Looking beyond KBA: a research paper, by Javelin

With financial consumers turning to online and mobile channels to manage their existing accounts and open new ones, digital account opening (DAO) is thriving, and the pressure is mounting for institutions to expand their origination platforms. They have to also consider the potential obstacles that ever-changing regulations and increased risk of fraud present, in particular, the growth of new account fraud bolstered by fraudsters leveraging the same convenience that digital account opening solutions offer to legitimate applicants.

Making matters worse still for banks, many of the solutions available to safely verify the identity applicants often compromise the digital customer experience. Furthermore, knowledge-based authentication (KBA) does not work for customers whose identity cannot be verified by traditional means, such as new-to-country or millennials, who may be forced to visit the branch to authenticate but often choose instead to simply abandon the account opening process. 

Each FI needs bespoke identity verification processes to meet the needs of its specific customer populations, but all must address the three pillars of successful digital account opening: customer experience, regulatory compliance, and evolving fraud risks. Tools such as static or dynamic KBA, IP geolocation, and device recognition play a vital role in preventing fraud but have a blind spot for certain customers. 

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