Financial services still in dark ages, checking ID manually

While other sectors are truly moving all of their customer experience online, growth is being slowed in the financial services sector because firms are still manually checking identity documents, writes David Pope

Financial services still in dark ages, checking ID manually

While other sectors are truly moving all of their customer experience online, growth is being slowed in the financial services sector because firms are still manually checking identity documents, writes David Pope

Back in the twentieth century, the financial services sector had to rely upon manual document verification to safeguard its interests and ensure they knew exactly who their customers were when opening new accounts. Whilst this served the industry well where security was concerned, the birth and spread of the internet since the mid nineties has profoundly changed consumer expectations in terms of speed of purchase, service and interaction. Until now firms’ ability to translate document verification processes to the online environment has been limited.

Whereas it was once seen as normal to have to wait weeks to make a purchase, obtain information, open a bank account or obtain a loan, the digital age has consigned consumer patience to the history books. The once acceptable delay between being accepted in principle as a financial services customer, your ID documents being manually verified and the account being opened is now a huge turn-off for consumers that expect quick and slick practices seen in other industries.

Financial services online processes fail to match consumer expectations

For financial service providers, however, the challenge is undoubtedly more complex than those industries, such as retail, that have blazed a trail in the digital era. Not only does the sector need to meet consumer demands, both in terms of speed and simplicity, it must do so without compromising security and ensuring it operates within strict regulatory guidelines.

However, just because the issue is complex, the sector can little afford to continue to dodge it and persist with increasingly impractical practices.

This is highlighted by the fact that 49% of UK adults believe that financial service purchases online are too time consuming and 53% believing them to be too complicated. If nothing else this demonstrates a clear gap between what customers expect when purchasing financial services online and what is offered to them.

Not only does this gap exist, but with new technologies being given their debut by other industries such as online retail and online gambling, this gap is only likely to grow. As this gap continues to widen, it goes without saying that the impact will become increasingly costly to the sector. With the latest research showing that 45% of adults have abandoned an online purchase of financial services after becoming frustrated over the length and complexity of manual identity validation and security checks and 20% giving up completely, failure to adapt new technology and procedures will have a negative impact on the industry.

The online gambling sector sets an example for financial services

If the financial service industry is looking for inspiration on how to facilitate such a dramatic change in document verification it should look no further than the online gambling sector.

In direct comparison to financial service providers, the online gambling sector is subject to stringent regulations surrounding age and ID verification. Similar to the financial service sector, the online gambling sector had to find advanced methods to quickly, securely and importantly legally bring on board new customers for their online channels. And without, asking their customers to drop into their local betting shop to hand in their ID documentation.

The online gambling sector quickly recognised that it needed to provide customers with a streamlined digital service that took seconds rather than days. More importantly it also realised that it had to implement a stringent system that would also keep pace with the speed of change in the digital revolution whilst keeping regulators happy.

These drivers would eventually lead the online gambling sector to advanced digital document verification technology that not only delivers an enhanced customer experience but is robust in meeting statutory and security regulations. Since utilising automated verification when on-boarding new customers, the sector has experience exponential growth. In 2013 the industry grow to $93bn – up from $79bn in 2012 according to Gartner.

Digital ID verification can improve growth in the FS sector

If the financial service sector embraces new ID technology it too could also drive a boom in online account opening and purchases.
Digital ID verification improves the customer experience and is often more reliable than a front line employee conducting manual eyeball checks on ID documents they have never come across before.

At Jumio, we have found that our online document authentication service not only increases customer sign-up and conversion rates but also removes the complexity and time associated with online account opening. By responding to the demands of the consumer, financial services can securely improve its customer offering driving improved growth in the sector.