Security questions don’t answer digital onboarding challenges

It’s no wonder most product sales continue to happen at the branch.

In an age where you can conjure a car, a bottle of Bulleit whiskey or a date with just a few taps on a smartphone, it is still common for banks to require would-be customers to come into their branches to sign up for products — even if institutions advertise those products digitally.

Although banks expect to move in a digital direction as branch transactions continue to decline, few banks have made signing up for products possible or easy online. To propel digital sales, banks will need to make the process for customers easier — including fewer clicks, less data they have to input themselves and the ability to save work and revisit it later. But behind the scenes, banks and others in financial services are facing a more complicated issue: finding efficient ways to verify that customers are who they say they are.

Increasingly, banks are realizing that customer growth is at stake if they don’t commit to making digital sales easier. According to a research paper published in May by Aite Group, financial institutions said that 21% of the decisions about fraud solutions are now up to the customer experience and marketing departments — marking a change from past years.

“While this may not sound significant, it is important to realize that less than a decade ago, these departments would not have been involved in such decisions,” Shirley Inscoe, a senior analyst with Aite Group, wrote in the report.


Chart showing retail banking priorities.


Banks are legally required to prove they know their customers, of course. But “know” is a relative word. While someone may show a driver’s license or a passport to open an account in a branch, the identity procedures tend to operate differently online. In fact, banks can court consumers like a game of Jeopardy! online. Institutions are paying data vendors to ask would-be customers questions such as “What street did you live on when you took out an auto loan?” or “In which of the following counties have you owned property?” as one measure to establish trust before someone can open an account. The experience, however, is clunky at its best and error prone at its worst.

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