UX and security: tiptoeing on the fine line amidst a pandemic

By Philipp Pointner, Chief Product Officer of Jumio

Daily life for people around the world has changed in ways that would have been unthinkable a few months ago. Needless to say, the COVID-19 pandemic has had a huge impact on consumer attitudes, behaviours and purchasing habits, with many consumers forming new habits that will remain post-pandemic. Lockdown has truly changed the ways in which we interact on many levels, but also, the ways that we transact.

Prior to the pandemic, bank branches were already experiencing a steady decline across the UK. Between 2012 and 2019, the total number of bank and building society branches fell by 22%. We can safely assume that social distancing and government-mandated closures have exacerbated these figures further.

As a result, banks are forced to consider how they can securely allow their current and prospective customers to conduct the same kinds of activities remotely while keeping them safe from increasing digital fraud and cybersecurity threats.

Although traditional banks have increasingly begun to look at the ways in which they can digitise account onboarding processes, this is an area where digital native challenger banks have always excelled. On the flipside of the argument, despite challenger banks being renowned for faster sign-ups and seamless customer interfaces, security still remains a top concern, with the annual value of online banking fraud losses being estimated at £112 million in 2019.

It becomes crucial then that both traditional and challenger banks ensure that fraud detection measures – the chief factor behind poor customer experience – are secure but also streamlined. So, how can this be achieved?

Striking the right balance

Accounts that are less than a day old make up nearly half (48%) of all fraud value. Furthermore, Experian’s 2020 Global Identity and Fraud Report reveals that 57% of businesses report higher fraud losses associated with account opening and account takeover than other types of fraud.

It’s apparent that protecting and supporting customers during the account onboarding stage is critical. Accordingly, businesses must find ways to verify the true identity of a potential customer to ensure they are who they claim to be.

Usually prioritising fraud detection produces slower onboarding processes as there’s more hoops to jump through to attain identity assurance. This causes friction which kickstarts a domino effect beginning with negative user experience which leads to increased abandonment rates which culminates in disenfranchised prospects who aren’t afraid to take their business elsewhere. This last outcome is particularly important with nearly 40% of potential new accounts choosing to abandon the onboarding process because they find it too time-consuming and arduous. Many of these customers are then put off from returning and completing the process, resulting in a significant opportunity cost for financial institutions.

It’s imperative that banks find the optimal balance between quickly and securely onboarding legitimate customers without igniting this chain reaction. To achieve this balance, there are lessons traditional banks can learn from their challenger counterparts.

You can’t win if you don’t play

The sudden shift to the online world means many people have had no choice but to adopt digital banking. This poses the question as to how many of these digital consumers will actually decide to return to a branch location once pandemic-related restrictions are lifted.

Banks typically follow a common set of steps when onboarding new customers – although this does differ depending on whether it takes place at a physical branch or online. While banks are required to perform the necessary due diligence as part of their KYC and AML obligations, many of the onboarding steps required in-branch can in fact be automated, streamlined and simplified to deliver a much better customer experience.

By leveraging face-based biometrics for digital identity verification, banks are able to discover the sweet spot between customer experience and security. It begins in the account onboarding process where banks ask the new customer to take a photo of their government-issued ID (e.g., driver’s license, passport) via their smartphone or webcam, then take a corroborating selfie. This process utilises liveness detection to confirm that the online customer is physically present and not attempting to bypass the system using a deepfake video or a picture of a picture. The use of biometrics and AI can make an accurate verification decision in a matter of seconds which creates a customer-friendly experience … Bingo!

Taking onboarding processes a step further

As with the initial identity verification process, traditional banks cannot rely on outdated and complicated methods of ongoing authentication to build long-lasting relationships with its customers. This is where face-based biometrics can step in once again and come to the rescue.

During the initial selfie-taking process, a 3D face map is generated to ensure the person behind the ID is the person creating the account. This face map contains over 100 times more liveness data than a 2D photo to accurately and reliably verify the customer. Instances where future authentication is required – such as resetting a password or attempting to make a wire transfer – the customer is simply required to take a new selfie. This creates a fresh 3D face map that is instantly compared to the one associated to the account. Within seconds, the user’s digital identity is unlocked and the transaction is authorised knowing that the person making the request is the legitimate account owner.

Action starts now

More than ever this holistic approach is required as a result of opportunist fraudsters taking advantage of an extreme global shift to digital. Although the past few years has seen digital account opening at the top of the list of technologies banks intend to add or replace, the current crisis highlights the need for digital transformation, and the need for speed.

Now is the time for challenger and traditional brick-and-mortar banks to invest in the user experience and digital processes from initial account creation to account management to transaction processing. To ensure this success, banks of all stripes must first be equipped to deal with the increased demand. Harnessing the power of face-based biometrics and AI is the best way to deliver smooth digital onboarding and ongoing authentication to stamp out fraud.

As Winston Churchill famously said, “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”