Philippine banks should incorporate a seamless identity-authentication system on their digital application process to maintain a strong online client base, according to a report by a California-based data analytics company.
In its “Identity in Digital Banking” Survey, Fair, Isaac and Co. (Fico) revealed that financial institutions are facing challenges when it comes to validating the identity of digital banking customers.
“You can see from the survey that many Philippine banks still have issues with manual processing that slows down the process, introducing friction into digital applications,” said Subhashish Bose, FICO’s lead for fraud, security and compliance in the Asia-Pacific region.
According to the survey, half of the respondents chose the following as pain points for identity verification: high level of manual processes to validate customer identities; consistent collection of supporting data and/or documents; and, the need for physical validation of identity.
In addition, 40 percent said there were concerns over the “time taken to verify identity” and the “cost of third-party verification services.”
Bose said that a third of the country’s banks are still requiring customers to visit a physical branch to open a personal bank account.
“[Lenders] will need to shift toward identity verification that is seamlessly integrated into the digital application process and can be rapidly confirmed or risk losing business,” the Fico official warned.
In a previous consumer study, FICO discovered that 45 percent to 67 percent of Filipinos are expecting to complete all aspects of the account opening online or through their phones. Only 41 percent of the respondents said they would accomplish the necessary offline actions if the whole process is not completed in-session. Meanwhile, 13 percent said they would seek other banks instead while 5 percent would stop the process of opening an account.
Filipinos set the benchmark for online banking experience not only among the lenders but to other digital businesses as well, according to Bose. Customers are expecting the same kind of instant gratification given by firms like Uber, Netflix and Amazon, he explained.
Meanwhile, Fico flagged several local banks for not putting up separate fraud and authentication decisions. This, the company said, could affect user experience.
“They are less concerned with user experience and therefore will ask a customer to authenticate again for a particular action, which they consider high risk, even if they have already been identified in the same session,” Bose explained.
In a June report, Fico noted that 76 percent of Filipinos are open to enroll a financial account via digital platforms amid the increasing demand for online banking.
Forty percent of respondents were opening online financial accounts for everyday transactions, 38 percent for credit cards and 33 percent for personal loans.
Bose said the country’s consumers have become digital natives. He explained that 26 percent of Filipinos prefer to open a bank account via smartphones. This percentage is higher compared to 18 percent in the United States and 25 percent in the United Kingdom.