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Why leveraging strong identity verification is the key to remaining competitive for financial services

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By Philipp Pointner, Chief of Digital Identity at Jumio

 

With the recent revelation that Facebook is allowing sales of thousands of people’s personal data for as little as 16 pence – it’s clear that nowadays keeping personal information private is no easy task. This rings especially true for financial organisations as they navigate the never-ending scrutiny to protect their customers’ finances by ensuring those accessing funds, making transactions or taking out loans are who they claim to be.

With the unprecedented rise in cyberthreats compromising our personal data, consumers are calling for a new level of assurance when engaging with brands online. In fact, our recent survey found that over two-thirds of consumers globally (68%) think it’s important to use a digital identity to prove who they say they are when using a financial service online. What’s more, over half of UK consumers specifically (57%) say they would be more likely to engage with an online financial services provider if it had robust identity verification measures in place.

It’s therefore vital that financial institutions ensure the methods they implement for verification are robust, in order to successfully build an ecosystem of trust across the plethora of services they offer.

And so, unsurprisingly, the question on everyone’s mind is: with identity verification methods becoming a differentiating factor for financial organisations, how can they deliver this in a way that doesn’t jeopardise customer convenience and experience?

Take the first step with digital identity for identity verification

Consumers typically face clunky authentication processes because financial services tend to take a one-size-fits-all approach to verifying customer identity — treating all customers as a potential threat and implementing lengthy verification processes so that the risk remains low. As a result, customers are left with an arduous process, leading to drop-off rates as high as 75% during the sign-up process.

Philipp Pointner

To combat this challenge, digital identity verification solutions can be an effective yet convenient option for financial institutions. Our research revealed that half of Brits (50%) constantly or often have to use their digital identity to access their online accounts and verify their identity following the pandemic. And with the UK government moving toward the use of digital identities to tackle fraud, this is the most logical step for financial institutions.

Biometric technologies can provide a cutting-edge solution

Biometrics can significantly enhance security measures without adding unnecessary friction to the process. For example, coupling facial recognition with liveness detection can not only prevent spoofing attacks but is also a secure and convenient way for users to verify their identity. Going one step further, adding an independent, app-based biometric allows for easy two-factor authentication whilst simultaneously ensuring users continue having access to their accounts — even if they lose or switch their device.

Additionally, financial institutions with digital identity verification processes can also allow their customers to prove their identity without sharing unnecessary information, through privacy enhancing technologies such as zero knowledge proof. For example, when opening an account, customers can use their digital ID to accept “yes, I am over 18” rather than sharing the full details of their date of birth, further reducing the risk for identity theft and fraud.

In fact, combining biometric technologies with digital identity verification ensures customers are protected on all fronts. Financial organisations leveraging such assets as part of their identity checks can benefit from remote identification and verification without the need for human intervention, thus in turn reducing costs, providing an entirely self-service user journey and a fast, accessible and efficient experience.

As if the security benefits weren’t enough, customer demand for seamless verification methods should be.

Even customers recognise the need for seamless verification. In fact, the majority (71%) of UK adults say that they feel comfortable using biometric identity verification to use online financial services, from their fingerprint (52%) to their face verification (36%). Consumers say they’d also be happy to use biometric identity verification when carrying out a range of financial actions, from bank transfers to setting up direct debits, verifying purchases, and more. A third of consumers would even be happy to do this every time they log into their account, making it clear digital identity solutions for verification should go hand in hand with biometrics.

Digital identity is the future

With the changing attitudes of both government and consumers signalling a shift toward digital identities, it’s crucial that financial services organisations stay ahead of their competition by embracing this form of technology to protect against fraud. While nearly two-thirds of consumers globally (61%) believe their bank has done more to protect them against fraud and online identity theft since the pandemic, only a third (34%) say this is as a result of implementing more online identity checks. Now is the time for financial institutions to change that percentage and reap the benefits of digital identity solutions or risk losing consumer trust and, ultimately, loyalty.

Finance

Is your business ready for finance automation?

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Mari-Frances Bentvelzen, Business Head and General Manager of Global SMB at SAP Concur

 

As managers continue to drive their businesses through these uncertain economic times, it is important for them to properly equip and guide their organisations. Small to medium-sized businesses (SMBs) are looking to save money during this inflation crisis. By looking carefully into different areas, there are many hidden costs that can be found to combat rising expenses and interest rates.

With 2023 approaching, it’s time for businesses to be more proactive towards improving their processes. Automating administratively heavy tasks can be hugely beneficial in saving time and resources, both of which can have a big impact on the bottom line.

Although travel logistics, expense tracking and invoice processing can sound like a lot of background noise, these processes can all be optimised through automation. This offers more visibility for finance leaders and helps free up valuable time and resources for employees within the organisation.

Identify which key areas need automation

The first step to adopting automation is highlighting which areas can be improved with specific technology. This includes auditing the business and identifying which areas are outdated. From this point, businesses need to determine which processes and procedures may benefit from digital transformation. High on the list are manual processes and data input — two areas that often are riddled with mistakes and delays. Automating these areas proves to be useful for both the organisation and its employees.

Another common issue that finance leaders face is lack of access into full spend visibility. To improve decision making, managers must be confident about the trusted insights, transparency and perspectives in their business. Reporting tools and automated processes can help verify expenses through integration with other vendors and systems.

Without automation, it is difficult for finance departments to ensure all data has been inputted and centralised. This can make it difficult to determine the most appropriate and potentially effective areas to target cost-saving measures. Spend management solutions can, however, provide finance leaders with full visibility into where their money is being spend, enabling any spend that does not correlate with policy to be flagged. This can help businesses to reduce non-compliant spend and increase policy and regulatory compliance.

Find the best solution for both business and employees

Once these areas are identified, the business must adjust for compliance requirements, infrastructure changes and spend changes. Finance leaders should select the best solution to streamline current processes, whilst also improving budgetary controls and employee safety and satisfaction.

It is important for companies to place employee experience and innovation at the forefront of decision making, with training and ongoing employee support. Expenses — the reimbursement process, specifically — often have an under-appreciated role in employee engagement.

In fact, the new SAP Concur Employee Experience study reveals that 70% of employees in the UK are concerned about the impact of cost-of-living increases on their personal finances. And it’s late reimbursements for expenses that are causing employees to worry, with 56% worried about delayed reimbursements impacting their personal finances. This is why it is crucial for organisations to adopt automation to help accelerate processes and relieve reimbursement worry.

We worked with Brother UK (Printing and technology solutions) to automate their processes within their internal finance department. Brother has many employees who have worked for the company for more than two decades, with many processes identical to the day they started. Unsurprisingly, these employees were reluctant to making big changes, as they were used to carrying out their work in very specific ways. And with the obvious talent crisis, Brother realised that it was more important than ever to focus on the employee experience.

Brother put their employees first, ensuring communication remained transparent during the entire project. The company also brought staff directly into the decision-making process, elevating buy-in and a sense of ownership over forthcoming changes.

Now that Bother has automated many financial tasks, employees within the finance department are able to spend more time on strategic and rewarding work, rather than menial and time-consuming tasks. This improvement has been a positive experience for all. It has also helped employees to progress further in their careers.

Plan for the unpredictable future

Do you work for an SMB considering such changes? Don’t hesitate — now is the time to take the proactive step to streamline and grow your business. Overall, SMBs are being faced with the unknown and are being forced to adapt or pivot their business models. Finance automation will help futureproof your business during these uncertain times, bringing a level of stability to your organisation. This will allow employees to focus on future growth ambitions and make more informed decisions without having to worry about laborious tasks.

It’s important to remember a key part of running any business is relationship management — both with customers and employees. It’s important to choose solutions that will help drive profit margins whilst also acknowledging employee needs. For small businesses, maintaining clear communication with employees will not only help to ensure solution implementation is successful, but will also help to soften any resistance to automation.

And there’s so much more beyond basic finance automation. By taking an even deeper dive into invoices and expenses, businesses can find key data to help underpin certain goals such as reducing carbon emissions for business travel or enabling employees to submit expenses from anywhere at any time.

In the long run, digitising tired manual processes makes it more affordable for all businesses, no matter the size, to offer a competitive advantage during this era of change.

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Finance

Cost of living: How to identify vulnerable customers

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Ellie Engley is account director at REaD Group

 

In the current climate, the cost of living crisis is a real challenge for financial services companies who need to be able to support their vulnerable customers. One in six (17%) of UK households (4.4 million) are now in ‘serious financial difficulties’, compared to one in ten (2.8 million) in October 2021 – an additional 1.6 million households – according to research from Bristol University, while it was recently reported that one in five adults across the UK – nearly 11 million people – have fallen behind with at least one household bill payment.

As a financial services provider, it has never been more important to be able to identify and communicate appropriately with vulnerable customers; those who, due to their personal circumstances, are especially susceptible to detriment. Not only that, but there are three different levels of poverty to be aware of: ranging from income below minimum income standard, not enough income and destitution.

As a financial service provider, then, it has never been more important to communicate sensitively to customers, price products appropriately and protect customers from fraud.

Identifying vulnerable customers

As a responsible brand, the first step is to proactively identify vulnerable customers to exclude from particular direct marketing campaigns, where additional credit or non-essential purchases could increase the pressure on their personal circumstances. This is an ethical approach to direct marketing which also sees companies increase ROI and improve campaign success.

Using both internal first party and third party data, it is possible to build up a detailed picture of customers in order to identify the existing vulnerable groups, as well as the emerging vulnerable groups within your customer base.

This data can identify vulnerable and potentially vulnerable segments of consumers, including self-declared vulnerability or that shared by a first party, such as a bank, on behalf of the consumer, along with high-cost short term credit applications; houses of multiple occupation (HMO data); and consumer vulnerability metrics. This latter employs a segmentation model which takes into account census data to provide information on demographics, such as age, income, housing, education, financial products, affluence measures; transient states such as health; market forces acting on the consumer and their susceptibility to those forces; and the individual’s market preferences.

Taken together this data will provide a rich and detailed understanding or levels and types of vulnerability so brands are able to work with their customers responsibly. Gaining a better understanding of differing vulnerable segments in a customer base helps drive effective communication strategies, while simultaneously ensuring fair treatment.

Other warning signs

Changes in transactions and behaviour are another way to identify vulnerability in customers. It may be necessary to identify different segments or groups of customers who are classed as vulnerable for different reasons. Those consumers who were once deemed ‘financially stable’ now feel financially stretched and are at greater risk of financial vulnerability through increased cost of living and rise in inflation.

The use of third party datasets can also support the identification of these groups which provide information on changes in personal circumstances, short-term finance requirements, loss of income or employment and changes to relationship or residential status.

Using external data variables helps companies make data-driven decisions on how to price products, reduce fraud, identify vulnerable customers and ultimately make more personalised decisions using data. Data can be used across different teams, including marketing, fraud and pricing, for multiple purposes and projects.

Being able to supplement the data they hold on a customer can help marketing teams to not only help identify risk but help define what their need state actually is, whether that’s saving, moving house or having children. Enhancing customer data helps companies make better informed decisions.

Keep it clean

On top of this, every financial services provider should be keeping their consumer data clean and accurate. Data that is up to date will help businesses make more informed and responsible decisions about how they communicate with customers and prospects.

Above all, financial service providers should be mindful of the many more people who are now vulnerable, and communicating with care should be a brand’s mantra for the foreseeable future.

 

Ellie Engley is account director at REaD Group, a Sagacity company, which uses its data products, insight and expertise to help its clients get closer to their customers.

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