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03. 30. 2018

Digital onboarding: How selfies turn banking upside down

Customers can now open a bank account with just a selfie and get all the support they need from AI-powered digital assistants. How can banks make the most of these tools to rev up digital onboarding?

Digital onboarding: How selfies turn banking upside down

Onboarding new customers is the first touchpoint between banks and clients, who more and more demand a quick and easy process when applying for accounts, credit cards and loans. This is a critical part of the customer journey but all too often it’s way too complicated and dragging.

To avoid losing customers, the onboarding strategy must offer seamless and personalized experiences, Deloitte says. This is crucial as 38% of customers believe user experience is the key factor when picking a digital bank, with 26% saying that easy enrolment and login are what they value the most.

Digital onboarding: copy your challengers

Technology, such as facial recognition, can be a surefire way to ease and shorten the onboarding process. Digital-only challenger banks are already using new technologies to get ahead of incumbent banks in this field. Their advantage is huge: they don’t use bulky legacy systems and don’t have to work around product silos or complex back-office processing.

UK-based Monzo uses a photo of the customer’s passport or driving licence for identification and matches it to a video selfie. Atom Bank was the first UK bank to allow clients to complete a mortgage application and approval entirely on their smartphone. And they haven’t stopped there: they also let customers log into their accounts with face and voice biometrics, normally used in video game development.

German challenger banks N26 and Fidor offer immediate account access by allowing applicants to complete a video chat-based ID verification process. They have certainly raised the bar and now one of the largest incumbent banks has followed suit. Deutsche Bank also offers same-day account access by using WebID to verify customers. This shows that instant access can and should be the norm, according to Mapa Research.

Liveness testing: how to look behind the selfie

Facial recognition is a powerful anti-impersonation weapon, which ensures that customers applying for the products actually are who they say they are. Another tool for revamping the onboarding process is optical character recognition (OCR), which extracts textual data from documents to verify the authenticity of the customer’s identity documents. Deloitte suggests that identification and OCR functions can be supplied by external partners if needed.

Me, offered by Spanish customer identity specialist Icar and facial recognition and biometrics company FacePhi, allows customers to open an account after scanning their IDs and taking a selfie. The system compares the photo with the ID picture and also checks the user’s geolocation data and social media identity details. It also uses a liveness filter that can distinguish between a real person and a photo based on movements.

Liveness detection is also used by Dot, a digital onboarding toolkit debuted by Slovakian biometrics company Innovatrix. In order to prove that they are real people, customers are prompted to follow a randomly moving dot on their mobile screen. The system also includes AI-powered and automated OCR that can handle low-quality ID pictures, facial authentication with a selfie and server-based biometric identification.

This technology also comes in handy when enrolled customers use the banking app. Once the user is logged in, the system keeps checking the account owner´s identity through the frontal camera of their mobile. If the user isn’t actually looking at the screen or somebody else is stealing a glance over their shoulder, the content of the screen becomes blurred to safeguard sensitive information.

Amelia, help me!

But some players in the banking industry have gone even further in using AI in customer onboarding. Scandinavian digital bank Nordnet has introduced Amelia, “a digital employee”, to guide prospective customers through the onboarding process. Available 24/7, she interacts with customers and even makes sure they activate their accounts. Amelia is just as good as she sounds: she learns quickly, manages complex dialogues and responds to analytical triggers in real-time.

In essence, their new digital assistant is a comprehensive AI platform and cognitive technology that connects conversations, data and processes to provide personalized end-to-end customer experience, Nordnet sums up. The company has teamed up with digital labor IPsoft to develop Amelia’s capabilities to support onboarding. But that doesn’t mean it’s all she can do: her services can be used for plenty of things from customer service to IT service desk and procurement.

Onboarding checklist: what to bear in mind

But technology isn’t the only thing that matters when it comes to digitizing onboarding processes. Deloitte warns that even if a technology has an impressive track record, financial institutions still need to weigh integration feasibility and local regulations. For example, photo or video identification requirements, anti-money laundering and counter-terrorism financing rules can be tricky, not to mention data protection guidelines.

“Many regulations are applicable in the onboarding process and must be carefully analyzed before launching the new digitized process,” Deloitte advises. These challenges need to be chewed over and built into the planning process from day one.

Another factor banks should consider is how to cut identity fraud to the bone, which can cause huge losses equivalent to 1-4% of annual sales volume, according to Icar. No wonder that one of the main challenges facing the financial sector is reliable user identification and authentication as part of onboarding or credit application processes.

“But digital identity is precisely what makes it possible to conduct ever-more-precise and seamless comparisons between the physical person and the digital person, offering a much more reliable form of verification,”  Icar says.

For more on digital onboarding and how to boost digital banking sales, download W.UP’s white paper “Digital sales: 12 strategies for banks to win the digital world war”.

Digital sales: 12 strategies for banks to win in the digital world war