Balancing Security and Customer Experience with Identity Verification

In financial services, balancing the competing priorities of security and customer experience (CX) has always been a delicate dance. Nowhere is this more challenging than in identity verification, particularly as digital transactions increase and come under greater regulatory scrutiny.

In financial services, balancing the competing priorities of security and customer experience (CX) has always been a delicate dance. Nowhere is this more challenging than in identity verification, particularly as digital transactions increase and come under greater regulatory scrutiny.

According to a recent Forrester Consulting survey commissioned by Docusign, 74% of financial services respondents reported that the number of digital transactions and agreements they process has increased substantially over the last two years. Moreover, three in four respondents say regulatory requirements for robust identity verification are increasing. For example, in the European Union, eIDAS Regulation and Payment Service Directive II (PSDS) are two newer regulations directly impacting financial services organisations, driving them to fortify their verification capabilities.

How can financial services organisations best address these formidable challenges in identity verification when it comes to important agreements?

Current identity verification methods present challenges

Current methods of identity verification are harming the customer experience. Key factors influencing CX include the time it takes to complete the process, the amount of personal data a customer is required to share, the number of different, disconnected steps, and the number of clicks it takes to complete a session.

That same study found that the time it takes for a customer to complete verification is too long, with 58% of financial services respondents saying the verification process takes longer than 5 minutes, and 37% stating that the process is too time-consuming for users.

This results in very high online application abandonment rates that climb above 30% if identity verification takes more than 6 minutes.

Current methods also waste valuable employee time. The study found that for 64% of financial services respondents, the verification process takes more than 5 minutes of employee time, on average.

Beyond experiential factors, security and fraud are significant pain points, with 97% of financial services firms having experienced some degree of fraud. For 59% of institutions, 1% or more of their transactions and agreements include identity fraud incidents.

This is having a notable impact on customer satisfaction, with 37% of respondents saying incidents of fraud have resulted in complaints, and 34% reporting that such incidents have caused bad publicity or damaged their brand reputation. In addition, 32% say they have experienced losses in revenue.

Lastly, 73% of financial services respondents say they are struggling to find the right balance between needed security and a positive customer experience during the verification process, and 77% say this is "very important."

Automated, fully integrated verification is the solution

To navigate that narrow channel between security and CX, financial services respondents see the advantages of an automated, fully integrated identity verification suite that uses advanced technologies.

Automated

To start, 74% of financial services decision makers agree that automated processes provide better CX, but only 14% of organizations have fully automated verification processes today.

Funding Circle is one firm that does. In the past, the UK’s largest lending platform for small- and medium-sized enterprises relied on wet signatures and witnesses to verify the identity of the signer. Digitizing these processes has strengthened security—reinforcing the overall levels of due diligence and trust expected by lenders.

Now, once a loan agreement is generated and electronically sent for execution, each recipient is required to self-verify before signing. Docusign ID Verification, a solution that automatically verifies IDs and eIDs, is built into Funding Circle’s existing eSignature workflow, creating a seamless signing and verification experience for customers.

Prior to implementing Docusign eSignature and ID Verification, Funding Circle found that signing and returning a contract could take at least 24-48 hours. Now it takes just one hour.

Fully integrated

Financial services leaders also recognize the benefits of employing a fully integrated identity verification technology suite: although just under a third of respondents currently use one today, 79% say they would benefit from such a solution, and 75% say it will be critical to have an integrated tech suite in the future.

In this sense, A4CB is ahead of the curve. Allies for Community Business (A4CB) is a nonprofit community development financial institution that provides capital to small businesses in Illinois and Indiana. By employing Docusign eSignature and ID Verification, the firm successfully transitioned into digital loan closings and electronic filings and can now verify its borrowers’ identities using their government-issued ID. A4CB was able to successfully reduce fraud risk, cut average loan processing time from 30 minutes to just 15 minutes per application and eliminated the wasteful use of paper. The firm also now offers an exceptional customer experience, by allowing them to sign documents and verify their identities remotely, at their own convenience.

In another example, with help from Docusign Kleberg Bank of South Texas digitized its small business loan application. By using Docusign ID Verification, 90% of Kleberg’s customers were able to verify their identity during their initial attempt, accelerating the loan process and ensuring they would receive their much-needed funding quickly and efficiently.

Advanced technologies

Finally, the adoption of emerging technologies is critical to creating a secure and seamless identity verification experience. According to the Forrester/Docusign study, 82% of financial services decision makers agree they would greatly benefit from emerging verification tech such as biometric data or eIDs.

Over the past two years, the use of new technologies like biometrics, government- or bank-issued eIDs and digital identity certificates (either previously created or created during the transaction) has increased. Firms are using a variety of methods in verification today but see the benefit of simplifying the number used to help streamline the experience.

Highest adoption rates are found among firms rated as “high maturity” for identity verification, with biometrics as the top choice among advanced technologies. The study found that 40% of financial services companies would implement biometric data for customer identity verification. In addition, biometrics ranked as the most popular verification method in “an ideal world.”

Striking the right balance in identity verification

For financial services firms, the key to successful deployment of identity verification is found in striking the right balance between security and customer experience.

While challenging, the benefits of hitting this delicate balance are substantial. The Forrester/Docusign survey reported that an improved CX can lead to boosts in customer loyalty (62%), brand reputation (59%) and regulatory compliance (49%). More robust security protocols, meanwhile, result in improved customer loyalty (46%), brand reputation (47%) and customer trust (45%).

Docusign’s innovative signer identification solutions, fully integrated into the eSignature workflow, can help financial firms achieve this balance.

To learn more about recent trends in enhancing both security and customer experience in identity verification, download the Forrester/Docusign October 2021 Thought Leadership Paper, Identity Verification Accelerates Digital Transformation: A Spotlight on Financial Services.