How Financial Institutions Can Put Consumers First and Thrive in 2022

How Financial Institutions Can Thrive by Putting Consumers First

By Bala Kumar, CPO of Jumio 

After an incredibly tough couple of years, consumers are continuing to feel the financial impact of the pandemic. Some have benefitted from working from home, with the reduction or elimination of commuting fees giving them the opportunity to invest that money elsewhere. There will be others that haven’t fared as well, though, needing to seek loans or mortgage holidays. What unites these differing scenarios is the increased need for support from financial institutions (FIs), whether that’s a bank or an investment platform.

As such, heading into 2022, FIs need to be hyper-aware of consumer circumstances, seeking to make life as easy and secure as possible for all types of financial interaction. This means ensuring a seamless journey for customers, but also reducing any opportunity for fraud, which we know is high in the financial space – in the first half of 2021, UK Finance reported that criminals stole a total of £753.9 million through fraud.

One of the key areas FIs will need to look at to achieve both aims is end-to-end identity management.

Putting customer experience at the heart of identity verification

Businesses need to start at the beginning of the consumer journey: onboarding. Historically, businesses have treated every consumer equally at this point. That is, assume every consumer is a threat and put lengthy onboarding processes in place to ensure low risk. Unfortunately, this causes friction and is one of the biggest causes of abandonment today. In fact, drop-off rates can be as high as 75% during onboarding if the customer experiences too much friction.

Rather than treating all users as potential threats, organisations will put the consumer experience at the centre of the verification process to enable a more seamless experience and smoother business operations. In 2022 and beyond, FIs will need to invest heavily to reduce abandonment rates and retain good customers through the onboarding journey.

Consolidating identity verification vendors for the KYC process

To support this improved customer experience, organisations will have to consolidate identity verification vendors for the KYC process. Banks in particular have previously used countless solutions to verify a customer’s identity, examine their identification and supporting documentation, authenticate them after every visit, ensure they aren’t on any watchlists by conducting ongoing screenings, manage investigations, monitor their transactions and report suspicious activity. However, this approach is not only costly and complicated, but it also cannot adequately spot financial crime and properly verify user identity.

Organisations are instead moving toward a single, comprehensive platform that consolidates these capabilities to effectively and efficiently confirm user identity and maintain compliance. It is projected that by 2023, 75% of organisations will leverage a single vendor with strong identity verification capabilities and connections instead of using various other third party solutions for identity proofing and affirmation, an increase from fewer than 15% in 2020.

Prioritising strong data privacy safeguards

Consumers today are calling for more control over their online data and how it’s being used by companies. Next year and beyond, enterprises that prioritise user data privacy and are transparent with consumers about how their data is being collected and used will have a competitive advantage over businesses that don’t. For instance, Apple has put its stake in the ground at the forefront of this movement to protect consumer privacy, updating its privacy policy and controls. This move by Apple has increased the awareness of the general public, hence putting more pressure on businesses to improve their privacy standards, especially when it comes to the sensitive domain of identity management.

Strong identity and access management (IAM) controls to manage permissions are critical for enterprises to provide users better control over how their data is used. For instance, providing customers with the option to tailor which of their personal identifiable information (PII) is shared with the company’s website or app and for how long. In 2022, we will see more enterprises moving toward Apple’s approach to privacy to appease consumer’s rising privacy concerns and build meaningful customer relationships built on trust.

The relationship between the consumer and FI has never been more important. Consumers will be looking to their bank for support, while banks need to continue to be on high alert for opportunistic fraudsters taking advantage of the increase in online banking. But providing a first-class customer experience doesn’t need to be at the expense of security. Starting with identity management will be the key to success for FIs in 2022.