How Fintechs Can Protect Data Privacy During Onboarding
June 16, 2022
Approximately 149 million Americans don’t think companies do enough to safeguard their information. Overcoming this consumer skepticism with a secure and consent-based data collection policy will be instrumental for fintechs when onboarding new and repeat customers.
Acuant and IDology attended the recent Fintech Nexus (formerly known as Lendit Fintech) event and left with three key takeaways for what fintechs need to consider in order to properly manage the increased demand by consumers for data privacy. Taking advantage of these insights can empower fintechs to locate and approve new customers while mitigating friction and streamlining the customer journey.
01. Consumer concern over data privacy is changing the digital landscape
Consumers are suspicious of how companies collect their personally identifiable information (PII) and are actively looking to ensure their data is not misused. A recent IDology study found that 70% of Americans suspect companies collect data without their permission. Adding to that, 90% support new privacy regulations at the state and/or federal level.
This creates a premium on trust, especially during the identity verification process. Consumers that don’t trust a verification process are more likely to limit—to the extent that they can—the information they share with companies, such as opting to use the guest checkout option rather than keep a payment card on file. Fintechs that don’t seriously consider these privacy concerns risk creating a drag on profits while also compromising the end-user experience.
Conducting business in the face of mounting consumer concern over data privacy requires transacting with trust. However, that doesn’t mean fintechs don’t have tools available for collecting data—with customer consent.
02. Fintechs can provide better data insights with a lighter touch
Providing a smooth, streamlined onboarding experience is a critical pillar in driving more revenue and ensuring customer loyalty. With privacy concerns changing the digital landscape, fintechs need a way to responsibly collect PII. The challenge is to collect the data necessary to stay compliant, foster consumer trust and keep friction at a minimum.
Since Know Your Customer (KYC) checks are the foundation of onboarding and compliance, identity verification and validation is the first and most necessary step in the onboarding process. A ‘soft’ KYC check could be performed prior to a fuller check, or as an authentication tool after initial onboarding. Performing lighter touches allows fintechs to evaluate risk while only asking consumers for PII they deem to be less sensitive—name, phone number and email address.
The key point is to do more with less, to only request what information is needed, when it’s needed. 93 million Americans abandoned signing up for a new online account last year because the process was too difficult, too time-consuming or didn’t seem trustworthy. Fintechs shouldn’t let unnecessary friction push privacy-conscious consumers out of their onboarding process. Incorporating lighter touches can foster friendly, non-intrusive experiences that minimize friction.
03. Create a fuller picture of customer identities
Utilizing a complete identity solution enables fintechs to onboard customers quickly and deliver customized experiences. This means fast-tracking access to products and services for legitimate customers and applying friendly friction, as needed, for suspicious identities. Using robust data that fuels identity proofing makes it possible to keep potentially valuable customers in the pipeline while delivering the speed, simplicity and convenience they expect.
Fintech firms face a competitive market to drive revenue by smoothly onboarding legitimate customers with a secure and frictionless journey. In fact, 86% of businesses view identity verification as a strategic differentiator, allowing them to capitalize on digital adoption while delivering a seamless customer experience. Being able to work behind the scenes to build a fuller picture of potential customers will empower fintechs to make strong business decisions. Making ‘softer touches’ with minimal consumer friction allows for a targeted, consent-based approach to data collection.
A comprehensive identity proofing platform that includes identity verification and automated KYC will play a critical role in enabling fintechs to effectively approve more trustworthy customers digitally, streamline customer onboarding and also meet growing consumer demand for data privacy.
Learn how fintechs can streamline customer onboarding without compromising data privacy in our eBook, Build Trust & Improve Customer Onboarding with Automated KYC.