. Between 2009 and mid-2016, banks were fined more than $200 billion for anti-money laundering violations, which had serious consequences for their onboarding operations. To combat this, banks have begun to tighten their Know-Your-Customer (KYC) and onboarding processes, resulting in a significant increase in onboarding costs. This has harmed the client acquisition process, generating unnecessary delays and long time-to-cash cycles, producing friction in a business customer’s day-to-day operations, and resulting in a significant loss of revenue.

In the rush to optimise their client onboarding banking journey to the point where it is an asset in the struggle to attract new customers and expand market share, banks and financial institutions are falling short. A recent report by HooYu found that:

  • 86% of fintech intend to focus on the effectiveness of customer onboarding while only 43% would like to focus on driving further traffic to the top of the customer onboarding funnel with PPC advertising
  • Modern fintech companies are placing an increased emphasis on integrating onboarding technology providers and A/B testing compared to traditional financial services firms.
  • The single biggest customer onboarding drop-out comes when customers are asked to produce ID documentation. 50% of fintech believe this to be the area of significant customer abandonment.

Here are some of the primary difficulties that banks and their commercial customers experience as a result of the old onboarding process’ inefficiencies:

Customer Challenges

  • Complicated and time-consuming application process without adequate guidance and/or assistance.
  • Restricted communication and lack of transparency in the application process resulting in trust issues.
  • Wastage of time due to abrupt requests for documentation and duplicate/incomplete data entry in the paper-based process.
  • Excessive turn-around-time in customer onboarding impacting business transactions and cash flow.
  • Lack of personalization and proper assessment of the customer’s needs while guiding them through the products and services prompting them to switch banks.

 Bank Challenges

  • Fast evolving regulatory requirements and stringent laws are resulting in complex customer onboarding in banking.
  • Inability to manage customer expectations across digital touchpoints during their various stages of the buying journey.
  • Longer onboarding time leads to lost cross-sell/up-sell opportunities with customers during their initial engagement period when their propensity to sign-up for additional services is high.
  • Missing single-view of the customer information impedes using existing customer data efficiently and any meaningful data analytics to give any conclusive customer insights.
  • Managing frustration due to delays, convoluted processes, and bureaucracy impacts the sales operations, which leads to up to 3/4th of customer onboarding requests not being able to reach fulfillment i.e. final stage of account opening.

Best practices for customer onboarding in banking

An Intuitive Mobile-First Solution

Customers are used to interacting with their phones and are disappointed when they don’t like the initial banking experiences. Almost half of the bank account applicants have abandoned the first few days of application for a bank account. The culprit is paperwork-laden processes that drive consumers to seek out digital-first alternatives.

Even though it is not as large a screen for a smartphone, the application experience should be enjoyable. Favorable mobile application experience limit the number of fields that are displayed on each page. Applications should be as easy to complete on mobile as on a desktop.

A customer can start and finish their banking experience with a simple text message on their mobile phone. Clicking on a link in the message will take the customer to a secured portal where they can do everything from interacting and completing steps to uploading supporting documents and identification.

When applying for a bank account, over half of clients claim they skipped the onboarding process. Cutting-edge banking technology allows customers to begin and finish their transactions with a simple text message from their mobile phone.

Eliminating Paperwork

Flexibility can be offered for how agreement details, legalese, and lengthy terms are presented and reviewed by consumers with the use of digital contract technologies. For example, It’s possible to present TILA disclosure tables in a variety of mobile-friendly formats, with the help of mobile-friendly document generation tools. If the only solution you can come up with is a static PDF that requires a microscope to read on mobile devices, then it should be done differently.

The new solutions enable banks to get legally binding customer consent from wherever they are. The customer can access and sign a secured document by clicking on the link in a text message. Banks can save money and time with the easy process because it eliminates cycle time and compliance exposure. The completion rates for customers are much higher when they use the smart eForms. It’s easy to complete eForms that are mobile-friendly, simplified in their presentation, and leverage autofill and CRM-prefill. Service reps can assist with the customer while also viewing the same form at the same time.

Without missing anything, the smart eForms ensure that the process is complete in a fast and accurate manner. Then eForms can be submitted from any device. In addition to this, terms and conditions can be presented in a format that is more user-friendly instead of having a service rep read them from a script.

Digital KYC

The benefits of digitising the ID collection process are several, the most important of which is that it lowers fraud. Financial associates aren’t always trained to recognise false or invalid identification cards. Financial organisations can confirm that IDs are authentic and relieve their workers of this strain by automating the ID validation process. Furthermore, digital ID collection eliminates the need to scan and file paper copies of identification. Instead, the information can be stored digitally in a more secure and accessible location. Digital ID collecting improves the experience for clients who sign up at a brick and mortar branch or in a remote scenario because it can be done without anyone leaving their seat.

A consumer can use a mobile phone to capture and send photos of their face and driver’s licence for approval with advanced ID verification and authentication systems that include completely automated KYC. Onboarding time is decreased, fraud risk is lowered, and even the most stringent ID and verification requirements are met promptly.

Automation and Real-Time Support

A digital customer onboarding banking process enables data to be pulled from Customer Relationship Management (CRM) systems like Salesforce or custom-built solutions to automatically populate contracts for additional services to expand the relationship. For customers, having contract fields already filled in is the ideal experience; it saves time and demonstrates the value of existing banking relationships. For banks, not only do completion rates improve, but re-keyed data errors are also reduced. This enables you to walk the customer through the process step by step, adapt to their needs and risk profiles, and skip questions based on past responses.

When the questioning is finished, the system can use the responses to build a signature-ready agreement for the customer. It’s a streamlined, mobile-friendly way for customers to navigate a difficult application procedure. For banks, it’s a method to boost completion rates, cut support expenses, and lower Not-In-Good-Order (NIGO) rates, all of which minimise the cost and time it takes for manual review and remediation.

Benefits of improving customer onboarding in banking

Consistency: Consistent design and a cohesive domain experience show customers that the application is being offered by someone that they know and can trust. While sharing personal and financial information during the customer onboarding banking process, they should feel secure and confident.

Ease of use: An intuitive application experience makes it easy for the customers to navigate or fill in their details. Seamless applications that allow customers to start and stop the process across platforms to further enhance the overall experience. (e.g. If they start filling out the application on a phone and finish it on a laptop, that’s how it will go.)

Clarity: The ability to connect with someone if the customer needs help is a hallmark of the best customer experiences. At the same time, the communication language used is clear and easy to understand, including error message explanations.

Efficiency: Customers can save time and avoid having to submit documents like account statements by connecting other accounts and pre-filling form blanks. These technologies improve efficiency and speed up the application process by removing needless manual labour.

Redefining customer experience & Future of customer onboarding

For the third year in a row, digital account opening (DAO) is the most popular banking technology. In 2020, almost 80% of all financial institutions will have introduced new DAO systems or modified current ones. – Forbes

Due to the COVID-19 pandemic, banks and financial institutions have started realizing the potential of digitization in the customer onboarding banking process. Digital identity solutions enable customers to safely access banking services and help banks offer customer-driven, mobile, and secured services. To provide a hassle-free UX while avoiding identity fraud, FIs need to focus on the following critical areas in their digital services.:

  • Provision of strong identity verification technologies and mechanisms
  • Provision of robust biometric verification
  • Provision of additional verification services for scoring, reputation, and risk management
  • Provision of a frictionless digital user experience for apps and services
  • Ensure that state-of-the-art security checks are performed in accordance with regulations.

When it comes to providing banking services, the better the customer service, the more customers will be willing to start a relationship with the financial institution. Emerging technologies being tested for client onboarding banking have a lot of promise in terms of speeding up the process, reducing duplicate data entry, and improving risk and compliance scoring accuracy.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com.

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

An identity verification service is for keeps

Posted on | by Signzian

Who are you?

Isn’t this the first question that comes to one’s mind when meeting a person for the first time? It is a natural question. In people’s conversations, a response is enough to close this question. But, it is different when dealing with institutions like Banks, Countries (immigration officers), and governments. Verifiable documentary evidence has to support the response. This is when an Identity Verification Service comes into play.

It doesn’t matter who you are. Documents must validate identity when dealing with institutions. A couple of years ago, a video went viral on the internet. It featured the tennis great Roger Federer. An usher at the Wimbledon center court did not allow Federer to pass without an ID document. For the record, Federer has won Wimbledon a record 8 times.

Businesses use identity verification services to ensure customers’ identity is true and accurate.

The identity verification service validates identity in the following ways

  • Using Government documents such as license, social security card, or passport.
  • Verify information from many sources – credit bureau or government databases.

Thus, identity verification service ensures successful KYC and Anti-Money Laundering (AML) compliance. It also reduces risks by fighting identity theft.

Your business may not have an identity verification service in place. It may already have one but is evaluating other options. Here are pointers to build a strong, successful, fintech, and sustainable identity verification process.

Compliance for an identity verification service

Law of the land still reigns supreme. Statutory and regulatory compliance is mandatory and no exceptions are advised for any identity verification service. On one end, there are KYC requirements that mandate access to identity, financial and personal information. On the other, there are privacy laws that regulate access to user-owned data. A paradox. It is this contradiction that identity verification service providers have to navigate.

KYC

In 2002, all financial institutions made KYC mandatory in the US. This was due to the USA Patriot Act of 2001, which came into being after the 9/11 tragedy. All KYC processes have to adhere to a customer identification program, called the CIP. The CIP also forms part of the institution’s anti-money laundering (AML) policy. Banks and Fintechs leverage KYC to assess customer profile and consequent risk.

Privacy Laws

On 25 May 2018, the European Union (EU) put a privacy law into effect – General Data Protection Regulation (GDPR). GDPR brought to the forefront the entire debate on data privacy. ‘User consent’ is the cornerstone of GDPR giving tremendous control to the user. The user now has the power to manage data – active and passive – that the user shares with other parties. The US too has many privacy laws, but none at a central federal level, unlike the EU’s GDPR. The Californian Consumer Privacy Act (CCPA) is often the most talked about and the most recent.

Be aware of legal requirements before zeroing in on an identity verification service. Adhere to all laws including KYC, Anti-Money Laundering (AML) regulations, and privacy. Violation of laws could invite major penalties or financial jeopardy.

Fraud Protection

The leading identity verification company Idology published the eighth “Annual Fraud Report 2021.” It says leaders call identity verification, the number one challenge in addressing fraud. It is not surprising. Covid-19 accelerated digital transformation initiatives across organizations. Identity verification was one of the top use cases. This at a time when incidents of fraud – financial, data breaches, identity thefts, and mobile fraud plays – are at historical highs.

Technology

Without technology, no identity verification service would be possible. The options are discussed below.

Optical Character Reader (OCR)

The world is still far away from complete digitalization. Most documents including those related to identity are still in paper form. OCR transmits the data from paper to electronic portals. OCR scans, recognizes, reads, and extracts written information from an identity document. It then verifies if the identity card submitted by the customer is legitimate or not. This allows customers to verify their identity through smartphones. OCR collects data from documents and encrypts it to follow regulations and reduce fraud.

Biometrics

Your smartphone asks for your fingerprint or your Face ID to unlock. Biological markers are impossible to replicate. These markers are best placed to customers into a password. 

Biometrics goes beyond face id recognition. It could extend to DNA matching, iris scan, fingerprinting, voice, and even typing. Biometric identification captures and corresponds to people’s unique physical features/behaviors. Thus, it lends strong confidence to a business’s approach to identity verification.

Blockchain

Following the crypto-mania? The Bitcoin frenzy has overshadowed the technology that powers crypto – Blockchain. Blockchain is powering a broad range of applications from trade to music and even voting. Yes, voting in elections. Identity management is using blockchain too.

The beauty and strength of the blockchain are that it restores the right to privacy to the user. It is the user who decides what personal identity information to share. Thus, fintech balance the challenge of ensuring compliance while adhering to privacy laws.

Blockchain is a digital ledger of decentralized data. It lends itself well to solve the use case of identity verification. Consumers assign a digital identity or watermark for all transactions. They then decide which information to share. This makes the process speedy, convenient, and risk-free for both parties. Thus, leveraging blockchain technology can ensure that digital compliance is convenient yet secure. Digital identity verification solutions including Signzy are also utilizing blockchain to audit transactions.

Artificial intelligence (AI)

AI impacts identity verification in the following ways,

  • Replace the human in performing all mundane tasks e.g. physical verification of paper identity documents.
  • Quick real-time verification of captured information with a trusted database either public or private.
  • Fraud detection and prevention.

Artificial Intelligence (AI) fastens the identity verification process compared to humans. It also resolves the biometric issues related to aging, makeup, and facial hair. AI-driven platforms leverage artificial intelligence algorithms. They verify a selfie and a photo ID for a swift and accurate identity verification process. AI accepts many identity card formats and uses the selfie for more authentication. AI conducts real-time authentication with geolocation, IP address, and AML background check.

The technology stack supporting identity verification could start with one of the above.  The stack could also be a combination. The decision would depend on the requirements and the business’ capability maturity. The choice of the technology stack should address compliance, fraud, and user experience.

Awesome User Experience (UX)

Identity verification is fraught with friction. In most cases, it is a frustrating experience for the users. Most users seem to have developed ‘acceptance’ to a poor user experience. Even the smallest convenience offered comes out as a great user experience. Balance awesome UX with the need for compliance and also preventing financial frauds.

Factors to consider

The approach to delivering a great UX could be guided by the following factors.

Avoid human intervention as much as possible

Ever imagined what would happen if the number of customers increased by 10 times? Wouldn’t it be tedious for your staff to keep up with the onboarding process? Thus, it would lead to bottlenecks causing the process to slow down. Higher the number of customers, slower the onboarding process. It’s an issue that can be exacerbated. Hiring more employees could solve this problem but wouldn’t be beneficial. Deploying automation will prevent this problem. It will avoid time-consuming processes, human errors, monotonous and repetitive tasks, improving productivity.

Need for speed and seamless experience

Customers hate waiting. The more you make them wait, the higher are the chances of you losing them. Sign-up abandonment is a reality, even if related to ‘mandatory’ services like banking. Unfamiliarity with the processes can be uncomfortable and frustrating for the customers. This causes poor user experience, resulting in abandonment and even churn.

Set user expectations

Identity verification is never a one-step process. It has to involve many steps. Setting user expectations at the outset can help manage user expectations better. Resetting user expectations at every step will help build a relationship. Thus, leading to eventual success.

Quick Wins

The single most important element in improving UX is simplicity. Achieve UX Simplicity by doing some of the following.

Autofill or automate the capture

One can’t imagine the joy one experiences on seeing a 15 field form partially auto-filled. A helpful dopamine shot. The availability of public and private databases of information can improve UX and cut errors of omission and commission.

Ask easy to remember information

Instead of asking the entire 9 number social security number (SSN) asking for the last 4 digits could catalyze action. Similarly, asking for information progressively (i.e. step by step) instead of all at once could reduce friction.

Fallback

Not every user who fails verification is a fraudster. Legitimate users may also be unable to verify ID because of genuine reasons (patchy internet, poor quality camera). So as not to impair UX, the system should provide for a fail-safe fallback including a manual process as the last option.

It is all coming together

Digitization will continue to grow. Institutions will juggle many factors in implementing identity verification solutions. Compliance will, without doubt, be the overriding factor in setting direction. E.g. The current COVID-19 pandemic is exerting another layer of verification for people’s movement. The continued growth in mobile users is making awesome user experience hygiene. UX should be as simple as ordering food on mobile, if not simpler. It is up to technology to do the tough balancing act between compliance and UX. It will be interesting to witness the future of digital identity verification. It will include compliance, mobile identities, cross-border imperatives, and artificial intelligence. Get ready for a machine soon asking you, “Who are you?”

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

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Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

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