Nimble financial technology (fintech) lenders have outpaced traditional banks and credit unions in offering digital loan applications that can be submitted by consumers with a few entries on a mobile phone. A recent ABA State of Digital Lending study found that “the majority of banks’ lending processes—including online application, onboarding, processing, underwriting and funding have yet to be overhauled through technology.” The study also found that many online lending solutions deployed by traditional banks still lag in providing the efficiency and frictionless experience that consumers demand.
With the COVID-19 pandemic creating financial strains on many individuals, more Americans are resorting to loans to pay their bills. Consumer debt reached a record high of $14.3 trillion in the first quarter of 2020, significantly surpassing the previous all-time high debt level of about $13 trillion during the Great Recession in 2008.
While loans can be a convenient source of funds, the application process is often a hassle, especially with legacy systems that take too long to complete the application, or with closed branches that limit compliance with outdated in-person document inspections and identity confirmations. Outdated loan processing can also make people feel inconvenienced and distrustful with burdensome document copying, expensive shipping fees, and lost or stolen documents—all issues that negatively impact the loan provider.
By deploying remote onboarding solutions that leverage biometric identity verification, banks and fintech companies can offer a lower friction application experience and improve loan processing efficiency and security by weeding out bad actors early and converting good customers more quickly.
Biometric Technology Offers Increased Convenience
With closed branches and reduced in-person banking hours, the pandemic has accelerated consumer adoption of mobile banking services. Unfortunately, digital automation drives increased fraud and less certainty about who is applying for a loan. The use of biometric technology can mitigate these risks by using inherence factors like facial recognition, fingerprint scans, and iris scans to authenticate a person’s identity.
Mobile facial biometrics can replace conventional in-person identity verification requirements with a more robust solution offering greater identity certainty in a fraction of the time than manual inspection that is ripe for mistakes and fraud. The ease of capturing a face with widespread mobile devices allows for a seamless user experience that can be performed anywhere. Mobile biometric identity verification also meets demands for “touchless” identity verification, by eliminating the need for in-person visits or the purchase of expensive in-branch hardware.
Biometric Technology Offers Increased Security and Identity Proofing Accuracy
Anti-fraud and Know Your Customer (KYC) regulations require the financial sector to adopt enhanced security methods that can mitigate fraud, prevent criminal infiltration and safeguard customer’s valuable information.
With biometric identity verification, financial firms can increase confidence that they enroll only legitimate individuals who rightfully own the identity they claim. Mobile biometric identity proofing solutions can scan facial features and match a selfie to a government ID photo. Some identity verification solutions can also confirm the authenticity of the credential by comparing the document’s data or security features with credible reference data sources like government registries to prevent fraudsters from cheating by using fake identity documents.
Moreover, modern biometric identity proofing technology should deploy additional security features like liveness confirmation and anti-spoofing detection to ensure that a real person is present at the time of authentication. With easy access to social media images and print image doctoring, fraudsters may be able to spoof a facial recognition system. To plug this security gap, customers should be asked to undergo a liveness detection test such as blinking or moving their head to confirm the presence of a real individual at the time of verification.
More sophisticated authentication solutions often include additional passive liveness and anti-spoofing attempts that work in the background, so fraudsters are not aware the liveness detection is occurring. Presentation Attack Detection (PAD) usually offers additional protocols and security features to detect inconsistencies with the customer’s image that could have been applied by a fraudster.
With the growing number of loan applicants in the US, financial institutions are driven to adopt modern technology to increase their loan processing efficiency.
Many organizations are looking to use automated security solutions like mobile facial biometric identity verification solutions. This innovative technology can help financial enterprises identify legitimate customers and speed up loan processing to inform clients of their application status quickly.
Biometric solutions have evolved such that they deliver highly accurate identity proofing results. They also deploy additional security features to mitigate fraudulent applications, thereby allowing better loan decision processes that speed up customer conversion and increase revenue.
Proof™ by authID offers mobile facial biometric technology to streamline identity proofing and identity document authentication procedures for better accuracy in digital onboarding and automated loan processing applications. Proof harnesses mobile technology, anti-spoofing liveness confirmation, and biometric matching of a selfie to verified credentials to expedite processes and mitigate fraud. To provide the financial services sector with the highest level of identity assurance, Proof also offers automated identity document authentication including validation of US, Canadian and Mexican driver’s licenses.
Schedule a Demo with authID
authID.ai is a provider of an Identity as a Service (IDaaS) platform that delivers a suite of secure, mobile, biometric identity solutions, available to any vertical, anywhere. authID‘s products can improve financial establishments’ loan processing efficiency while ensuring their services’ security and accuracy and providing a seamless user experience. Contact authID today at 1 (516) 778-5639 or click here to schedule a demo.