In recent years organisations of all sizes, across most industry sectors have focused on shifting the traditional face to face customer interaction towards a digital customer experience. Businesses and consumers alike have come to expect to a level of simplicity and convenience that comes with the ability to apply for products and services remotely. Circumstances such as the rise of Covid-19 have highlighted the need for a capable digital presence.
In the New Zealand banking market, rural bank branches are closing rapidly, which could be considered as another good driver for this type of development. When it comes to assessing banking options, customers will often make their choice of provider based on the ease of digital application. Seemingly arduous manual tasks and increased time to complete an application are likely to drive a potential customer to other competitors. According to Experian, customer leakage or abandonment of up to 85% can be attributed to slow or fragmented processes resulting in massive lost opportunity. This makes it imperative that the application or customer journey is as smooth as possible.
In many cases, companies and other entities are required to adhere to Anti-Money Laundering (AML) legislation. In New Zealand, this legislation is enforced by the Reserve Bank of New Zealand (RBNZ), the Financial Markets Authority (FMA) and the Department of Internal Affairs (DIA). These agencies mandate the requirement to incorporate an AML program within a customer application process. Digital applications also face the same requirements.
Since the implementation of AML legislation, early adopters of digital customer onboarding have utilised third party sources to verify identity document through sources such as government agencies and credit bureaus. However, fraud still presents a real threat, and digital tools must evolve to combat it. That is why reporting entities worldwide, such as banks, finance companies, payment providers, gambling institutions, lawyers, and accountants are now looking to implement biometric verification programs into their AML programs to enhance fraud prevention.
A recent CNBC article showed how HSBC business customers could now open new accounts by using a selfie picture to verify their identity. A mobile app uses facial recognition software to take a headshot of a customer, which is then compared against a photo ID uploaded by the customer, such as a driver’s licence or passport. This change is intended to simplify and speed up the process of opening a new account using a mobile or digital device and reflects the increasing tendency of customers to open accounts online. Almost half of all new HSBC business accounts are now opened online, compared to just 10 percent of accounts in 2013, according to the bank.
In a whitepaper, IBM managed to demonstrate how the inclusion of an automated biometric tool for Columbian Co-Operative Bancoomeva would reduce credit application processing time from 17 days to 30 minutes. In doing so, Bancoomeva was able to improve fraud prevention, create a process enhancing customer satisfaction, while adding an additional $1million USD annually to the bottom line resulting from efficiency gains.
New Zealand based institutions are also introducing automated biometric instruments into their own onboarding procedure as the technology is more commonly accepted by customers and AML enforcement agencies. As such they have benefited by improving customer engagement, streamlining time consuming back-office tasks, increasing scale without additional staff, enjoying faster decision times all while recuing the risk of fraud.
Being an established provider of credit origination and automation software to the Asia-Pacific credit markets, Credisense has developed its own proprietary biometric verification service called OneMatch.
The OneMatch customer begins the journey with a link that lands them at the start of the verification process. The customer then photographs their identification document, be it a passport or driver’s licence. OneMatch intelligently reads the photograph, landmark tests the document – cross-referencing authenticity marks – and digitises any text in the image. The customer is then prompted to take a video selfie which is then verified against the document source. Once this process has been completed, the customer application can be continued with complete confidence in the OneMatch service meeting AML requirements.