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We can no longer talk about the rising digital age because it’s here and it’s moving forward at a rapid pace

In the years leading up to the pandemic, many organisations had been investing in digital transformation programmes, but the pandemic has pushed every organisation into this space, even those that had previously resisted the lure of digital channels. With physical branches closed and call centres overwhelmed, in 2020 anything that could be moved online was moved online, and it is fuelling a colossal demand for digital onboarding.

It is expected that by 2025, nearly 330 million new bank accounts will be opened through digital onboarding, compared to 184 million in 2020 (Juniper, 2021). For organisations to survive, they must design long term strategies that support it.

Why data is no longer enough

As nearly all activities shift to online channels, one of the biggest challenges facing organisations is knowing with confidence who they are doing business with. It’s far more difficult now to know for sure who is on the other side, whether they are real and making true claims about themselves. This is because with accelerated digitisation has come accelerated levels of threat. Breached data is at an all-time high and, as a result, data is more readily accessible on the dark web to be purchased by criminals for fraudulent use.

Today onboarding is a faceless process and online channels are a perfect hiding place for criminals to commit fraud. Trying to address these challenges is putting a strain on internal processes, which for many organisations, are still playing catch up. Brands are in a race to update their technology infrastructure while continuing to rely heavily on manual processes that are data based. And it is leaving them exposed to fraud as the data being used to identify customers may have already been compromised.

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It’s an uncertain place for consumers, as well as brands. Consumers now have little choice but to move online and are also being forced to do almost everything digitally. In a situation like this, trust has to work both ways. Consumers expect organisations to keep their details safe online. They also expect an easy, friction free user experience and demand instant results. For them, when it comes to their relationship with a brand, there is little room for mistakes.

And regulation has not eased. If anything, it has become more stringent. To address customer expectations and demands, as well as regulatory requirements, data-based identity checks alone are no longer enough.

The power of digital identity

As digital adoption increases, identities have become more complex. What has evolved out of a more digital society is a digital identity. The traditional view of identity – a name, address, date of birth and maybe driving license or passport – is no longer as simple. It now encompasses a person’s presence, interactions, behaviour, online profile and much more. And while it may be more complex, it is completely unique to an individual, making it the only way organisations can truly onboard new customers seamlessly, while keeping fraudsters trying to impersonate genuine individuals at bay.

It means that there are now many more ways an individual can prove their identity to an organisation, giving them the confidence that they are dealing with a genuine, trusted customer. Digital identities have also opened opportunities for organisations to cast their nets far wider than they have ever been able to before, with a more diverse offering, to people around the globe, and at a much faster pace.

Developments in artificial intelligence in areas like identity document verification and biometric face matching means that businesses can finally move from their still largely data based manual processes to a fully digital model of ‘know your customer’. For example, customers can prove who they are wherever they are, by simply scanning an identity document and taking a selfie. Checks are automated with machine learning and dedicated teams can focus on the fewer more complex cases.

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To instil further confidence, an individual’s email address can also undergo fraud checks – looking at attributes such as age of email address, domain risk, associated IPs – to determine the potential level of fraud associated with that email and ensure the email is associated to the individual in question. Organisations also have the opportunity to use advanced behavioural insights to distinguish between genuine users and identity thieves. These are passive checks that do not interrupt the customer journey but do reduce fraud losses and enable brands to stay ahead of more sophisticated criminal activity.

Organisations that are embracing digital data have been able to accept more customers with confidence, reduce dropout rates, mitigate against the risk of fraud, and give customers a faster, easier journey.

More significantly, it is demonstrating that digital data has an empowering nature. People who previously had difficulty proving their identity with data only methods, are now accessing products and services that were not available to them. These are the people that have traditionally been data poor, so struggled to prove who they are and have, therefore, been ‘invisible’ to brands. As such, a digital identity is proving to be a force for good.

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In the wake of the pandemic, digital onboarding has emerged as a critical capability

With regulators expecting organisations to put in place measures that ensure fair access for all and to truly know who they’re doing business with; organisations have a responsibility to make use of digital identities. This approach doesn’t just help organisations to be more efficient with their onboarding strategy, it supports and promotes inclusive identity, allowing the right level of checks to be performed against each candidate without adding unnecessary friction into the customer journey. Gone are the days of having to physically sign up in person for a new product. Brands that adopt and embrace a digital mindset will not only develop a more forward looking, sustainable and successful business, they will also cultivate two-way trust and a greater sense of loyalty with their customers.

Source: Juniper (2021), Online Payment Fraud.