What do businesses and users think about identity verification?
Optimizing onboarding processes can produce long-term benefits for both your business and customers. One critical part of onboarding for regulated and fraud-targeted businesses is identity verification. It’s a key mechanism that keeps you safe and compliant. But, it needs to be seamless, or customers may drop out of the onboarding process.
Keep reading to learn what challenges businesses are most commonly facing, and how users feel about the methods of identity verification they encounter.
What is the importance of digital onboarding?
More customers are doing business digitally than ever before. Our research revealed that nine in ten customers now feel comfortable accessing services online, with one in two feeling more comfortable than they did before the pandemic. As businesses rush to meet digitally emboldened customers online, digital onboarding and verification have also become more important. However, these processes need to meet a number of business objectives. We spoke to 200 business executives across a range of industries, and found three core areas onboarding has to support: customer acquisition, fraud prevention and regulatory compliance.
What challenges are businesses facing?
1 - Customer acquisition
Acquiring customers is a crucial endeavour with notable expense. Getting it right means attracting and successfully onboarding a customer and their value. Getting it wrong means drop-off and wasted customer acquisition costs. Here's what 200 executives in product, fraud, compliance, risk, IAM and IT told us were their primary challenges:
- 44% view customer onboarding as too time-consuming
25% cited high customer drop-off
22% are concerned with customer retention
Business concerns need to also be balanced with the user’s experience, so we collected opinions from customers, too. Our own survey of 4000 people across four countries (US, UK, France and Germany) provided the customer’s perspective. While convenience is always a factor, the most pressing issue for customers right now, given the current increase in accessing information and services digitally, is security and privacy. Among those respondents who are extremely dissatisfied with the way their digital identity is handled, over 57% reported abandoning an account sign-up in the last year.
2 - Fraud prevention
Onboarding is essential in stopping fraud from impacting your business. Our Identity Fraud Report 2022 revealed the pandemic was responsible for a rise in identity fraud. Many businesses were forced to rapidly move operations online to meet their customers, and fraudsters took this opportunity to attempt to exploit immature digital processes.
- Identity fraud has increased 44% since 2019
The biggest fraud increase was in retail, followed by financial services and professional services
27% of bank executives worried about balancing the cost of fraud against the cost of preventing it
25% cited accurate fraud detection as a major challenge
As customers continue to be comfortable transacting online, the fraudsters will stay online with them.
3 - Regulatory compliance
Customer onboarding can also be subject to regulation, particularly in the world of finance. Performing KYC (know your customer) and AML (anti money laundering) checks on customers is crucial for many reasons:
- it builds confidence in customers’ identities
it provides a solid basis on which to conduct further due diligence and customer risk assessments
it limits money laundering, terrorist financing, corruption and other illegal activities.
See our blog, ‘What is KYC?,’ to learn more.
However, meeting regulatory compliance for onboarding can require large numbers of manual review teams, which, of course, can be costly. Business executives told us about their biggest challenges with the onboarding processes:
- 35% found manual review processes challenging
23% see it was compliance issues as their biggest obstacle
How do customers feel about identity verification?
Identity verification is just one part of your customer’s experience and interaction with you. It’s a necessary step before they can proceed with what they came to do, whether that’s accessing their finances, making a purchase, booking an appointment or checking in. For tips on improving customer experience at verification, check out our blog, ‘7 Ways to Improve Your Customer’s Identity Experience at Sign Up.’
For businesses, customer identity verification solutions can address all the central concerns with the onboarding process that were reported in the executive survey: time to onboard, manual review processes, balancing the cost of fraud versus the cost to prevent it, high drop-off during account opening, accurate fraud detection, compliance issues and customer retention. But despite this opportunity, only 41% of those executives have active digital business initiatives around customer identity verification.
Customer attitudes on identity verification
Another survey we conducted, this time of 5,000 people across the US, UK, France, Germany and the Netherlands, revealed that 9 in 10 customers now feel comfortable accessing services online. We asked these survey participants how they would prefer to verify their identity with a business and found:
- 90% of those who tried remote document verification (e.g., a photo ID) want to do it again
76.7% found the use of biometrics convenient
82.8% found biometrics to be secure
Onfido’s identity verification solution supports these preferences and viewpoints by offering a combination of identity verification technologies: document verification, biometric verification and experience credentials. These identity verification options, along with ease of use, help to maximize the user experience.
How can identity verification drive business value?
The report quantifies three measurable benefits Onfido delivers that generate a 261% ROI:
- 26% increase in customer acquisition
27% increase in fraud detection
30% decrease in time spent onboarding
Read Forrester’s Total Economic Impact™ study to discover how Onfido’s solutions drive real business value.