The evolution of customer experience in FinTech

The world of online banking is constantly evolving and many children growing up today may never have to visit a bank in person, instead managing all their finances from their digital devices. This is worlds apart from the experience of their grandparents, for whom the high street bank was a vital institution. But how has customer experience evolved in FinTech and what else needs to be done to ensure safety and ease-of-use in this field? We speak to Alex Valdes, CFO and EVP at Trust Stamp, one of our long-term clients.

Many users of new FinTech firms are used to a fully online experience, but most high street banks still require each account holder to visit one of their branches in person. How can these banks build an effective online user experience and what benefits can they gain from it?

From our experience working with large enterprise banks, we’ve found that there are three central pain points when considering a digital transformation, especially for a process like new customer identification.

The headache of identifying customers: Identifying customers for banking services is a sensitive task that requires thoughtful consideration of all regulatory requirements as well as consideration for how this new process will integrate into your existing system. By using modular tools for authentication flow creation and auto-branding, as well as easy to use plug-and-play integrations, a comprehensive identification process can be quickly designed and implemented to capture customers’ data, verify it and pass the results back to the bank’s database, painlessly.

By coupling biometrics with automated ID validation, security is enhanced and at the same time the customer can save a trip to the bank

User Friction: There has always been a common belief that in order to increase security, you must do so at the expense of customer satisfaction. That is, as security measures become more advanced, there is more scrutiny which causes more friction for the customer, ultimately producing a negative impact on the overall customer experience. With new technology, this belief has been challenged and even flipped on its head. For example, by coupling biometrics with automated ID validation, not only is security-enhanced through the use of sophisticated machine learning techniques to identify fraud but now the customer can save a trip to the bank, does not have to stand in a long line, and can do all of these steps from the comfort of their own home. Through automation, small things like extracting the personal details from the customer’s ID to prefill the rest of their application will save them additional time and headache, resulting in greater satisfaction.

Cost: It is expensive to onboard a customer using manual processes, both for the bank when considering labor costs, real estate and the opportunity cost of not reaching customers outside of its geo-location and for the customer in their time which could be spent instead with their friends and families or working on their business or career. By tapping into digital channels, not only can a financial institution (FI) reach more customers, but the costs will be dramatically reduced on a process that machines can do for them automatically. All of this together saves time and money for everyone and provides more security and better compliance, all while enhancing the customer’s experience and the FI’s competitiveness in a fast-evolving industry.

How have you seen customer experience evolve over the past few years?

Customer experience demands are evolving, especially with newer generations. These customers want convenience and speed. They have less interest in building personal relationships for standard banking products and services and they have less time in their schedules to handle these types of tasks in person. When given the choice of signing up for a new product or service in person or via an app on their phone, I would say, nearly every time they will choose the latter. By making products and services available 24 hours a day, 7 days a week via digital channels, a company will win more and more business, especially from younger demographics.

Biometric authentication has made it possible to do what humans have been doing for thousands of years with our eyes, which is recognizing the characteristics of one’s face to identify who they are.

It’s also important to point out the current environment. We expect, in this “Post-COVID-19 World” there will continue to be a greater emphasis for businesses to remove as many physical touchpoints as possible, and customers will see this as an additional benefit when considering the alternatives. Touchless biometrics does exactly this. Biometric authentication has made it possible to do what humans have been doing for thousands of years with our eyes, which is recognizing the characteristics of one’s face to identify who they are.

Machine learning, when applied to biometrics, automates this process to a degree of accuracy that is even greater than the human eye but is also trained to look for micro characteristics of an identity document to detect it as a forgery, something only very few humans can do. Automation, remote service, and convenience in this new world will provide a strong competitive advantage against legacy banks using conventional time-consuming, inconvenient, and expensive methods to serve their customers.

What do you think are the key things that fintech companies should consider when crafting a customer onboarding program?

Compliance must come first. Without “checking off” the regulatory compliance box first, the rest of the benefits don’t matter. Understanding regulatory requirements such as GDPR, Anti-Money Laundering and Terror Funding legislation is a key component of your customer identification process within your onboarding program. This is another headache for a lot of fintechs and banks and is one that our company made a priority to minimize as much as possible.

While, of course, it’s the responsibility of the financial institution’s compliance team to determine what those procedures are and whether they are sufficient for their compliance needs, we’ve developed a series of custom onboarding flows based on our experience in the field. These preset flows have the necessary procedures to assist in collecting and storing all the data needed to meet those regulatory requirements. These flows use tools such as AI-powered biometrics and ID validation to determine the true identity of the person in question and tools like optical character recognition to automatically extract data from a validated identity document to perform over 20,000 global data checks such as sanctions lists, politically exposed persons, negative media, and so on.

Could you tell us a bit more about OnBoard and what it sets out to do?

Absolutely. After working with large global enterprise banks who have very similar if not identical pain points, but have the resources and expertise to build sophisticated technology to overcome these challenges, we wanted to create a product that would make it possible for all fintechs and banks to benefit from advanced authentication methods while reducing the headache and cost of implementing such systems. This is when OnBoard was born.

OnBoard is an out-of-the-box solution that makes it easy to get started with advanced customer authentication methods, including ID validation, facial biometrics, background screening, and so much more. Through the account management panel, an F.I. can easily choose from a variety of preset authentication flows, such as, for example, “KYC/AML for Financial Services” or build a custom flow with steps that are specific to its business, industry, or regulatory needs. Then, using our auto-branding engine, each flow can be quickly white-labeled for a seamless user experience.

OnBoard is an out-of-the-box solution that makes it easy to get started with advanced customer authentication methods

Finally, our APIs make it so simple to drop that new authentication flow directly into your website and/or mobile application. Each flow, and by the way, there can be countless flows depending on types of customers or services or products, or locations of customers or even depending on which stage of the customer journey they’re at, will then feed back into the central account management platform for your administrators to securely review all identity and compliance data that is captured such as facial images, images of identity documents, watchlists results and so on. It really is a beautiful tool that has enabled every fintech and bank to achieve the same level of sophistication of a large global bank all while saving them the time and costs of building such a system.

Finally, what do you think the future holds for FinTech? What new developments do you foresee over the next couple of years?

The beginnings of transactions: It’s hard to talk about the future without first talking about the past. When humanity reached a point of sophistication and first began to transact with each other, life was still relatively much simpler. You knew who lived in your village and how many resources, such as pigs and potatoes, they had, so when bartering it was feasible to track who owed what to who. Then society began to advance to the point that some sort of method was needed to track transactions. First, some societies started by scraping marks on a pole for what was probably the first accounting system, then trading seashells and rocks and such.

The changing meaning of currency: Then sometime around 2500 years ago, the first currency was introduced which represented actual value or as in today’s fiat standards – a promise. About 5 years ago David Birch wrote a book called “Identity as the New Money” which predicted that eventually our society will go back to the most primitive method of transacting, but instead of using your memory to identify a person, a machine will do the job for you, and therefore as he predicts, your biometrics will become the “new form of money”. So instead of using plastic cards to first identify you, then to tap into your record of creditworthiness and capacity to transact, your biometric will be swiped as the ultimate unique identifier, which, by the way, travels with you wherever you go in the world and never changes.

So with more and more transactions moving to digital channels, greatly powered by smart devices and even more so with global events such as the COVID-19 pandemic, being able to securely and accurately prove identities is paramount more than ever. And being able to collaborate within such a financial ecosystem will allow institutions to create more value for their customers as they are now able to deliver more products and services to more customers around the world while still protecting themselves from financial and reputational losses imposed by criminals (and regulators).

My prediction is that biometrics will certainly be the answer to address these current and future needs. With that said, it is the job of companies like Trust Stamp to prove, to the extent possible with existing technologies, that the physical persons in any transaction are who they say they are and that they are presenting legitimate information in a manner that is secure and maintains privacy and regulatory compliance for all parties.

Thank you, Alex.

If you would like to read more about KYC and FinTech, click here to read our blog post on the subject.

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