The mobile channel is quickly becoming the preferred method for consumer shopping, payments and account opening. A recent Forbes article pointed out that mobile shopping applications grew faster than any other category in 2014, with sessions on shopping apps on iOS and Android devices increasing by 174% year-over-year, while another study showed that nearly a third (33%) of online shoppers made at least one purchase via smartphone in the past 12 months. With all of this growth, Forrester predicts that mobile retail sales in the U.S. will reach $31B by 2017.
But, as the mobile channel continues to grow, the risk of fraud grows as well. Concerns about fraud are increasing – both from consumers and the organizations participating in the mobile transactions. The LexisNexis True Cost of Fraud report shows that M-commerce merchants saw a 70% spike in the revenue lost to fraud in 2014, with more than one-fifth (21%) of all fraudulent transactions being attributed to the mobile channel.
If financial marketers want to capture more of the growing, profitable, ‘mobile-first’ consumer segment, they need to support work on improving identity verification and authentication to protect their organization and their customers/members from fraud. And, to truly be successful, bank and credit union marketers must lobby internally for ID verification processes that are quick and easy to fit with consumers’ mobile expectations.
Processes that are too onerous for mobile users will cause consumers to abandon the process or purchase, meaning lost sales or fewer new customer accounts for your bank or credit union. The good news is that there is a new generation of mobile verification/authentication technologies allow financial organizations to effectively balance security and usability.
Balancing Authentication Simplicity and Security
When it comes to verification/authentication, the key to keeping the process convenient for the mobile consumer is to ensure that the solution can do the following:
- Keep the consumer in the mobile channel
- Take place in near real-time with little lag
- Require little to no manual data entry from the user
- Run in the background and remain invisible to the user (as much as possible)
- Pair with an additional layer of security (e.g. biometrics) for a second factor of authentication
Using these five guidelines for end-user convenience, most organizations can create a mobile authentication process that is both simple and secure.
By creating a secure mobile ID verification process that is also a convenient experience for customers, financial marketers enable customers to move through the buying process more quickly, while at the same time keeping fraudsters out. They are also able to reduce or eliminate costly manual reviews, which in turn, helps keep the overall cost of acquisition and managing customer relationships lower. Further, mobile ID verification/authentication meets Know Your Customer (KYC) and other compliance requirements.
Mobile ID verification can also make the digital account opening process easier on customers and improves the experience by allowing them to stay in the mobile channel for ID verification. This varies from other ID verification methods, in which users would typically need to leave the mobile channel to send a scanned copy of their ID documents to the business through unsecure email or fax channels or even visit the branch office.
It’s important to note that user experience is key for customer acquisition and mobile onboarding. With a mobile ID verification user experience that is just as quick and easy as mobile users expect, digital marketers are able to improve the customer journey metrics for mobile self-service and boost customer satisfaction.
‘Best-in Class’ Authentication Process In Action
To show how this would look in real life, here’s a hypothetical ‘best practices’ process.
A customer wants to open a new banking account from the convenience of their home, using their preferred device – her smartphone. To verify their identity during the account origination process, the bank or credit union prompts the consumer to use the mobile phone’s camera to snap a picture of their government-issued driver license.
Once the image is scanned, advanced computer vision and complex algorithms running in the background instantly scan and verify the authenticity of the ID by looking for advanced security features that are embedded within authentic driver licenses. Thus, the mobile OCR capture technology is able to instantly verify the authenticity of the ID document without requiring the consumer to leave the mobile channel.
Multiple Authentication Options
Some organizations are already looking at adding ID verification steps to all their mobile processes. For instance, Canadian-based Tangerine announced plans to bring Voice Banking and Touch ID to their mobile apps. These new biometric technologies give Tangerine clients the ability to bank with their voice and use a fingerprint to log in for added security.
Peter Aceto, president and CEO of Tangerine called out these new security features specifically for being, “simple and innovative solutions” suggesting that the bank appreciates the importance of maintaining the mobile experience that users expect in this channel.
Going beyond voice banking and Touch ID authentication, MasterCard began experimenting with facial recognition to approve mobile purchases. When discussing why MasterCard turned to facial recognition to address the company’s security challenges, they said, “The new generation, which is into selfies … I think they’ll find it cool. They’ll embrace it.”
In the examples described above, the consumer remains in the mobile channel for the entire process and enjoys a fast, convenient and secure identity verification process.
These pilot programs demonstrate that some of the largest financial brands in the world are looking for innovative solutions for mobile ID verification and authentication, and that using the smartphone’s OCR for mobile capture is an ideal way to verify a user’s identification. Consumers familiar with the camera and taking a selfie will find this additional process a convenient extra security measure, and maybe even a fun and engaging process that they enjoy doing.
Security as a Sales Benefit
We expect to see a lot more interest in mobile capture for ID verification and authentication as financial marketers look at how to capitalize on the wealth of marketing opportunities within the mobile channel. Because of the fraud and risk issues involved, financial services may actually be leading the way in their adoption of mobile capture technology.
As consumers increasingly turn to their mobile devices as their preferred channel for banking, shopping, payments and opening new services, financial brands and specifically, financial marketers, will need to look for ways to improve authentication through the mobile channel.
The right digital ID verification solutions not only help reduce the risk of fraud but can also increase sales, capture more new customers and improve the user experience, as consumers feel more secure using their mobile device and as they find the additional security easy to integrate into their daily lives.