The COVID-19 pandemic that began in the spring of 2020 has accelerated the pace of digital transformation in the retail banking sector. More customers than ever before are doing their banking from home using a computer, tablet or phone.
This trend is likely to continue long after the pandemic has subsided. Banking customers enjoy the convenience of transferring funds, paying bills and checking their balances from anywhere, at any time, on any device.
Another driver behind digital transformation in banking is customer experience. Just as Uber made the processes of summoning a ride easy, quick and seamless, and just as Airbnb improved the customer experience for finding, booking and paying for accommodation, so too is digital technology transforming the banking industry.
Today’s banking customers want their banking experiences to be as customer-friendly and seamless as ordering a ride, booking accommodation or watching a movie. This is putting pressure on banks of all sizes to offer banking experiences that mimic the digital experiences that today’s banking customers are used to.
Digital transformation in the banking industry is all about reducing or eliminating friction. In an industry that is famous for having established and rigid days and hours for doing business, friction has always been an issue. When banks require customers to do business with the bank on only certain days and only at certain times, this annoys customers and puts stress on the relationship.
Today, banks are eliminating this friction with digital onboarding and branchless banking. And behind this shift is biometrics.
If you have ever unlocked your smartphone with your finger or your face, you have used biometrics to verify your identity. Biometrics are behavioral or physical characteristics that enable digital systems to identify whether a person is allowed access to particular devices, systems, or data. Biometric identifiers include facial patterns, fingerprints, voice intonation, and typing cadence.
Digital onboarding makes signing up for a banking account easy and quick for customers. It takes all of the steps that are common to the physical process of onboarding a customer and transforms them into a digital process that can be conducted on any day at any time and from anywhere.
In the old way of onboarding customers, new customers had to provide a set of documents to verify their identity and confirm their home address. The bank obtained a copy of the applicant’s driver’s license, a utility bill or filed tax return as well as a customer selfie to perform the necessary identity verification checks.
This manual process involved documents being sent back and forth between the front of the bank and back-office operations. This onboarding process was (and still is for some banks) time-consuming and frustrating for customers. It also made the experience less than ideal for all concerned.
Today, this onboarding process is being replaced by digital onboarding. And one of the primary derivers behind this shift is diametric identity verification, a process that requires new customers to use their mobile phone camera and an app to scan their biometric information and prove to the system that they are who they say they are.
IDmission’s Artificial Intelligence Character Recognition platform, for example, uses a complex artificial intelligence engine to read ID documents and determine not only what it says, but what the field definitions/names are for a particular document type. It then compares the photo on the ID document with the selfie taken with the customer’s mobile device, and sends the completed identity check data to the onboarding application.
Because of biometric identity verification, digital onboarding is quick, accurate and secure. One feature that adds to the security of digital onboarding is passive liveness detection, the AI-based form of liveness detection that ensures that a face presented to a facial recognition system is live (and not a photo or a mask).
Passive liveness improves the customer experience because the applicants are passive throughout the entire verification process. They are not required to blink, move their heads or in other ways prove that they are live. The other advantage of passive liveness detection is that it is spoof-proof. This reduces the level of risk that banks face when verifying the identities of new customers digitally.
The rise in branchless banking is also being driven by changing customer demands. Banking customers who shop online, order food online, and book flights and hotels online, all from home on any device at anytime of the day or night, no longer expect to have to travel to their local bank branch and stand in a long line to do their banking.
Today’s consumers want branchless banking, and forward-thinking banks are giving today’s customers what they want. Branchless banking is popular with customers because it is convenient and quick. And it is popular with banks because it eliminates the human error found in manual banking transactions, and it lowers overhead and labor costs for bank branches.
Today, branchless banking is growing in popularity because it offers customers most of the common transactions that they used to do in person at their local branch, including:
The future of retail banking is digital. Long after COVID19 has passed, expect to see more of your banking customers transacting their business online with their computers, tablets and mobile phones.
Digital banking will grow in popularity because it satisfies customer demand, reduces your costs, helps you stay competitive, and reduces risk.
Biometric authentication is helping to drive the rise in digital banking because it lets you verify new customers remotely, eliminate friction in the customer onboarding process, prevent fraud (by up to 90%), and maintain compliance with privacy regulations.
Your peers in the banking industry are replacing cumbersome, manual, traditional systems with biometric identification technology. Their customers appreciate the speed and convenience of biometric verification. And the banks appreciate that biometrics makes their customer identification processes more secure.
Biometrics in banking also boosts brand reputation and improves customer trust. Banks are adopting biometric technology because it improves customer experience and reduces risk.
Biometric identification is no longer a buzzword or fad. It’s a strategic, integral part of banking platforms around the world. Is it part of yours?