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Fraud Protection: Why Customer Onboarding Requires Digital Identity Processing

Fraud Protection: Why Customer Onboarding Requires Digital Identity Processing

By Omid Aslani, Director of Commercial Product Management at Kofax

In the financial services market, great customer experiences are central to competitive advantage.  It drives higher retention and the willingness to pay a more premium price on upsell opportunities. The first interaction customers have once they purchase a product or service is the onboarding process. Have you thought about what your organisation’s onboarding process looks like?

If it’s slow, manual and clunky, you’re turning off customers before you’ve had the chance to nurture a sense of brand loyalty. On the other hand, if the process is smooth, fast and streamlined, it’s likely to create a favourable impression, and potentially even winning over customers and retaining them for the foreseeable future.

However, onboarding is susceptible to fraud, an area that companies can ill afford to ignore. The pandemic may have abetted the situation. LexisNexis Risk Solutions’ Federal Government Solutions team reported that fraudulent transaction volumes increased by 35 percent. Similarly, bot attacks in e-commerce and financial services rose from 32 percent and 38 percent, respectively.

Risk management, data security, digital transformation, compliance, and marketing leaders, all have a stake in optimising the way their institutions capture, validate and continuously monitor customer identities, starting from Day One. Leaders must implement best practices in streamlined digital onboarding of new customers while preventing fraudulent account openings – without increasing customer friction.

Automating this business-critical workflow is essential to effective customer onboarding. Financial services companies serious about customer experience and fraud protection must look at digital identity processing best practices.  There are three ways digital identity processing can prevent fraud:

  • Verification of mobile ID – When mobile ID verification is provided to customers, they can snap a photo of their driver’s license, passport or national identity card with their smartphone and upload it to the onboarding system. The technology can then optimise, image enhance, extract and validate the digital content using advanced, automated neural networks and multilayered image filters to confirm the document’s authenticity. Adopting ID verification can go a long way in fraud prevention, without taking away mobile upload from customers.
  • Mobile ID framework – Know Your Customer (KYC), and Anti-Money Laundering (AML) regulations are constantly evolving. So, adopting intelligent automation can ease the compliance process for financial institutions. The process orchestration component within it extracts information and submits it to other enterprise applications for further processing.
  • Facial recognition technologyEnsuring an applicant hasn’t stolen someone else’s identification is essential. Utilising facial recognition technology makes sense – it combines military-grade liveness detection with auto-capture to confirm applicants are indeed, taking live pictures of themselves. In combination, the intelligent automation technology adopted can make a side-by-side comparison of the applicant’s video and selfie image to the picture on their ID. The applicant will only be validated if a match is confirmed.

An enhanced customer experience

Omid Aslani

Omid Aslani

Digital identity processing, in combination with intelligent automation, can not only create an effective onboarding process but it can also provide a blueprint for delivering an enhanced customer experience. Here are some ideas:

  • Eliminate compliance-related frustrations – It’s imperative compliance remain front-of-mind throughout the entire onboarding process. There are KYC and AML regulations, of course, but organisations also have to abide by other regulations such as GDPR and Terror Funding legislation. Often, compliance-led delays frustrate customers, but software robots can automate customer due diligence, such as KYC checks. Financial institutions can verify data against internal and external databases and reduce errors in the compliance process too.
  • Ensure an intuitive user experience – Don’t expect customers, current and new, to spend time trying to figure out how to use the organisation’s digital platform. When it comes to a banking or retail mobile onboarding programme, ease-of-use is a top requirement for customer retention. Offer an intuitive and user-friendly solution, further supported by a step-by-step guide to take customers right through the process with little-to-no sticking points.
  • Streamline the process for speed – A slow onboarding process can lose financial institution customers. Equip the intelligent automation platform with capabilities to streamline the onboarding process for efficiency. For instance, robotic process automation (RPA) can automate time-consuming tasks. AI technology such as natural language processing (NLP) can streamline document processing. Low-code and no-code development capabilities can empower business users and citizen developers to build-and-run digital workflows that further simplify the onboarding experience.
  • Support administrators with powerful administration tools – Ensure that administrators have the ability to securely review all identity and compliance data – including facial images, document uploads, and watchlist results. Provision the intelligent automation platform to give managers a 360-degree of the onboarding journey. Real-time visibility helps manage every step from start to finish and ensure a good customer experience.

A quick and straightforward onboarding process is an easy win for financial services organisations. It can potentially also provide them a competitive advantage in today’s unsettled market. At the same time, the process has to be thorough – organisations can not rush through critical verification and due diligence processes, due to fraud risks.

Adopting a unified approach to intelligent automation combined with advanced digital identity processing capabilities can help cut customer onboarding times from days to minutes, without compromising on safeguards for fraud prevention.

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