The Imperative of Digital Webinar: The Importance of Rapid Transformation for FIs

At our recent webinar, Acuant’s Chief Product Officer Jose Caldera met with Aite-Novarica’s Head of Risk Insights & Advisory Julie Conroy to discuss the implications of the global pandemic on the rapid digital transformation of the financial industry and how FIs can prepare for a digital-first future.

The financial industry has been on a digital trajectory for some time, but there’s no question that the COVID-19 pandemic of 2020 had a significant impact on the industry. Or as Conroy noted, the global pandemic put the pedal to the metal for the digital landscape, requiring FIs to adapt or provide new (or more) digital services while also forcing many new consumers into the digital environment. In a consumer survey^[i], Aite-Novarica saw a 39% increase in consumers that tried a new banking product and/or channel during the pandemic.

Though certain consumer demographics, such as people in older age groups, may have been initially resistant to or inexperienced with these digital services, the closing of physical bank branches due to pandemic guidelines required people to adapt and familiarize themselves with this new digital world. As a result, many consumers began utilizing digital and mobile services such as mobile banking, check deposits using a camera phone, contactless credit/debit card payments, digital wallets and more. Due to the convenience a digital or mobile financial service can offer compared to the effort required to visit a physical branch, a high percentage of those new digital consumers have every intention of continuing to utilize digital services once life returns to a post-pandemic “normal”—an Aite-Novarica survey^[ii] found that over 65% of survey recipients plan to continue utilizing online banking and 67% mobile banking.

As we exit the pandemic and see a rise in digital adopters across all industries, consumers are not only becoming digital-first but mobile-first. This is especially the case in banking—an Aite survey^[iii] shared during the webinar highlighted that 76% of consumers in the United Kingdom and 68% in the United States log into their bank account on their mobile device at least once a week. With the growth in mobile use, also comes customer expectations for fast and streamlined mobile services, particularly by the tech-savvy or younger generations who are used to and expect results to happen in real time.

This means that financial institutions looking to maintain a competitive edge and grow their customer base must have the right technologies as part of their frameworks to adapt their services. Having proper risk mitigation solutions in place will be critical when it comes to establishing trust and fighting rising identity fraud in the industry.

Impediments to Rapid Digital Transformation

As the digital and mobile landscapes expands, so too will the fraud typologies and attack methods by criminals looking to exploit the systems and users through various scams and forms of identity theft, including synthetic identity fraud. A great concern FIs face when it comes to newly digitally active consumers—especially non-tech savvy individuals or older populations that are using or depending on digital banking service for the first time—is that they are likely far more susceptible to fraud attacks and scams. In tandem, FIs also need to ensure a streamlined customer experience that the tech savvy users expect.

With digital transformation still a work in progress for many FIs, the question is how to adapt to the rapid digital transformation without impeding security or customer experience. A significant number of financial firms aren’t moving fast enough digitally, and statistics across both sizes of institutions are indicating that small and mid-size FIs are struggling to keep pace with digital expectations.

The pressure and importance of having a digital-first strategy, not just for a company’s go-to-market but for security and meeting consumer demands, are high. However, many companies are hindered from going digital due to a lack of financial or technical resources to implement both the digital services and the identity verification and Know Your Customer (KYC) technologies to fight fraud in the marketplace. An Acuant survey found that of the firms surveyed, 58% indicated that less than half of their identity verification, KYC and/or AML compliance interactions are fully digital. This means that FIs need vendors that can provide digital solutions that enable easy adoption and integration of technologies that can detect and prevent fraud within the marketplace, without needing too many technical resources or breaking the bank.

The right digital identity proofing technology will help FIs maximize customer acquisition in a cost-effective manner while also enabling FIs to provide better customer experience, mitigate risk, prevent fraud and meet compliance regulations.

To learn more about the current state of the financial industry and how FIs can adapt to a digital-first strategy without compromising security or customer experience, watch the webinar with Aite-Novarica here.

^[i] Aite Group survey of 1,994 consumers December 2020 to January 2021
^[ii] Aite Group survey of 1,994 consumers December 2020 to January 2021
^[iii] Aite Group survey of 3,061 US, UK and German consumers, January 2021