The customers of many medium- and small-sized financial institutions experience a moment of annoyance every time they log into their account and have to locate their password or complete a multi-factor authentication process. Potential new customers may turn elsewhere if they have to go to a branch to open an account or submit an application. The problem is simple: customer expectations for security and convenience have outstripped their financial institution’s capabilities.
Customers interact with retail giants such as Amazon every day. They know what convenience looks like and they know what security looks like – and they demand the same from their financial institution. Take the act of applying for a mortgage. Many financial institutions require a customer to come to a branch location in order to provide authenticating documentation in person. People do not want to take the time to do that today. They want to apply, be validated, and be approved – all online, and all seamlessly and securely.
Many large financial services institutions deliver on customer expectations for security and convenience by incorporating innovative solutions such as biometrics into their identity authentication protocols. For example, when customers call to ask questions about their account, they may be asked to repeat a phrase such as “my voice is my identity.” Even that may not be necessary: their verbal greeting to the account representative may be analyzed without the customers ever realizing it, providing the necessary authentication. This is often done in conjunction with other methods of validation, such as a phone number or IP address. The combination means that customers are not burdened with passwords and experience no delay in transacting their business.
Of course, large financial services institutions have an advantage over medium- and small-sized financial institutions: they have the hundreds of millions of dollars necessary to develop and implement such protocols. Most medium- and small-sized financial institutions do not have such resources. Yet, their customers expect the same high level of security and convenience.
What are medium- and small-sized financial institutions to do? The security measures they have trusted in for years are now deemed inconvenient and annoying by customers – and those customers are all too willing to take their business elsewhere. It is critical for the growth (and even survival) of these financial institutions to meet the dual customer demands of security and convenience.
Fortunately, the security solutions large financial institutions have the funds to develop in-house can be provided by third-party vendors today at a fraction of the cost. For example, robust biometrics – including voice patterns, fingerprints, facial characteristics, behavioral characteristics, and more – can be integrated seamlessly and cost-effectively with existing systems. In fact, the recent movement toward open banking and open APIs supports such strategic partnerships.
By engaging with a partner who can deliver increased security coupled with increased convenience, medium- and small-sized financial institutions can demonstrate to existing and new customers that they are innovative and customer-centric. Such partnerships level the playing field, allowing these financial institutions to compete with large institutions and gain market share. Your financial institution, too, can be on the field as a contender!