By Paul Dunphy, Research Scientist for OneSpan
In the Netflix series The Crown, a lead character exclaims: “Who wants transparency when you can have magic?” Magic and transparency can be thought of as different extremes of how large and complex institutions try to win our trust. Typically institutions choose “magic” due to the lack of insight they provide, which means we can only hope that they will act in our interest. We often depend on such institutions – but since we can’t trust magic, we need transparency instead.
Today, technology is providing new transparent approaches to identity verification for banks to improve issues with the customer due diligence phase of onboarding. Aite Group found that abandonment rates for financial account opening processes range between 65 – 95%, depending on the product. If this process is not conducted thoroughly, banks could face regulatory action and costly fines. When re-framing this problem from one that banks must solve individually, to one that banks can solve collectively, then new approaches become possible.
Banks can solve problems in identity verification by sharing a live log of data related to identities that have already been verified. Yet this can be difficult to realise, even in the digital age. Pragmatic challenges such as: tracking master copies; resolving version conflicts; and managing concurrent updates, can create an aversion to this type of arrangement due to the risk to the integrity of those records.
Distributed ledgers (blockchains), can help here. Over the years we’ve learnt that:
- You can choose between 1,000 cryptocurrencies at this very moment
- Programming errors in smart contracts will lead to power struggles amongst those who govern public blockchains.
- Realising a truly decentralised ledger is difficult since centralised power structures naturally emerge.
- People spent $4.5M on an Ethereum-based game about breeding cute kittens
- Permissioned distributed ledgers are more than “just” shared databases
- Creating a global cryptocurrency is difficult for many reasons, including fraud prevention.
Given the attention that distributed ledgers have attracted in recent times, it is inevitable that the first forays into applying transparency to solve identity verification problems have used this technology.
Let’s look at two different approaches to how banks can create transparency by using distributed ledgers.
A Shared Log for Identity Verification
If banks are able to co-operate and maintain a shared log of data relevant to identity verification it can help streamline identity verification. KUBE (Know Your Customer Utility for Banks and Enterprises) is a technology that has been proposed by the Isabel group along with Belfius, BNP Paribas Fortis, ING, and KBC to achieve exactly that.
The technology aims to increase the efficiency of onboarding for business customers through a shared log of identity attributes previously checked by member banks. The technical details of KUBE are not yet clear, but the distributed ledger in the architecture will contribute to consensus between each bank on the latest version of the log, along with assuring the integrity and availability of the data. Once customers are registered in the KUBE system, the identity verification performed with one bank is available to another bank with the consent of the customer, who receives the benefit that they only need to verify their identity once amongst that federation of banks.
In this example, KUBE provides a verifiable and transparent log which creates transparency between banks on the network. But, the customer must rely on KUBE to protect the confidentiality of their personal information.
One other option is to re-envision digital identity completely to place the customer on more of an equal footing with banks. Decentralised Identity (self-sovereign identity) is a model of digital identity whereby a user is equipped with cryptographic techniques to create, self-verify, and own a digital identity that is portable between relying parties. Its constituent components are a trustworthy shared log, public key cryptography, and verifiable credentials (now a W3C standard).
Sovrin is one exemplar of this approach and its technology comprises a public-permissioned distributed ledger based on Hyperledger Indy and cryptographic credentials following the W3C standard. For example, after identity verification the customer is provided with a verifiable credential from that bank, which is stored in an identity wallet on the customer’s mobile device. When the customer onboards with a new bank, they provide that credential along with a decentralised identifier (DID) that they use, and prove their ownership of both using properties of public key cryptography. The receiving bank must then check the validity of the credential on the shared ledger. Thus, identity need only be verified once amongst a federation of institutions and the customer retains control over disclosure of personal information.
This area is one of active investigation; as such, there is no product that is ready-to-go. One crucial challenge that requires research is the relationship between user experience and privacy, since in this model customers will inherit new responsibilities and software to use to manage their privacy.
Privacy is Important
Both examples require privacy for both customers and financial institutions. When designing a shared log for identity verification there might be an inclination to start with a minimum viable product that simply pools the personal information of customers. Pooling the personally identifiable information (PII) of customers creates an attractive honeypot for attackers, and a point in the system design where information can be accidently leaked.
In addition, banks have their own privacy concerns. Clearly, we shouldn’t design a system where banks can conduct surveillance on each other. In the design stage of a technology, we must consider how the benefits of transparency can solve new problems, while at the same time, finding acceptable levels of data confidentiality and privacy.
The value of transparency-enhancing technologies such as trustworthy shared logs are subject to a network effect, which means that the value of an application in the financial industry is tightly coupled with the number of financial institutions that choose to use them. The exciting research direction of the future is to investigate how distributed ledgers and transparency-enhancing techniques more generally, can create new applications in banking, and reduce our need to trust magic.
WHY BANKS NEED TO EMBRACE WELLBEING IN THE DIGITAL EXPERIENCE
Howard Pull, Head of Digital Transformation Strategy at MullenLowe Profero
The impact of the COVID-19 crisis on the economy has been huge. Over the past six months, youth unemployment figures have dropped, wages have stagnated and GDP has fallen by a record 20.4%. The drop in GDP is worse than the 2008 Financial Crisis, the Winter of Discontent and the Great Depression.
While the furlough scheme and other government measures have provided some much-needed financial support, the prevailing social and economic conditions have made money worries increasingly common. According to a recent survey from MullenLowe Profero, during the pandemic 40% of 18-25-year-olds are afraid to look at their bank account, with a further 40% stating that thinking about their money has a negative impact on their own personal wellbeing.
In response to these rising financial concerns from account holders, it is clear that banks need to help people – especially young people – feel more confident in managing their money. In particular, banks need to provide more educational support to their customers about how they can make the right financial decisions. This means designing tools and support services to enable more people to effectively manage their finances.
With 60% of consumers aged 18-25 believing that banks should help them have the capacity to absorb a financial shock, financial institutions also need to adapt their products and services to meet the needs of more uncertain account holders.
Adapting services, however, is easier said than done. The pandemic has radically shaped consumer behaviours and therefore the old rules no longer apply. For example, while consumers in the past may have preferred to discuss financial matters in person at a bank branch, risk of infection and the widespread use of digital tools has meant that the majority of young people want banks to provide wellbeing services online.
Digital experiences are also important to the future success of any bank. According to MullenLowe Profero’s report, digital experience is now the number one reason why young people choose a bank. Therefore, it is clear that banks during the pandemic and beyond need to reevaluate their operations and shape their personal wellbeing strategies around digital tools.
Community and Global Wellbeing
MullenLowe Profero’s report into financial wellbeing found that young people weren’t just concerned with their own personal wellbeing. They were also concerned about the importance of community and global wellbeing too. In fact, over half of 18-25-year-olds agree that the events of the last few months have made them seek out brands that do better for the world, with another 50% stating that the importance of a local community has increased during the pandemic.
Community wellbeing is concerned with the importance of local areas and the businesses and organisations that are based within them, whereas global wellbeing is concerned about the entire world. For banks, showing support for areas local to their branches and customers as well as issues affecting the globe such as the climate crisis is important to maintaining the trust and support of account holders.
Focussing banks on concerns around community and global wellbeing requires banks to assess their impact on the wider world. In other words, it forces banks to check who they support and where their money could be better placed. For example, young people want to be recognised for their positive behaviours. 56% of 18-25-year-olds want rewards and benefits for purchasing ethical and sustainable products and services.
The findings of the report found that young people across the board want financial institutions to reflect their values and to help them manage their finances. With COVID-19 continuing to wreak havoc on our day to day lives, banks can provide much-needed support by offering educational help as well as creating products and services that actively manage an account holder’s finances. They can also step in and provide support to the wider community and world by taking measures to reward ethical and sustainable behaviours.
IMPROVING THE BANKING EXPERIENCE THROUGH INFORMATIVE AND ENGAGING VISUAL COMMUNICATIONS
Javier Lopez, General Manager Vertical Solutions, OKI Europe Ltd
Banks play an integral role in daily life. However, everyday opportunities such as attracting new customers into branches to open an account, or promoting new offers and services to existing customers, can be lengthy, expensive and cumbersome processes – especially when tailoring communications to the specific requirements of each branch, or differing customer needs.
Quickly creating and adapting in-branch visual communications to communicate and educate cost effectively while remaining on brand can be a challenge, especially for banks that have networks of branches and print their visual communications centrally or use third-party suppliers.
Building trust through signage
Visual communications can help build trust and satisfaction between you and your customers. The ability to create and print personalised communications on demand can not only instil confidence in your brand, it can also offer the flexibility to quickly adapt to financial trends and fluctuations in interest rates. This is particularly important in today’s volatile market, so that you can keep your customers informed while remaining competitive.
Printing in-branch and on-demand is an immediate and cost-effective way for banks to communicate with customers. With the right printer on-site, branch staff can easily create and print signage and customer communications as well as everyday documentation to a professional quality as and when needed. This saves on the cost of third-party suppliers and eliminates lead times for essential signage.
The ability to print a comprehensive range of collaterals in-house including freestanding and hanging banners, posters, self-adhesive floor and window stickers, as well as personalised leaflets and direct mailers, can help keep customers informed about the latest services and offers. It can also be used to remind both customers and staff to adhere to social distancing guidelines. Furthermore, the same printer can be used for day-to-day documents such as personalised mortgage or loan offers.
A message that sticks
As the world adjusts to a new normality, OKI Europe Ltd recognises the challenges banks face when encouraging social distancing and has teamed up with Floralabels to offer free* social distancing media and artwork to create self-adhesive floor stickers that can be printed quickly and easily from an A3 colour printer such as the C800 Series. Floor stickers can help ensure customers maintain safe distances while queuing at counters, kiosks and ATMs. The free stickers include self-adhesive floor circles (285 x 285mm) and rectangular floor banners in two sizes (215 x 900mm and 297 x 1,320 mm) with various designs and messaging options to choose from.
Achieving ROI with a do-it-all device
When it comes to printing in-branch, implementing a printer with unrivalled media flexibility will provide the best return-on-investment. Not only will the bank be saving on printing and delivery time and costs, it will also save on storage space or potential wastage as well as offering the flexibility to be more reactive to market trends in a timely manner.
OKI’s multi award-winning C800 Series A3 colour printer is designed to take up a minimal footprint and will supply everything from 1.3m metre hanging and freestanding banners to posters, self-adhesive floor stickers, window stickers, leaflets, flyers and much more on a diverse range of materials. Featuring OKI’s pioneering digital LED technology, the C800 Series delivers professional quality results, at high speed and on-demand.
Banks are vital to helping people and businesses prosper, supporting economic growth. Investing in cost-effective do-it-all devices that enable the fast rollout of eye-catching, professional quality collateral will help banks and their customers thrive.
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