Jul 15, 2019
Digital Onboarding for the banking sector / Use Case
In this article, we will talk about how the case of use on Digital Onboarding in the banking sector is developed, revealing its main characteristics, advantages and regulation.
It is important to introduce some basic brushstrokes on what we are going to discuss. Digital onboarding is a process used in the banking sector in order to open accounts and gain new clients.
The regulation marks a specific process to be able to carry out the necessary procedures, since it must comply with the eIDAS regulation and the recently approved AML5 last summer of 2018.
If you are interested in getting more information about the new EU market, click here and download the handbook.
Due to the growing confusion of the different existing solutions to make use of the digital onboarding of clients in the market, we have decided to explain what are the essential legal requirements that the technology must comply with, the advantages of a digital banking onboarding and a simple example of how our product works, VideoID, with a process that takes just 30 seconds and works from any channel and device.
Digital Onboarding and its regulation
We will start with the regulation, in order to clarify what can be expected from this process of digital banking onboarding.
It is important to make a preliminary clarification. Selfies or images do not comply with the legal regulations for the prevention of money laundering and financing of terrorism (KYC AML world legislation) in the financial industry. In essence, it is due to the low degree of technical security it offers.
a) Digital onboarding at European level eIDAS AML5
According to the AML5 Directive and the eIDAS regulation, video identification is possible throughout the whole European regulatory framework. This means that the process of digital onboarding of customers in the financial sector is already possible at the European and not local level as it has been until now. Financial companies now have the possibility of opening accounts digitally to 508 million potential customers.
b) Digital onboarding at world level KYC AML
More and more countries are regulating the practices of video identification for digital onboarding where a fundamental need arises: the “bankarization” of citizens, to avoid widespread fraud and unseat the competition. For other sectors, this type of practice is also being regulated.
Mexico, Japan, South Korea, the United Arab Emirates and many other countries are joining the new digital revolution offering a safer, faster and frictionless onboarding for the end customer.
c) Certification Authority
Now, thanks to the eIDAS and AML5 regulation, you can also issue your certificates of natural persons remotely.
The direct business that will be created in the next few years around the Digital Single Market is estimated to be of several billion Euros, impacting the region’s GDP due to the digitization of multiple industries and countries
Our technology was the first to obtain a certification by an eIDAS Conformity Assessment Body (CADB) in Europe for an asynchronous video process (video recording + subsequent verification by a qualified agent). That is, you can already use it to improve your value proposition in the market.
In addition, if you use it with SmileID (facial biometric authentication technology which authorizes the registration of the person in seconds with total confidence), you can use it throughout its whole life cycle, in any channel, in order to facilitate the use of identifications and certificates.
Steps for a digital onboarding in opening a bank account
If you are a financial company, it is interesting for your new clients, those whom you have not yet had the opportunity to identify, to opt for a digital onboarding. Do you really know how it works? It is simple:
- The customer will be asked to show their identity document to the camera of the device they are using.
- Then they will have to show the reverse.
- They will show their face and have to smile, so we can do all the required security validations.
Don’t miss the next 2/22 use case about Facial Biometrics in Payment Procedures!
Advantages of digital onboarding
1. Fast Onboarding
Bank onboarding is usually a procedure with high friction: go to the office, endless queues, messengers and expensive paperwork… What up to now has taken an average of 3 weeks, can be done in 3 minutes.
A digital onboarding of clients integrated in a bank is able to register a person in that time with all the necessary requirements and extra documentation that the bank itself can require for their needs.
2. Easy to use
Anyone who has an electronic device with Internet access and an integrated camera can perform a digital onboarding.
3. Real-time effectiveness
The security measures are taken in real time, the biometric pattern of the face and the life existence of the person are also verified. All in a matter of seconds.
4. Exponential increase in conversion of new customers
According to a study conducted by one of our clients, the conversion ratio increases by more than 60%.
We must take into account the improvement in the user experience, the positive assessment that is offered and the consequent following recommendation.
5. From any device and channel (omnichannel)
No matter the channel (kiosk, cellphone, PC, ATM, commercial office, etc.) or the device (iOS, Android, etc.).
6. Any identity documents
No matter where you are from, more than 800 documents from more than 153 countries are validated.
Digital Onboarding Banking: Examples of countries and companies
Without going any further, the Spanish regulator (SEPBLAC) was a pioneer in approving video identification at the high level of security for clients’ digital onboarding processes, but it has been followed by many others, not only in Europe, but also in the rest of the world.
The most pioneering bank has been Selfbank*, that has managed to increase its conversion rate exponentially.
*50 Casos de éxito en Experiencia de cliente. Alberto Córdoba y Juan Genís, 2018
After what we have seen, we can affirm without fear of being wrong, that the video identification has come to stay. That is why we have created a new category of services on the Internet, being chosen as Cool Vendor by Gartner.
Users are already choosing their banks for the facilities they provide on a digital level, do not stay behind!
Do you want to know more about this regulation and the possibilities offered by video identification in the financial sector? Download our handbook where you can have all the information easily and in one place.