The challenge of building trust in Open Banking

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In today’s world, digital banking is the new normal. Customers expect smooth start-to-finish journeys that include access to as many services as possible. This leaves banks tasked with maintaining the delicate balance between meeting customer demands and building trust through a high level of data security and regulatory compliance.

To learn more about the challenge of building trust, PaymentsJournal spoke with Jose caldera, Chief Product Officer at Acuant, and Tim sloane, Vice President of Payments Innovation at Mercator Advisory Group.

The rise of digital banking

Digital adoption in finance has been fast and furious with more options than ever before, and for good reason. Digital banking offers a lot of value to consumers, serving as a one-stop-shop for money management and payments. It also offers more options than ever before. Neobanks, challenger banks, and open banks have thrived in the digital realm, and COVID-19 will make this change more permanent.

“Everything has become more digital and everything has become more online, especially after a year of going through this pandemic. There is definitely a need to serve customers who are looking for a different experience, ”Caldera said.

Additionally, the younger generations of adults are digital natives, which means they have higher expectations when it comes to digital services. “I think [the adoption of digital banking] has been a combination of the evolution of technology and also of user expectations and [the] the user experiences they want to have, ”he added.

Data security is essential when it comes to digital banking. “It goes without saying that whatever [data a] the digital native user has given to the company or the financial institution, their expectation is that it is stored securely and properly protected from hackers, ”Sloane said.

Protect customer data with open banking

Consumers’ expectations about their customer experience aren’t the only things that have changed. A new model of consumer confidence is also emerging. According to Forrester, consumers no longer want piecemeal privacy management tools. Instead, they flock to companies that incorporate trust as a business strategy.

Open Banking is a system in which users’ personal and business data can be shared securely between banks and applications and securing customer data is crucial to establishing and maintaining trust. “The [is] a combination of strategies that you see best adopted [by] digital banks versus traditional financial institutions, ”Caldera said.

Digital customer onboarding is now the norm. By adopting trusted technology, such as identity verification and Know Your Customer (KYC) tools, open banks can ensure the security of their customers’ data during onboarding and beyond.

“There’s a whole bunch of new technologies out there that give the owner more control over what data can be shared. And I think digital banks have taken a better approach than traditional financial institutions, where data exists in many places, ”Caldera added.

The challenges of integrating customers online

The biggest challenge when onboarding customers online is balancing a seamless customer experience while remaining secure and compliant. Even if consumers want to access as many services as possible, they may be reluctant to share their personally identifiable information (PII).

“From a financial institutions perspective, on the one hand you have the requirements for user experience, out-of-the-box services, and at the end of the day you have the regulatory and security requirements,” Caldera said.

Financial institutions must capture personal data in order to allow consumers to access the services they are looking for. At the same time, FIs must comply with a growing list of regulations, including anti-money laundering (AML), GDPR (the EU’s General Data Protection Regulation) and other privacy laws. Solutions that manage security with features like transaction monitoring, KYC, and risk screening can help FIs stay compliant.

“From a general point of view, it is the job of the compliance officer to say mainly ‘no’ if there is an associated risk, but it is obviously the challenge of management to be able to remain competitive on the market. market, ”Sloane explained.

How Acuant Builds Customer Trust

According to Caldera, Sharpening enables a risk-based approach favored by regulators to assess customer integration and behavior. “We have built our belief in trust into what we do, and it’s our DNA. How do we make sure that when you are dealing with someone you can really be sure that you are dealing with the right person? “

With this belief in mind, Acuant has created a framework that assesses the identity of customers by asking the most important questions to build and maintain trust:

• Is he a real person?
• Is this person who they say they are?
• Can I do business with this person?
• Should I do business with this person?

The idea behind this framework is that banks go beyond simple identity verification to really understand if they should do business with someone. Acuant’s platform answers these questions during onboarding, while allowing banks to constantly see user behavior, monitor that user, and recheck that user’s identity in other instances.

“It’s a much more complete view of what these identities and [who] these users are, ”Caldera said. “We’re thinking of a comprehensive framework that allows us to measure trust at the start, middle, and end of this relationship.”

Conclusion

Building customer trust in the digital age and open banking can be a challenge, but it is crucial for banks to remain competitive nonetheless. By deploying the right security tools, financial institutions can meet the challenge.