In an evolving regulatory environment and with an increasing proportion of business now being conducted digitally, having the ability to securely and reliably identify customers has never been more important. What are the challenges and risks those businesses face when they have to onboard new customers?
Onboarding is the most precarious part of the customer relationship, where a service provider has not built up brand equity, but is asking the most in terms of data and effort from their prospective new customer.
Our research with YouGov shows that during onboarding, the criticality of speed, simplicity and trust are amplified. For example, 61% of customers said they would not tolerate a signup to a wealth management service lasting more than 10 minutes – and for some industries like online gaming, this reduces to 5 minutes.
As well as poor customer experience and customer drop off, onboarding creates significant operational burden for business teams. It’s often a slow and cumbersome process that involves sending manual documents back and forth, manual data entry which is prone to errors, and teams having to make decisions from inaccurate and out of date information.
In many industries, businesses are also faced with significant fraud – in online gaming, for example, 1 in 20 accounts created are fraudulent.
Legacy ways of verifying bank accounts, like requesting bank statements and micro-deposits are no longer fit for purpose. Unfortunately, much of the world continues to operate with outdated tools in today’s digital environment. How can Open Banking streamline customer onboarding, identity verification, and risk identification for businesses?
Verification is the first step to onboarding a new user and yet it can often take days to verify an account owner using traditional methods. The security of these methods is questionable, they’re prone to errors and they take forever. It doesn’t need to be this way.
Open Banking allows businesses to access their customer’s financial data instantly, and securely through open, regulated, APIs. Since this happens real-time and customers don’t need to manually enter their information, accuracy is high, which means much less fraud risk.
However, by itself, Open Banking only provides the raw data – so businesses have to spend engineering resources building and maintaining their own verification logic.
Customers’ expectations for an easy, convenient experience accelerated in 2020. Recently, TrueLayer launched a new account verification solution: Verification API. Could you please describe the solution and how is it working? Also, towards which industries is it aimed at?
TrueLayer has developed a verification logic that sits on top of Open Banking rails. We’ve combined machine learning and open banking to create the Verification API, which makes onboarding effortless. It has success rates up to 20% higher than credit bureaus and it takes seconds, compared to days for manual bank statement checks. And by pre-verifying customer’s details, it also simplifies payments setup, meaning no more failed transactions.
It works by matching the name supplied during the onboarding process with the name on file at the bank. It provides a single feed that ensures an immediate and highly accurate response on whether their user’s account has been verified or not. 90%+ good actors are successfully verified in 3 clicks.
The solution is useful for many businesses across a number of industries in the UK and Europe, including financial services and fintech, wealth management, PSPs, ecommerce, marketplaces, property, and iGaming.
How can the new Verification API solution benefit businesses?
Businesses can instantly and accurately verify new users, without having to process streams of raw bank data themselves. Ultimately this means they can get customers using their product faster – and reduce fraud at the same time.
They can also be reassured of the accuracy of the verification. In the UK for example, Verification API is connected to all major UK banks and has a 22.5% higher success rate compared to credit bureau checks.
It also has Strong Customer Authentication embedded within the bank verification flow, meaning that businesses benefit from lower fraud risk.
Finally, Verification API massively reduces the operational burden of onboarding for businesses. Payments teams are freed up from dealing with high volumes of failed payments, because Verification API uses pre-verified account details. Plus there is less burden on compliance teams as checks are automated through a single API call.
It also frees up valuable engineering resources – engineers can focus on solving core business problems, rather than building and maintaining name-check logic.
What are the benefits for consumers?
For consumers, it means smoother onboarding experiences, since users don’t need to remember account details, manually submit bank statements or wait for a micro-transaction to settle. They are seamlessly redirected to their banking app to confirm account ownership with a fingerprint or faceID.
They're also protected against identity theft, since they’re typically authenticating with their face or their fingerprint on their mobile device. And they have less hassle from failed payments — since TrueLayer pre-verifies account details.
About Ossama Soliman
Ossama Soliman is Chief Product Officer at TrueLayer. A software engineer by background, Ossama has led product and strategy for American Express, where he deployed one of the company’s first large-scale machine learning programmes and was a product leader in Amex’s digital bank. He was most recently the General Manager of Business Lending at Amazon, where he built the business from scratch and launched machine learning powered products serving millions of customers globally.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now