Branchless Banks and the Identity Checking Conundrum

Two headlines caught my eye recently, the first concerned the rise in current account fraud and the second was a new bank starting up – a bank that wouldn’t have any branches.

Current account fraud driven by ID theft has risen by 20 percent within the past year[1]. Checking identity is a vital part of opening a new account – but how does this fit within the world of branchless banks?

A bank without branches is reliant on giving their customers a great online experience– so how can banks offer customers digital delight without increasing the risk of fraud?

Employ an appropriate check at each stage of the customer journey

branchless banks

The need to check the identity of a customer depends on what they are doing and how well you know them. A customer who has never dealt with your organisation may need a much higher level of checking than an existing customer applying for a new product, or a customer simply checking their account balance.

The more you understand the profile of your customers at the different points they access your services the more you can tailor your checking to both their requirements and the level of fraud risk. Some organisations are looking at minimal ‘gateway’ checking with additional checks only initiated as the customer’s requirements introduce higher levels of risk.


Get the answers to the right questions in the right way

The information you need varies dependent on what the customer wants to do, for example at the account opening phase you may want to confirm that your customer lives at the address they have given. For a returning customer you may want to confirm that they are your genuine customer and not an imposter. Answering these questions requires a different approach, to confirm information such as address a solution that looks at known data about a person helps.

When you want to confirm an existing customer’s identity, you need assurance that they are who they say they are, traditionally passwords and secret questions have been used to do this. The rise in data breaches has made these methods less reliable and providers are increasingly looking to solutions such as biometrics and device intelligence.


Ask the customer to do as little as possible

Research has shown that Lengthy application processes are the number one frustration felt by more than half (51%) of UK adults when applying for financial products and services.
The main reason, for actually abandoning an application was poor customer service and poorly designed customer technology (46%) [2]. These statistics show that despite an interest in the products offered people are not prepared to undergo inconvenience to obtain them. Where applications are online it is very easy for the customer to abandon the transaction.

Those offering online services must concentrate on finding solutions that will give them the level of checking required without adding to the burden for the customer. Solutions that work ‘invisibly’ are the goal. There are solutions that can help, for example where documentary proof is required a solution that allows documents to be scanned and submitted by mobile will win out over a process that needs documents posted out. Other solutions such as those that scrutinise the devices being used to access an account can be completely invisible to the customer, causing no friction or inconvenience.

Retail banking is moving to a more virtual world and the winners are likely to be those banks that can best balance tackling fraud with providing their customers with a great digital journey. The solutions to support banks are available but need to be applied appropriately and with understanding of what the customer needs are at each step of the way.


1 Experian Fraud Report 2015 click here to view
2 Experian/Opinium research with 2002 adults from 11th – 16th June 2014