With fraud levels at an all-time high—costing U.S. financial services firms $4.23 for every $1 lost to fraud—banks need the strongest solutions to verify that customers are indeed who they say they are. With the current economic slowdown, identity verification will loom large for financial institutions as fraud escalates. Leveraging a continuous identity assurance solution like Instnt Verify™ can create a circle of trust with customers while generating top-line growth. Below, we break down how continuous identity assurance can help firms manage digital customer onboarding while enabling customers to own and manage their own identities.
Current Identity Assurance Concerns
Much of the fraud risk financial institutions currently face occurs during the new account creation state of the customer journey. Scams directly affecting fraud detection at each touchpoint exacerbate issues associated with identity verification.
Additionally, the inconvenience of verifying identity at sign-up continues to pose concerns for financial institutions. If the process is too complicated, the customer will simply walk away. Research shows that in Europe 68% of people who have onboarded for financial services have abandoned during the process. Likewise, in the US, studies show 1 in 4 customers drop out during the digital customer onboarding process, with almost a third citing the length and the number of steps for identity-proofing and affirming as critical paint points. If institutions were able to halve the abandonment rate, they would consequently increase customer acquisition by 29You % and revenue by 26%.
Unfortunately, if the risk controls are too harsh, an institution might be rejecting otherwise good—and potentially profitable—customers. For example, one bank found itself rejecting nearly 60% of all potential new customers trying to sign up. As a result, it turned away hundreds of thousands of applicants and missed out on potential revenues.
Solutions to simplify workflows while maintaining the strictest Know Your Client (KYC) procedures are therefore essential.
What is Continuous Identity Assurance?
While identity assurance aims to determine whether or not a consumer is legitimate, continuous identity assurance takes the process further. Continuous identity assurance is the concept that users own and provide a measure of certainty of their identities, from the opening of an account to the future of account use. It creates a circle of trust extending across a financial institution’s customer omnichannel journey.
A one-of-a-kind continuous authentication solution like Instnt Verify™ works by collecting intelligence about users and their behavior. Artificial intelligence (AI) technologies review digital identities to grant access to verified customers while flagging fraudulent or anomalous behaviors.
Effective identity and access management systems with continuous authentication establish the digital identity of applicants during onboarding and then thereafter at certain times and touchpoints, such as when they need to update their payment information or phone number. At each of those interactions, identity is verified, frictionlessly and without disruption to the transaction taking place.
Benefits of Continuous Identity Assurance with Instnt
There are several benefits of continuous identity assurance. Let’s have a look at a few.
1. Data security
Continuous identity assurance leverages the Hyperledger blockchain, providing risk and security LoA-based access and an embedded OEM ID wallet. The decentralized network results in data being accessed securely by both parties after permission has been given to them. With Instnt Verify™, businesses can efficiently validate transactions from authorized account owners, preventing account takeovers and gaining identity assurance from account opening on Day-zero to transactions on Day-N.
Instances of unauthorized access are virtually eliminated because the security offered by the blockchain means that data can only be accessed after permission has been granted by the customer. As a result, institutions can combat a variety of fraud risks, including synthetic fraud and account takeovers, the former of which is the fastest-growing financial crime in the United States.
2. Lower costs
Continuous identity assurance can drastically lower operating expenses because it eliminates the need for the bank to maintain relationships or contracts with multiple vendors. Cloud-based managed acceptance platforms can integrate within minutes, allowing IT staff to focus on more mission-critical tasks and spend less time managing several technologies and databases, many of which might be outdated. Instnt Verify™, for example, offers no-cost KYC checks and ensures that businesses only need to pay for accepted good customers. As a result, businesses have experienced 40% OPEX cost reduction with Instnt.
3. Speed and efficiency
Because multiple systems are removed during continuous identity verification, the process occurs much faster and with greater efficiency, whether during onboarding or later throughout routine account updates. Since Instnt relies upon technologies such as AI and machine learning, it ensures institutions keep up with the evolving fraud landscape. For example, Instnt Verify™’s fully AI-managed service can efficiently analyze millions of data points, transactions and consumer behavior patterns to seek out outlying occurrences and label them as potential fraud events.
4. Accurate Data
Identities can change over time without the customer informing their financial institution. Customers have traditionally needed to send name changes, and addresses of their own volition to the bank. The financial institution must continually validate the accuracy of the customer’s identification data in the distributed ledger.
Continuous identity assurance eliminates this gap. Since the customer owns their own identity and data, financial institutions can know with confidence that they are accessing the most trustworthy, up-to-date user data. This model of self-sovereign identity, or individual ownership over their digital identity and information, improves the consistency of privacy and security.
5. Continuous, Real-time Information
Currently, each time a customer digitally onboards to a new bank or financial institution, there is no way for that new institution to know the last time that that customer went through the process with another institution. With continuous identity assurance, the identity is “updated” and the new institution is informed that the customer previously onboarded somewhere else, thanks to blockchain technologies.
Continuous identity assurance also enables other participating institutions to access real-time updated information with a guarantee that every time there’s new information, they’ll be notified. Without this technology, financial institutions have no way of knowing whether their new customer had also recently onboarded or opened accounts at other institutions, which could pose a risk.
Leverage Continuous Identity Assurance with Instnt Verify™
By using a customer acceptance platform with continuous identity assurance, banks can increase their revenue and reduce costs. Instnt Verify™ enables institutions to authenticate transactions from authorized account owners, effectively stopping account takeovers. With Instnt, you will gain identity assurance from account opening on Day Zero to transactions on Day N.
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Sources
Lexis Nexis Risk Solutions - Annual LexisNexis Risk Solutions Study Finds Fraud Costs up to 22.4% from Pre-Pandemic Levels Across U.S. and Canadian Financial Services Firms
Finextra - NextGen Nordics: Signicat finds 68% of consumers abandon onboarding