FICO, a global analytics software provider, highlighted all the major barriers to digital interaction between banks and its customer, by surveying security decision makers across 172 banks in eight countries, including 27 U.K. banks. In its “Germany and UK Banking Survey 2020,” FICO revealed the inability to complete identity verification online is the biggest concern for banks.
“Banks in the U.K. also noted challenges around authentication of existing customers, including complying with legislation. This was a concern for 54% of respondents, probably driven by the Payment Services Directive 2 (PSD2), which establishes technical and operational rules around verifying the real payer, both for banking and payment card accounts. The lack of integration between authentication systems across customer channels is a concern for half of U.K. banks,” the survey stated.
The study revealed that most consumers are looking for digital interaction, stating that 82% people in the U.K. are prepared to open accounts digitally. However, 54% of U.K. banks said the consistency of identity validation across channels is a challenge. While 72% of banks in the U.K. use digital methods to capture identity for personal bank accounts, only 36% of banks said they capture customer identities and verify them in the same channel. One in three U.K. consumers (32%) said they would abandon an application process if forced to process via a non-digital channel.
“Historically, identity solutions were developed for face-to-face interactions and have since been adapted to the needs of new channels and products. As digital interaction is accelerated by the impact of COVID-19, it exposes the weaknesses inherent in using identity verification processes that were not intended for digital channels,” said Sarah Rutherford, Senior Director of Identity Fraud Marketing at FICO.
“Banks need to move fast to work out how identity fits into their digital onboarding and authentication strategies. The fragmented approach is impacting the customer experience. The benefits of moving to a single identity infrastructure across all channels and product lines should be assessed as a matter of priority. This approach reduces unnecessary friction and confusion for customers, avoids multiple copies of documents being held across the institution and facilitates faster onboarding of cross-sell opportunities. Banks that still rely on processes first developed for branches will be disadvantaged,” Rutherford added.