Fostering New Account Growth through Advances in Digital Identity Assessment

Online Account Opening Growth in 2017

We can all agree that the “bank of the future” will look and act differently than traditional brick-and-mortar institutions, but just how distant is that future? While we’ve seen account openings begin to shift away from the branch, Aite Group reports that by next year, 28% of new accounts will be opened online and 8% will be opened on a mobile device (an anticipated increase of 5% and 2% from 2015, respectively).1 In an increasingly faceless environment, validating a consumer’s personally identifiable information, their devices and related risk is vital to ensure the optimal customer experience as well as safety and soundness in the financial system. Are you ready for this shift?

As financial institutions (FIs) seek to deliver innovation and access, smartphones, tablets and other internet-enabled technology are increasingly important to financial inclusion in helping the unbanked and underserved gain access to the financial system. As such, FIs are increasingly considering the best approaches to optimize compliance and growth while mitigating risk through advanced identity and authentication technologies.

Do You Really Know Who You Are Interacting With?

Assessing a digital identity presents unique challenges in knowing if the consumer truly is who they say they are. In a recent study from Aite Group, online fraud is reported to be eight times higher than in-branch fraud on average.2 Additionally, the majority of FIs surveyed say that application fraud is already on the rise in the online, mobile and call center channels.2 As account openings continue to shift to a faceless online environment and the use of bots and malware are the new reality, FIs have recognized that traditional identity verification simply isn’t enough. The use of the most current and accurate data, from a variety of sources combined with predictive analytics to improve CIP and KYC initiatives, will continue to better enable FIs to make more informed decisions.

Because our devices have become an acceptable, and perhaps preferable, alternative for authentication, validating mobile device identity and mobile account status with the mobile network operators both at the point of new account opening and for ongoing transaction authorization is essential.  Equally important is the ability to distinguish bot versus human interaction through the use of behavioral biometrics.

Evaluating the likelihood of fraud based on the credentials presented and then determining the right account type and access privileges to provide will continue to be a complex challenge. However, by working together as an industry and leveraging collaborative bank intelligence as well as advancements in authentication technologies, predictive analytics and risk scoring, financial institutions are increasingly better positioned to optimize growth and adapt to the evolving nature of fraud.


About the Author:

Jim Mortensen is Vice President of the Identity Solutions product line for Early Warning. Mr. Mortensen is responsible for developing and delivering new identity solutions, inclusive of solutions for digital identity assessment, as well as managing their overall product lifecycle.

1Aite Group, “Application Fraud Rising as Breaches Fan the Flames,” March 2016.
2Aite Group, “New DDA Strategies: Balancing Risk and Regulators,” August 2016.

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