Mobile Banking & Digital Identity Compliance

Mobile banking has it all: convenience, speed and financial insight — not to mention that customers love it. Citi's study shows that mobile banking adoption is skyrocketing and ranks third in popularity among app categories behind social media and weather. Banks love it, too. Mobile transactions are ten times cheaper than ATMs. In addition, mobile banking increases customer loyalty, reduces printing and delivery costs and helps keep expensive branch operations under control. Mobile banking can also turn smartphones into a powerful digital ID and authentication tool when certain security challenges are met.

man using mobile banking app

High on this list of challenges is the risk of exposing digitally-transmitted, personally identifiable information (PII) and ease of cracking KBA (knowledge-based authentication) questions. The risks are real, with data showing the fraudulent opening of new accounts has reached record highs. Now infamous cybersecurity debacles have made headlines in recent years, such as the 2017 Equifax breach in which 150 million people saw their personal information compromised, costing Equifax $1.4 billion, plus legal fees.

New digital banking regulations have risen to help protect customers from these risks. These include AML (Anti-Money Laundering) regulations establishing standards for detecting and reporting suspicious activities, and KYC (Know Your Customer) standards to regulate banks' identity proofing processes. The costs of non-compliance are steep. Regulators have imposed a whopping $26 billion in fines over the last ten years for failure to meet AML and KYC standards.

Mobile Banking Offers a Solution to Digital Authentication Challenges

When these risks can be managed, mobile banking has excellent potential for satisfying customer demands for convenience and helping financial institutions operate more efficiently. Helping it move forward are advances in smartphone technology. These include the integration of touch and facial recognition technologies. Computer vision, machine learning and biometrics promise even more robust authentication with less user friction.

Here are three potential uses for ID Verification which assures that the user is who they say they are, all in a matter of minutes:

  • Enrollment — When banking customers first enroll in their mobile banking app, they submit scanned documentation and a "selfie" to the IAM (identity and access management) system
  • Document Verification — Machine learning algorithms scan security features to instantly determine document authenticity and search databases to compare the document's photo against those on other legal documents
  • Facial Recognition — When customers attempt account access, they are prompted to take a selfie. A machine-learning algorithm compares the selfie with the enrollment photo, accounting for different hairstyles, clothing, and subtle variations. Motion sensors perform a "liveness test." The ID Verification system can present the user with a challenge if the identity is in question.

New mobile apps can pave the way for safer, compliant digital transactions, with high assurance that privacy won't be compromised and a lower risk of fraudulence. The rise in smartphone usage, coupled with new technologies, offer customers and the payment industry alike everything they need.

Learn about the latest developments in digital identity models, biometrics and other techniques used to authenticate access of a digital identity in our white paper, Should Banks Be the Guardians of Digital Identity?

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Ondrej Valent is a Sales Director of Global Banking and Consumer Authentication within HID Global and has more than a decade of experience in IT Security. Leading the Global Sales Team and Sales strategy. Ondrej has profound technical background and has extensive experience with Financial Institutions, advising on Regulatory initiatives, Operational Risk, Governance and Compliance bringing a wealth of knowledge on how organizations can create greater user experience while meeting their security requirements. Prior to HID Global Ondrej led the sales strategy at FireEye, Gemalto and SafeNet.