The Lose-Lose Banks Have with Identity Verification
By now you’d assume that most consumers understand the importance of protecting their personal financial information, lest some bad actor attempt to steal their cash along with their identity in the process. Given these threats, banks have been working to enhance their security and verification — especially as more and more customers do their banking online and on mobile phones. Unfortunately, while they may be effective in preventing fraud, some of these methods have also proven pain points for consumers, putting banks in a lose-lose situation.
As Business Insider notes, the verification stringency banks are forced to employ may be costing them customers. At the same time, the absence of such measures could result in breaches, which in turn lead to lawsuits and other legal issues. Given this conundrum it seems many institutions are now investing in new technologies that could solve some of their security problems without inconveniencing users.
Topping the list of what financial firms are prioritizing in the next year is artificial intelligence at 30%. Meanwhile 20% plan on investing in biometrics and identity management. Finally, with blockchain being all the rage thanks in part to the recent crypto breakthrough, 19% plan on pursuing the tech’s applications further.
While these investments are a good start, BI suggests that banks need to find a solution sooner rather than later. As they explain, “If banks want to keep customers loyal, they have to start innovating in this area.” They go on to explain what needs to be done and what benefits banks will have as a result, adding “The trick is to streamline verification for clients without compromising accuracy. If banks manage to do this, the result will be happier and more loyal customers; higher client retention and revenue; and less spending on redundant checks, compensation for breaches, and regulatory fines.”
Obviously the struggle that banks are currently experiencing could potentially create another opportunity for FinTechs to partner with larger institutions. While it’s hard to say for sure how far ahead some startups are when it comes to exploring these technologies, there’s no doubt that joining forces and tackling the problem together would be to the everyone’s benefit — including banks, FinTechs, and consumers. In other words, perhaps with continued investments and even a few partnerships, these institutions may soon be able to turn a lose-lose situation into a win-win-win.