Looking Beyond KBA: Solving the Fraud vs. Customer Experience Challenge in Digital Account Opening

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 strong on institutions to expand their origination platforms. But meeting ever-changing regulatory guidelines and protecting customers from digital fraud stand in their way. In particular, the growth of DAO is fueling a rise in new account fraud (NAF) as fraudsters discover that digital account opening solutions offer them the same types of conveniences that they do to legitimate applicants.

Making matters worse still for banks, many of the solutions available to safely verify the identity applicants often sacrifice digital customer experience. Knowledge-based authentication (KBA) does not work for customers with thin credit files, such as immigrants or millennials, who may be forced to visit the branch to authenticate but often choose instead to simply abandon the account opening process. That is an enormous problem for institutions as they enhance their digital channels — particularly mobile — to meet the needs of their digital-first customer base.