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By Frederic Ho, Vice President of APAC, Jumio Corp.
Six digital banking licenses have already been granted in the Philippines as part of the ongoing financial services revolution.
Digital banking is well positioned to play a key role in meeting the needs of the large unbanked population in the Philippines, especially since one of the main obstacles to reaching these communities is the inaccessibility of bank branches. physical.
However, this development also presents its share of challenges. The country’s digital banking landscape has evolved to become increasingly competitive, with traditional banks rapidly turning to digital solutions to effectively transform and streamline processes, manage costs and achieve operational efficiency.
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At the same time, fraud levels in the Philippines continue to rise amid the pandemic. To make matters worse, 4 in 5 Asia-Pacific banks say the introduction of real-time payment platforms has led to increased losses from fraud. As the country is home to an increasing number of daily transactions, an increasingly digitized banking landscape is undoubtedly also well suited for criminals to conduct fraudulent transactions.
The digital switchover therefore poses a dilemma for banks: to offer them convenience and efficiency, as well as their customers, while exposing their business to more risk of fraud.
How can digital banking players in the Philippines refine the benefits of digitization to ensure that it helps (rather than hinders) the banking experience?
Strategy is the key
With the right strategy, financial institutions can design a workflow that benefits both the customer and the organization, while minimizing costs and security risks.
In a rapidly changing banking landscape, it is imperative that all banks in the Philippines assess their strategy and carefully choose the right technologies to stay ahead of their criminal adversaries and stand out from other players.
In this regard, it is important to understand that technology cannot simply be ‘nested’. Yet we are seeing this in many organizations and industries, where new functionality and costs precede the real needs of customers and business processes. It is crucial that banks, both digital and virtual, do not fall into this trap, as their choices can have many security ramifications.
For example, banks have long turned to eKYC (electronic Know-Your-Customer) technologies to streamline digital banking processes and ensure regulatory compliance. These technologies make it possible to verify a customer’s identity using official documents such as passports and identification documents to ensure that the person is who they claim to be.
As more financial institutions take advantage of biometric verification, such as biometrics based on selfies and fingerprints, these can also have their own inherent security risks and vulnerabilities. An example has already occurred in Asia, where a government-run facial recognition system has been used by tax evaders to forge tax invoices. Fingerprint fraud has also become a worrying issue as bad actors have been able to create rubber fingerprint clones to cheat payment systems in India. These compromised solutions can then become platforms that users actively avoid because they do not provide the adequate security that customers need to transact with peace of mind.
In order to work around these issues, while complying with various regulations and compliance requirements, many financial institutions often make short-sighted business decisions based on the cost of new technologies being used. While this is done in the hope of minimizing overall expenses, this strategy often comes with hidden costs. For example, the deployment of separate and unrelated technology solutions (for example: optical character recognition for extracting data from identity documents, facial recognition for identity verification, among others) leads to processes of slow, expensive and imprecise checks that do not allow definitive assessment of a user’s digital identity online or an assessment of whether they are physically present.
The impact of these inaccuracies is immense. They require layers of manual reviews performed by specialized in-house teams, resulting in higher overheads and lost customers due to longer processing time.
However, adopting any new solution will surely come with its fair share of risks. But it is up to companies to choose the right ones. For example, many identity verification vendors now offer liveliness detection, a feature that allows businesses to determine the user’s physical presence behind an application. These technologies have brought fraud levels down, as most fraudsters often abandon the process as soon as they learn they need to take a live selfie.
But even then, not all liveliness detection methods are the same. Legacy liveliness detection techniques rely on visual movements such as blinking, smiling, turning or nodding, which can be easily faked with deepfakes. Newer methods, however, are rigorously tested to ensure they can thwart advanced impersonation attempts (including realistic 3D masks or deepfakes). For hackers to sneak into these solutions would require an unimaginable investment in cutting-edge technologies, such as 3D animatronic puppets that could somehow exhibit realistic gestures and natural reactions to the environment. Even if the investment is made, advanced liveliness solutions are still evolving and may still be able to detect small differences.
The cost of friction
In their rush to secure technological systems, financial players also risk neglecting ease of use for consumers. While users do indeed demand higher security, neither are they willing to compromise on convenience. Tedious administrative processes that slow down transactions are, after all, one of the biggest reasons banks lose customers.
What’s more, these users usually don’t hesitate to make their frustrations known publicly – via App Store reviews – when they aren’t able to navigate or effectively open and manage an account. This risks damaging the company’s brand reputation and driving prospects away from their services altogether.
Ultimately, digital banking should make life easier for users. While they complicate the banking experience, the digital switchover is hardly worth it.
The good news is that strong security doesn’t necessarily mean something laborious or restrictive. The best long-term solution is to partner with a seasoned solutions provider who has the expertise and technologies to deliver and refine a fully digital experience.
For example, banks can unlock a full suite of online identity verification solutions that take advantage of alertness detection, artificial intelligence (AI), computer vision, biometrics, lists automated monitoring and any necessary manual reviews by partnering with an integrated eKYC provider. Such a system enables seamless orchestration between these separate components to provide faster and more reliable means of verifying remote users, detecting online fraud, and simplifying regulatory compliance.
More importantly, because these solutions do not require any additional steps from the end user, they pave the way for a smooth onboarding process and a smooth customer experience.
While balancing simplicity and reliability is easier said than done, organizations don’t have to step into the unknown to achieve it. We already have solutions that can meet these specific needs in order to achieve a seamless, intuitive, fast and secure user experience.
All they have to do is take the next step.
Jumio is an online mobile payment and identity verification company that provides card and identity scanning and validation products for mobile and web transactions. Jumio has verified over 400 million identities issued by over 200 countries and territories from real-time web and mobile transactions. Jumio’s solutions are used by leading companies in the financial services, sharing economy, digital currency, retail, travel and online gaming industries. Based in Palo Alto, Jumio operates worldwide with offices in North America, Latin America, Europe and Asia-Pacific.
