UK banks are under pressure when it comes to digitally verifying customers’ identities.
That’s according to research from global analytics software provider FICO. The survey of 172 banks across eight countries discovered that consistency of identity validation across digital channels is a challenge for 54 percent of UK banks.
The study identified that banks are under pressure from three drivers: the move to digital platforms, increasing regulation, and the potential for new technology.
The report noted that customers have willingly moved to digital channels. However, “this has exposed a lack of integration in digital channels between account opening, identity proofing and authentication. For a significant minority of banks this still means relying on physical identity capture and validation, which customers dislike enough to abandon onboarding.”
The report noted that tightening of legislation in Europe has left UK and German banks with challenges both of compliance and applicant experience, because of a lack of integration.
“Banks should consider how identity fits into their digital onboarding strategies, looking for seamless and streamlined solutions,” said the report.
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However, UK and German banks are also adopting new digital authentication technologies including biometrics to improve customer experience.
“Some banks’ implementations are fragmented, and they will need to roll out consistent experiences across products and channels. Banks should consolidate their disparate identity systems to minimise customer confusion, improve integration with core systems, and reduce support overhead.”
German and UK banks agree that good user experience is essential: In the UK this is focused on authentication (57 percent). FICO noted this is particularly concerning given the imminent authentication requirements of PSD2.
Integration issues
Integration of authentication systems is a significant concern for half of the UK banks questioned. “The UK has many authentication RegTech start-ups, early adopters will have chosen suppliers from a long list; as this function is standardised, banks will look to consolidate their technology,” said the report.
“There is also concern about the ability to authenticate business users who have previously required multiple hardware tokens across their banking relationships; given the low churn in business accounts, it is unlikely that authentication would be a factor in them switching provider.”
Yesterday we reported that The Investing and Saving Alliance (TISA) has been awarded a £340,000 smart grant from Innovate UK to accelerate the development of its Digital ID scheme. TISA said the scheme will allow UK consumers to “easily access digital financial services by creating a single, reusable, secure ID.”
