Security has long been a top priority for financial institutions all over the world. As technology progresses, so is the means of hacking. This has resulted in banks taking a more stringent approach to protect their network and systems. Fraudsters are just a step behind and so banks really need to be innovative with the way they secure their customer’s information and money.
Opening an account used to only require that customers present an ID or two. Today, it takes more than that to ensure that bank personnel are dealing with a legitimate customer. Policies for verification may have become stricter but this also means a more secure account and higher trust from customers.
For most banks, they do verification via the KYC process or Know Your Customer. This is a requirement for banks in identifying and verifying their clients when they open an account. The typical KYC process consists of an ID verification, face verification, document verification (utility bills, residence permits), and third-party check.
All this information does not have to be provided right away. It can start with a simple ID and utility bill. Then, when the time comes that the customer needs to make a high risk transaction such as transferring a large amount or processing a direct deposit, they have to provide a higher form of verification. This is very convenient as not all customers feel comfortable having to give all their information at once.
With the existence of biometric identification, the KYC process is bound to get even easier as customers only need to provide biometric characteristics like their face or fingerprint. This doesn’t require the customer to authenticate themselves over and over again. Once their biometric identification is set up in the system, every transaction moving forward becomes effortless. The convenience combined with better security is something that all customers want.
Customers tend to stick with banks that follow a strict verification process. Furthermore, they trust banks with their personal data more than any other institution. This is what they found in a survey done by nCipher Security. 68% of the respondents said they trust banks the most while only 23% say that they trust the legal profession and 20% say they trust their cellular provider or their government with their personal data.
However, this trust can easily be eroded. When a customer feels like they are not in control of their information, they’re likely to not trust the bank again. In the same survey, customers shared that they feel more secure when banks share relevant information to them –information such as the types of account they own, how their personal data is used, etc.
They also want to be informed right away if the bank encounters a data hack. In the survey, they said that they don’t trust banks that don’t have control over their data security. This is why financial institutions should not attempt to cover up their mistakes during data breaches. It shows incompetence and lack of accountability and will only lose customer trust.
The best way to go is to take precautionary measures ahead of time. Use KYC in banking for better protection and halt suspicious transactions right away. Yes, it may be inconvenient for the customer to have to call and approve a transaction but they’ll also appreciate the bank’s efforts to secure their account.
Millions of dollars are lost in fraud crimes every year, and banks are certainly not immune to them. When it comes to verification, we’re not only doing it for the customer sake but the institution’s as well. There are laws in place that mandate banks to handle customer data responsibly. In the event of a data breach, banks risk losing millions and possibly closing down the institution.
What forms of verification have you encountered with your current bank? Do you feel it’s secure enough? Share your thoughts in the comments below.