Home Banking How Can Banks Solve the Challenge of Preventing Financial Crime and Yet Deliver A Seamless Customer Onboarding Experience?

How Can Banks Solve the Challenge of Preventing Financial Crime and Yet Deliver A Seamless Customer Onboarding Experience?

by internationalbanker

By Barley Laing, UK Managing Director, Melissa Global Intelligence





The scourge of financial crime is increasing. It’s being driven by organised crime rings, fuelled with billions of compromised data records, who are systematically and methodically targeting financial services firms with sophisticated application fraud attacks that use stolen or falsified identities in an effort to obtain new accounts. This growth in application fraud is set to increase largely because the there’s little in the way of adverse consequences for the perpetrators, in terms of prison time, along with the low rate of detection.

This growing trend in financial crime is backed up by the research we carried out with the AITE Group amongst executives from US financial institutions and financial crime executives. It found that 13 billion data records were stolen or lost in the US since 2013, which in turn is driving increased application fraud that’s set to cost banks in the US $2.7 billion in credit card and DDA loses in 2020, up from £2.2 billion in 2018.

It’s not just an issue in the US, with fraud prevention service Cifas highlighting that the amount of identity fraud reported by its members in the UK is currently fluctuating at around 175,000 cases per year over the last couple of years. Meanwhile, UK Finance found that in the first half of 2018 £500 million was stolen from the customers of British banks.

Eliminate friction from customer onboarding 

At the same time fraud is increasing the pressure on banks to reduce or even eliminate friction from the customer onboarding experience is growing. Banks still experience high levels of attrition with digital channel onboarding when hurdles in the process trip up prospective customers, particularly when consumers’ expectations are increasingly shaped by the experiences provided by the digital behemoths such as Apple and Amazon. This puts huge pressure on financial institutions to provide similarly friction-free and elegant interactions, with the importance of ease of use starting with onboarding.

So, it’s perhaps not surprising that in our research, when asked about key business case drivers for new account risk assessment tools, top of the list for fraud executives at banks, at 88%, were those that improve the customer onboarding experience. But any move in watering down KYC and AML compliance procedures to speed up the onboarding process potentially increases the likelihood of fraud.

This poses the question, how can banks ensure that they don’t fall victim to fraud, yet meet their AML and KYC compliance requirements and deliver a seamless onboarding experience for new customers?  

ID verification powered by data

Identity verification is an essential element when onboarding new customers. It is required by KYC regulations in countries around the globe and is a requisite element of financial institutions’ fraud prevention needs.

Delivering effective identify verification all comes down to data. Unfortunately for banks there’s no single source of ID verifiable data to use. Instead, they need access to many different streams of data to be KYC and AML compliant and avoid fraud. This means having access to the most up to date, relevant data, from multiple sources of billions of global contact records. This should be data from trusted reference data sources, such as credit agency, government agency, utility company and international watchlist data.

Those that obtain data from a limited number of sources could find themselves with an incomplete reference data set; one that could have errors due to mistakes from manually inputted information that impacts on the effectiveness of the data for fraud prevention.

Ideally when sourcing data for ID verification it’s important that it doesn’t just verify but enriches and improves the customer data, to help deliver a 360-degree single customer view (SCV) that will also aid your future marketing and sales efforts. It could be data that completes the missing parts of a postal address or adds an additional contact phone number.

It’s also vital that the technology powering the data can deliver this insight in real-time to ensure a positive onboarding experience for new customers, as consumers expect a seamless onboarding experience in the increasingly digital age we live in.

Early adopters of next-generation technologies that provide ID verification in real-time will be able to do more than reduce fraud. The improvements to the customer experience will give them an advantage over their competitors who don’t. After all, data is the new currency, and creating intelligence from data at scale can give firms a competitive edge.

Biometric data

Biometric data can play an important role too. Banks should take a serious look at the latest facial recognition and other biometric technology to help confirm the potential new customer’s identity, that speeds up the verification process and therefore improves the customer experience.

What is becoming increasingly important is ‘proof of life’ in biometrics, particularly with interactions between banks and their customers more commonly taking place online. For example, is the entity the bank is communicating with a real live individual, or an image of someone, or even a sophisticated avatar? And does this captured image match their ID photo also on the system? Biometric technology such as this will avoid time consuming security questions prior to the start of the interaction.


Banks must always deliver a good customer experience when onboarding new customers as well as to existing customers accessing their accounts. This is where the importance of having the appropriate depth of ID data and biometric technology plays a vital role in an increasingly competitive open banking world. Those that thrive will be those that enhance the customer journey whilst maintaining strong due diligence over the customer data in their systems. In fact, such due diligence ensures you become the source of trusted identity your customers use for all of their digital banking activities – vital if you want to grow and prosper in the open banking age.

It’s time for banks to put a stop to the growth in financial crime, meet required KYC and AML requirements and deliver a seamless customer onboarding experience that helps them to stay ahead of the competition. Today, with the depth of global contact data available for effective KYC compliance from cloud service providers and improving biometric technology, it’s possible.


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