TD Bank On The Case For Real-Time Digital ID Verification

Many banks are still tackling key onboarding tasks in person — even though today’s digital-minded consumers find cumbersome, manual account sign-ups unacceptable. But smart identification processes that leverage biometrics can simplify ID verification and help banks identify customers in real time, Angel Kadelski, head of U.S. mobile banking platforms for TD Bank, says in the latest Digital Identity Tracker.

When The New Yorker published its most reprinted cartoon in the magazine’s history by cartoonist Peter Steiner in 1999, the internet and digital identity was still in its infancy. The cartoon featured a dog sitting at a desk, paw on a computer, saying, “On the Internet, nobody knows you’re a dog.”

More than two decades later, the pandemic has created the perfect storm for cybercriminals to hide behind online anonymity to exact their schemes, with more consumers moving to digital channels for their daily activities than ever before. Financial institutions (FIs) and businesses have the opportunity to digitally confirm that users are who they say they are when communicating and transacting online.

The timing is right to accelerate the adoption of these tools to confirm consumers’ identities with one or more biological traits. Digital ID solutions have become essential to onboarding for new account openings, although a survey by FICO found that only 49 percent of U.S. and Canadian banks use digital ID verification methods for these processes. The study further showed that just 16 percent of these banks use integrated, real-time digital validation tools for consumers to securely open financial accounts online.

Angel Kadelski, head of U.S. mobile banking platforms for TD Bank, acknowledged that many FIs still consider customer onboarding risky and best-suited for in-person interactions, especially when it comes to customer identification program (CIP) and know your customer (KYC) procedures and the general need to fight fraud. She said there are opportunities for digital ID verification solutions to ease the onboarding experience, fulfill stronger CIP practices and protect FIs from cyberattacks.

“Digital ID solutions for customer onboarding can actually improve CIP and KYC practices because you can triangulate and verify the authenticity of various data points that you cannot achieve in a face-to-face interaction with a potential customer,” Kadelski said.

The Importance Of Real-Time Verification

Among the data points that can be combined to score an individual’s ID digitally, she said, are real-time validation of IDs matching government databases; cross-references with sanction lists; geolocation verification; biometric capabilities that use facial recognition to match consumers with photo IDs; credit bureau and social media data to confirm relationships between consumers and their businesses; and device identification to confirm that applicants are not bots.

Biometrics not only can simplify verification to keep customers from abandoning the process but also can help banks meet CIP requirements when in-person interactions are challenging, such as during a pandemic. TD Bank uses fingerprint and facial recognition biometrics to verify customers on its branded mobile app. The bank also enables customers to use voice recognition to confirm their identities when they call its contact centers. Customers who enroll in TD VoicePrint no longer need PINs, security questions or passwords. Selfie ID capture or the comparison of a selfie against a government-issued photo ID is another method that some FIs are using to reduce customer frictions.

“I expect the use of both existing and new biometrics to expand to other use cases across digital, including within physical branches,” she said. “The reason is not necessarily to be a sole or primary authentication solution, but as an additional authentication method for customers who may have failed traditional means or may have been flagged for a high-risk transaction that needs an extra layer of verification.”

The Customer Convenience Balance

Kadelski noted that customers have come to expect convenience, especially as innovative digital experiences are being introduced at much faster rates across industries.

“Banks are left with having to meet those customer expectations to stay relevant and competitive with nontraditional FinTechs while also having to ensure they are providing safe and secure experiences,” she said.

Innovative ID solutions can address both sides of this balance if done right, she added. Smart identification processes that can score identities in real time across multiple categories can help banks eliminate barriers to onboarding new customers or to satisfying existing ones as they come to expect frictionless, end-to-end experiences.

The future of digital ID verification will require a combination of solutions, including both biometrics and entity data. FIs that once relied on face-to-face interactions in-branch to prove customers’ identities will therefore need to rethink how to adapt to the pandemic-driven, digital-first economy.