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U.S. banking’s “weakest link”

Mobile digital enrollment is where consumers are headed. Why aren’t more banks?

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  • Written by  Hakan Nordfjell, Gemalto
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  • Comments:   DISQUS_COMMENTS
UNconventional Wisdom is a periodic guest blog where the conventional wisdom is held up for fresh inspection. If you have some "UNconventional Wisdom" to share, email UNconventional Wisdom is a periodic guest blog where the conventional wisdom is held up for fresh inspection. If you have some "UNconventional Wisdom" to share, email [email protected]

I will unabashedly admit that I used to get a kick out of the early 2000s game show “Weakest Link.”

Over the course of each episode, at the end of every round, a team was prompted to vote for the participant on their side who underperformed and therefore represented the “weakest link.” That unfortunate soul was then met with the biting, unapologetic catchphrase, uttered in precise British English by host Anne Robinson:

“You are the weakest link. Goodbye.”

… before being swiftly ejected from the show.

Banks are exceptional at many things, from managing money to providing innovative credit card rewards programs to integrating into all sorts of seamless payment experiences.

One thing they haven’t been as great at, to this point? Digital account enrollment. In fact, only 8% of bank customers were able to open an account entirely in the mobile channel, according to a 2017 Javelin consumer survey of account opening features at the 30 largest banks in the U.S. Broaden that to online and the number still only reaches 1 in 3 customers (34%).

When it comes to modern banking, I’m casting my “weakest link” vote for digital enrollment. That applies almost across the board here in the U.S., and it’s particularly problematic in banks’ quest to remain competitive.

Consumers want mobile digital enrollment

We’ve observed a steep rise in interest and momentum for digital-only banks, including the likes of Ally Bank and N26, which inherently feature digital enrollment. Similarly, Citibank is laying the groundwork for a national digital bank. A lack of smooth digital enrollment and account opening for traditional banks makes those options (or going unbanked altogether) all the more appealing.

Consumers have undeniably embraced mobile lifestyles and are becoming more expectant of on-demand and self-service by the day. Venturing into a storefront, restaurant, office, or branch or calling into a customer service line is quickly turning into a last resort.

Many banks haven’t fully seen the self-service light, even though they purport to always be working toward convenience, the first obvious boon of digital enrollment and onboarding.

The fact that remote digital enrollment eliminates the requisite for a trip to the branch should thrill banks. They’re already starting to guide people toward kiosks when they do come into the branch wanting to open an account or apply for a credit card, so as not to occupy employees who could be focusing on furnishing customers with value-added services like wealth management, loans, and mortgages.

Why not enable consumers to skip the branch altogether and enroll anytime, anywhere, on-demand, on any device? That becomes a win/win, as banks can be more efficient in their operations and customers get a boost in convenience.

Digital enrollment on a consumer’s device of choice makes the process a seamless, familiar fit into the mobile lifestyle wave that banks want to ride.

People don’t want people

Another branch-related obstacle that doesn’t mesh with consumers’ on-the-go, technologically-supercharged, mobile-first lifestyles: human error.

Think about the last time an employee (at a bank or otherwise) looked at your driver’s license, looked back up at you and made a judgment call that everything checked out. Chances are, it was a process that dragged on for a frustratingly long amount of time (if they were rigorous enough) or it was one that didn’t inspire much confidence.

That step of ID verification—knowing whether the ID document is legitimate and whether the right person is holding it—is one that gets automated and thus has no potential pitfall of human error during digital enrollment.

With digital enrollment, banks can satisfy their KYC requirements; better verify that a customer is who they claim to be (through the combination of online network, geolocation, and behavioral attributes); and conduct near-real-time background checks. Most of those benefits aren’t even a possibility during traditional enrollment, instead replaced by human-executed steps with a higher propensity for error.

Biometrics in your customer’s pocket

Beyond convenience and assurance, security advantages should make digital enrollment a no-brainer. Whether traditional enrollment happens via a branch, telephone call, or mail-in application, there’s virtually no way it’s underpinned by multi-factor authentication, which is now an industry best practice. Particularly with mobile enrollment, biometric authentication is a bank’s best friend.

Again, a branch probably isn’t outfitted with a fingerprint scanner. Guess what is? Any iPhone newer than a 5s, any Samsung Galaxy more recent than an S5, and a host of other modern handsets. FaceID and similar mobile facial recognition technologies have advanced the reliability of biometric authentication even further.

Biometric “checkpoints” can be peppered in throughout the digital enrollment process to repeat authentication and increase security without creating friction. And that doesn’t even begin to touch on devices’ other built-in data security mechanisms like encryption and secure elements.

Getting up to speed

It’s important for U.S. banks to be self-aware enough to realize their “weakest link” and that, as a result, they’re not effectively harnessing benefits of convenience, mitigated human error, and enhanced security.

While digital enrollment is relatively nascent for banking in our backyard, banks can use other verticals and geographies as models. For example, ID verification has been honed and automated in the federal government space for some time, as in the case of checking passports at immigration. In Sweden and other countries, mobile banking, digital enrollment, and biometric authentication have become commonplace.

Existing mobile banking apps provide a solid foundation for U.S. banks to build on, and digital enrollment can be integrated as a service into those apps in a flexible and scalable way. It’s high time banks acknowledged and addressed their “weakest link,” before consumers get frustrated and vote—by revoking their own status as customers.

About the author

Hakan Nordfjell is senior vice-president of eBanking and eCommerce, Gemalto. The company provides online security methodologies.

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