END-TO-END DIGITAL ORIGINATION BECOMES TABLE STAKES.
The hype of digital delivery is huge, but the reality is often disappointing. Customers have been conditioned by other digital experiences to expect to be able to sign up for new services with a few clicks on their phone.
In some emerging markets, that is how banking is already done. It can be easier to open a bank account in New Delhi than it is in New York, thanks to the advent of the Aadhar digital identification system in India. The reality is that a minority of retail and commercial banking products can be opened through an end-to-end online experience, and an even smaller number available through mobile.
Leaders are now incorporating advanced Know Your Customer (KYC) and multifactor authentication approaches into their digital apps, while laggards still ask you to come into a branch to sign a piece of paper. The evidence in the Nigeria. is that smaller banks are now losing material share in the millennial and mass affluent segments to big national players because small banks are struggling to deliver a good digital customer experience. In 2018, a failure to provide end-to-end digital origination will start to move from the state of disappointment to more of an existential threat.
INCREASING SOPHISTICATION OF DIGITAL FRAUD COMMANDS HIGHER PROFICIENCY AT SORTING REAL BANK CUSTOMERS FROM FAKE ONES.
Banks’ movement towards better robust digital product origination opens them up to a new type of threat: synthetic identity fraud.
In this brave new world, the bad guys are creating new identities using a combination of real and fabricated information, or sometimes entirely fictitious information. Once limited to the credit card market, online deposit and loan origination now allows fraudsters to open digital accounts that pass all the usual security checks.
It’s a phantom crime that is costing banks billions of dollars and countless hours as they chase down people who don’t even exist. Often, a bank doesn’t recognize there’s an issue until it starts to see suspicious activity in these accounts and then, in a puff of digital smoke, the account is closed and the bad guys have moved on.
As the fake-news scandals of the last two years have shown, the power of automation is that deception and misdirection can now be done at scale in the digital world. In 2018, banks will need to get better at sorting the real customers from the fake, without undermining the benefits of a compelling and differentiating digital customer experience.