Using tech to enhance the banking experience

DIGITAL banking has accelerated rapidly in recent months.

In Singapore, four digital banking licences have already been granted and are on track to set up shop in early 2022. Neighbouring countries too, are making great progress in the arena - the Philippines has just awarded two more digital banking licences, and Malaysia will soon have five of these licences up for grabs next year. Amid this evolving and competitive landscape, traditional banks are also quickly turning to digital solutions to transform and effectively streamline processes, manage costs, and achieve operational efficiency.

But this presents its own set of challenges. For instance, fraud levels in Asia-Pacific continue to be the highest in the world - double that of any other region. To make matters worse, four out of five Asia-Pacific banks say the introduction of real-time payments platforms has resulted in increased fraud losses. With Asia being home to a growing (and already massive) number of daily transactions, an increasingly digitalised banking landscape is no doubt also fertile soil for criminals to perform fraudulent transactions.

The shift to digital, then, presents a dilemma to banks - providing convenience and efficiency for them and their customers, while also exposing their business to more fraud risks.

How can these players hone the benefits of digitalisation to ensure that it helps (rather than hinders) the banking experience?

CHOOSING THE RIGHT TECH

Technology cannot simply be 'shoehorned' in. Yet, we see this across many organisations and sectors - where new features and costs precede the real needs of customers, and business processes. It is crucial for banks - both digital and virtual - to not fall into this trap, as there can be many security ramifications for their choices.

For instance, banks have long looked towards eKYC (electronic Know-Your-Customer) technologies to streamline digital banking processes and ensure compliance with regulations. These technologies work to verify a customer's identity through official documents such as passports and IDs to ensure that the person is who they say they are.

While more financial institutions are leveraging biometrics verification - such as selfie-based and fingerprint-based biometrics - these, too, may have their own inherent security risks and vulnerabilities. An example of this has already occurred in Asia, where a government-run facial recognition system was used by tax fraudsters to fake tax invoices. Fingerprint fraud, too, has become a worrying problem as bad actors have been able to create rubber clones of fingerprints to fool payment systems in India. These compromised solutions may then become platforms that users actively avoid, as they do not provide adequate security needed for customers to transact with peace of mind.

In a bid to circumvent these issues, while complying with the various regulations and compliance requirements in Asia, many financial institutions often make short-sighted business decisions based on the cost of any new technologies used. While this is done in hopes of minimising overall expenses, this strategy often incurs hidden costs.

For instance, deploying separate and unlinked technology solutions (for example, optical character recognition for data extraction from ID documents, facial recognition for identity proofing, among others) results in slow, onerous, and inaccurate verification processes that are unable to definitively assess the digital identity of an online user or assess whether they're physically present.

The impact of these inaccuracies are immense. They require layers of manual reviews that are performed by specialised, in-house teams, resulting in higher overhead costs and customer loss due to longer processing time.

That said, the adoption of any new solution will surely come with its fair share of risks. But the onus is on the businesses to pick the right ones. For instance, many identity verification providers are now offering liveness detection - a feature which enables companies to determine the user's physical presence behind an app. These technologies have sent fraud levels plummeting, as most fraudsters often abandon the process as soon as they learn that they are required to take a live selfie.

But even then, not all liveness detection methods are the same. Legacy liveness detection techniques rely on users making visual movements such as blinking, smiling, turning or nodding, which can be spoofed easily with deepfakes. Newer methods, however, are rigorously tested to ensure that it can foil advanced spoofing attempts (including realistic 3D masks or deepfakes). For hackers to be able to sneak these solutions, it would require an unimaginable amount of investment into bleeding-edge technologies, such as look-alike 3D animatronic puppets that could somehow exhibit lifelike gestures and natural reactions to the environment. Even if the investment is made, advanced liveness solutions are always evolving, and may still be able to detect small differences.

CONVENIENCE IS PART OF EQUATION

In their rush to make technology systems more secure, financial players are also at risk of overlooking ease of use for consumers. While users are indeed demanding higher security, they are also unwilling to compromise on convenience. Tedious admin processes that slow transactions are, after all, one of the main reasons banks lose customers.

Moreover, these users are typically not shy to make their frustrations known publicly - via app store reviews - when they are not able to navigate or effectively open and maintain an account. This risks damaging the company's brand reputation, and turns prospects away from their services altogether.

Ultimately, digital banking should simplify the lives of users. If they complicate the banking experience, then going digital is barely worth the effort.

The good news is that robust security doesn't necessarily mean something that's laborious or restrictive.

With the right strategy, financial institutions can design a workflow that benefits both the customer and the organisation - while minimising costs and security risks. For instance, banks can unlock a full suite of online identity verification solutions that leverage liveness detection, AI, computer vision, biometrics, automated watchlists and any necessary manual reviews by partnering an integrated eKYC provider. Such a system enables seamless orchestration between these separate components to deliver faster and more reliable ways for verifying remote users, detecting online fraud and simplifying regulatory compliance.

Most importantly, as these solutions don't require any additional steps from the end user, they pave the way for a smooth onboarding process and a frictionless customer experience.

In a rapidly transforming banking landscape, it is imperative that banks evaluate their strategy and pick the right technologies carefully to remain ahead of their criminal adversaries and set themselves apart from other players.

While balancing simplicity and reliability is a task that's easier said than done, organisations don't have to tread into the unknown to make that happen. We already have solutions that can cater to these specific needs, so as to achieve a user experience that is seamless, intuitive, fast and secure.

All that remains is for them to take the next step.

• The writer is vice-president of APAC at Jumio Corporation