RESEARCH: SIGNICAT FINDS THAT EUROPE IS “NEARLY THERE” WITH FULLY DIGITAL ONBOARDING FOR FINANCIAL SERVICES

  • European eID schemes provide 69% of ID information needed to digitally apply for financial services
  • 3 European eID schemes provide all the necessary information
  • Digital Identity Service Providers (DISP) are the key to bridging the gap

New research launched today by Signicat, the world’s first and largest identity assurance provider, shows that through electronic identity (eID) schemes in Europe, consumers are closer to being able to apply for financial services 100% digitally, although gaps still exist. The report, “The Rise of Digital Identities”, is based on exclusive Innopay research and looks at how eIDs are currently used to onboard consumers to financial services across seven European countries.

On average, European eID schemes provide 69% of the information that financial institutions need in order to onboard a customer wholly digitally, and three schemes provide all the necessary information. These existing schemes could provide the vital staging point to develop digital identities that enable a truly digital financial services landscape.

Banks are under pressure to reduce costs, increase profits and to comply with ever more stringent regulations. Their customers have, at the same time, moved to embrace digital channels, meaning banks can reduce the number of branches and better target these customers to reduce costs and increase profits. However financial institutions are missing a vital link in the digital chain – onboarding. 40% of consumers have abandoned a bank sign up process because of the time and effort needed. This, combined with the upcoming eIDAS regulation means that financial institutions need to be able to onboard customers 100% digitally.

The paper was developed with research from Innopay, the payments, digital identity and e-business consultant. Innopay surveyed the onboarding landscape across Austria, Belgium, Germany, Luxembourg, The Netherlands, Switzerland and the UK to look at KYC/AML requirements and how available eID schemes map to these requirements. While current schemes do cover the majority of information needed by financial institutions to confirm a prospective customer’s identity, gaps exist.

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It found that in Belgium, for example, the eID covers all the necessary attributes but the scheme is only relevant in a consumer-to-government context. In The Netherlands, the bank-operated scheme offers the right coverage but, on its own, won’t satisfy Know Your Customer (KYC) requirements.

To fully verify a customer’s identity, financial institutions must supplement eID information from a variety of sources including national ID schemes, various digital assets and traditional ID documents such as passports. The challenge is that information is not always available, there are inconsistencies across regions and difference stages of onboarding require different levels of assurance, including examination of the physical document. To succeed, institutions must plug the gaps and ensure they have access to the right information in the right geographies.

Gunner Nordseth, CEO at Signicat, said: “As the market becomes more competitive, financial institutions are under increasing pressure to attract and retain more customers but at lower costs. It’s a huge challenge and the old analog process for onboarding has proved cumbersome and outdated. There is enormous scope for digital identities to reduce inefficiencies as well as ease compliance with KYC. But building those identities is a complex task and financial institutions need to create interoperability between regions in a fragmented European landscape.”

Gunnar added: “The real strength lies in combining the various identity information sources to create a complete and validated digital identity. That’s where a digital identity service provider, or DISP, can help. It facilitates connections to the relevant schemes and other forms of verification to build a trusted picture of the customer. Financial institutions can not only comply but also gain a lead in the race to a truly digital future for onboarding.”

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