Bridging the convenience / compliance gap in payments with digital identity verification

August 28, 2017

Recent regulatory developments and ever-increasing consumers’ demands for speed, convenience, and security have made it imperative for financial institutions to find a cost-efficient way to check both the compliance and convenience boxes.

In fact, as remarked by the Boston Consulting Group, payments and transaction-banking businesses remain critical elements of the financial services landscape as they are a vital source of reliable revenues and the cornerstone to customer loyalty. To stand out in a very crowded field, payments players must differentiate themselves digitally, putting customers at the center of their strategies.

Meanwhile, regulations are changing at a dizzying pace, making it imperative for financial institutions to be able to meet ever-stringent Know Your Customer (KYC) requirements while delivering a delightful and engaging user experience. This urge is even acuter when trying to win and retain high-value yet commonly file-thin customers such as Millennials and new-to-country, as their number one request is being able to transact in the mobile channel effortlessly.

Although balancing the competing needs of compliance against the expectations of today’s digital native customers is no easy task, leading financial institutions are already leveraging technologies such as machine learning and artificial intelligence to deliver frictionless identity verification successfully.  

For example, industry experts highlight the effectiveness and ease of use for both the payments provider and the consumer of automated KYC checks based on the combination of mobile ID document verification and facial comparison.

Leading global payments companies are leveraging ID document verification for seamless payments and onboarding

Today, hundreds of international payments companies are leveraging biometrics including selfie pictures and digital fingerprints for identity proofing in order to meet KYC and AML requirements with minimal disruption to the customer experience. Indeed, the rising demand for biometric-led identity verification has much to thank the prospect of phasing out passwords and the convenience of fast and secure payments on the go. The numbers speak for themselves: a forecast from Goode Intelligence predicts one billion customers will use biometrics to access banking services by 2017 while worldwide mobile payment revenue is expected to surpass 1 trillion U.S. dollars in 2019.

On the other hand, regulators around the world are becoming more willing to use digital channels to resolve the risk-convenience dilemma, particularly since the European Commission Fourth Anti-Money Laundering Directive (4AMLD) accepts that electronic means of ID verification are as valid and trustworthy as in-person methods. Likewise, the UK’s FCA has stated that banks must maintain high standards for identity verification of new customers and that if they adopt digital identity services to undertake verification, these also must meet stringent governance standards. 

Transformation is not without its challenges, but financial services should make the most out of the regulators’ positive attitude towards digitalizing KYC and capitalize on the opportunities available to engage with their ‘digital-first’ customers.  A seamless mobile user experience and robust and secure identity verification step based on documents such as passports or driver licenses are not mutually exclusive. In fact, they can be achieved at once by providing end-to-end digital journeys that allow consumers to verify their identity and prove they are who they say they are without disruption, within the digital channels.

Join industry thought leaders as they assess the issues and impact of new regulations, as well as how mobile ID verification can bridge the gap between user expectations and regulatory requirements.

Watch this 60-minute on-demand webinar using this link:

If you want to learn more about secure and convenient digital payments, visit our Resource Library to access the recordings or contact our identity verification experts