A set of seismic changes including the arrival of new digital-only banks, shift in regulation and shifting consumer demands have made today’s banking digital-first — but the benefits of all this digital innovation are being held back by Identity verification challenges.
That’s the claim, at least, in The Digital Identity And The Future Of Banking, a new research report from Business Insider Intelligence that was previewed for free last week, but which costs £383 to purchase (here).
In the study, verification is firmly positioned as a big headache for banks trying to reap the advantage of a move to a more electronic world, with each password reset costing up to $70, according to Forrester Research estimates, for instance.
It’s a big headache, with financial services companies spending billions annually on compliance requirements related to identity verification even as “agile and technology-first players” are “snapping” at their heels by streamlining how they offer services to banks’ customers.
But banks can’t afford to avoid dealing with the issue, as, “Identity verification underlies many of the core processes associated with financial services, with banks required to subject their customers to strict identity checks, both to protect those users’ finances and to meet regulatory compliance demands.”
The answer, the report suggests, has to come from the Digital ID universe:
“Digital ID solutions can help iron out these identity verification headwinds, in the process providing a foundation for banks to bat away the growing threat to their core business from industry insurgents.”
You might also like
That’s because, digital IDs, when done right, “can help banks ease identity verification pain points for their customers while also helping them slash operational and compliance costs”.
The promise: banks that are successful in developing effective ID solutions can tap into new business opportunities as trusted providers of Identity solutions across a whole range of industries, from e-commerce to healthcare and public services, claim the authors.
The report claims to lay out how banks can go about developing scalable and effective digital ID solutions to solve genuine pain points in their own business and take advantage of the opportunities that Digital Identity infrastructures open up.
Banks and vendor strategies mentioned include Barclays, Mastercard, Microsoft and Signicat, among others.
And its key takeaways are stated to be:
- How digitisation, driven by agile and innovative fintechs, regulations, and falling costs of technologies like smartphones, has transformed how customers interact with their banks
- How efforts to realise the full benefits of digitisation are being stymied by inefficient identification processes, which are creating new pain points for banks and their customers
- Digital ID solutions that contain the set of information that can be used on digital channels to accurately identify a person, can, however, help solve these pain points for consumers.
- And how, “if done well”, banks will be the biggest beneficiaries of digital IDs, as this tech can help them slash onboarding and compliance costs while also allowing them to tap into new revenue opportunities.
Business Insider Intelligence is a premium research service specialising in business intelligence and data-driven research.