11th September 2017 – LAB Group presents on financial services customer on-boarding to the Thai Securities and Exchange Commission (SEC) and members of the Association of Thai Securities Companies (ASCO).
Photo: Nick Boudrie, CEO of LAB Group with Pattera Dilokrungthirapop, Chairperson of ASCO and CEO of DBS Vickers Securities (Thailand)
In September, LAB Group presented key industry insights to prominent delegates from Thai Securities and Exchange Commission (SEC) and members of the Association of Thai Securities Companies (ASCO).
It was a pleasure to share the knowledge we have gained from over seven years experience in facilitating over half a million investor applications from more than 200 countries. We covered the following critical topics on digital customer acquisition, including discussions about the challenges of compliance in the current financial services landscape.
Our experience has taught us that financial services companies from all over the world follow the same procedures and patterns to open accounts, despite location and type of service offered. No matter where or who you are the process generally follows:
It is essential that your digital solution does not miss these steps, or fail to cater to potential scenarios such as applications originating via an intermediary advisor group. The danger is a narrowing of digital benefits and any gaps inefficiently plugged using non-digital solutions. This type of situation could negatively impact user adoption and erode the return on investment for future digital initiatives.
To break it down even further, we see the investor engagement and account opening journey following these core pillars:
Traditional e-commerce digital acquisition, such as a website application for a credit card or personal loan for an individual, no longer support the requirements of the above pillars. As an industry we need to move away from these traditional techniques to cater for a more complex process that addresses the current needs of digital customer onboarding.
The overall user experience (UX) and the user interface (UI) need to combine and provide a solution that covers all aspects of the customer journey as outlined in the pillars.
The best-designed UI in the world is not good enough if the result is an Adobe PDF form to be printed out and signed; a better UX is a UI that will allow the customer to use a digital signature. Better still, the technology would automatically create an account and accept funding using an API.
An essential factor discussed during the presentation was the different forms of electronic identity verification currently available. The goal with any of these techniques is to strengthen the certainty that the applicants are who they claim to be.
The current technology mix covers:
Electronic Identity Verification (EV, EIDV) – matching details such as name, address and date of birth against independent data sources (this could be an electoral roll or utilities database). EIDV is also generally used to summarise a combination of the other technologies listed below.
Government-issued document verification – an Australian example of this is the Document Verification Service (DVS) used to compare a customer’s identifying information with a government record (e.g. passport, driving license).
Identity (ID) document scanning – scanning or photographing identity documents and uploading them to undergo various fraud checks before OCR, EIDV and government record checks.
Optical character recognition (OCR) – the process of scanning printed or photographed documents to convert the characters (words, numbers, symbols etc.) to an electronic format to assist in data collection. The information is then used for EIDV. For example, a scanned driving license number can be checked against government records or from the DVS in Australia.
Biometrics – comparing a biometric signature (for example, a photo of a face) to an identification document such as a passport. In the future, biometric signatures could be stored as official government records, negating the need for the customer to provide the comparison point (i.e. the passport or drivers licence).
This technology is evolving quickly in image quality and accuracy; for new payment technologies in China, applicants are asked to blink or smile as part of the biometric verification, and we can now unlock phones using facial recognition – an upgrade to the thumbprint. These technologies are becoming increasingly ubiquitous and therefore more acceptable in financial services transactions.
Face to face – a traditional face to face method of opening a digital account is important for eliminating costly paper-based methods. The ID document can be signed in person while the account advisor is present, providing further verification for the online account opening process. FSC (Financial Services Council) identity forms can also be leveraged more easily from a face to face scenario.
PEP/Sanction list screening – checking a person’s details against politically exposed person (PEP) lists, or other watch lists (such as RBA financial sanctions, OFAC, DFAT). Although often confused with electronic identity verification, it is a different process.
Data challenge – account set-up and access can come in the form of one-time passwords (OTP), multi-factor authentication (MFA) and/or asking the customer to input details such as date of birth to access their digital records.
There are issues with a digital access process based on PII (personally identifiable information) involving electronic ID verification. The process could break down when a customer is re-engaging with a process; without the assurance that it’s still the same person, the record could become compromised.
The challenge with all these different providers, technologies and methodologies is how to unite them under a consolidated workflow, providing a customer experience that is not alienating when the process gets complex. There are also change, operational and risk management considerations to take into account. The solution to these challenges is a continuous investment into on-boarding technologies and processes.
In the presentation, we also discussed some of the leading drivers in the market for digital customer engagement. Some of these initiatives include:
The presentation was summed up with the following points:
Achieving market consensus on regulatory and compliance requirements is vital for the customer acquisition industry. Standardisation will lead to consistency and implementation efficiency, resulting in a higher rate of acquisition. LABform’s CRS implementation to multiple organisations is a practical example of this.
Less than 30% of the global industry is digitised, and as the demand for digital solutions increases, the industry needs to catch up. Traditionally, online engagement has been a simple mass retail scenario which is no longer applicable to the growing need for more adaptable processes. Implementation of new technologies is a challenge for lower customer acquisition volume asset class businesses, who find it difficult to justify their own technology builds in a business case.
Additionally, we need to address the complexity of engagement (e.g. adviser drafting for online applications and intermediary engagement channels).
Drawing up a roadmap of the various fast-moving digitisation technologies available and how we can engage with them, will help the industry keep up with legal, compliance and change management considerations.
Investors need to feel comfortable with the rapid change in technology. The rate of advancement can sometimes be alienating, and as an industry, we need to assist them with their acceptance of new technology. For example, as a society were we comfortable with the idea of a thumbprint to access internet banking before Apple made it ubiquitous?
Any on-boarding platform must follow a roadmap of continuous improvement. We are involved in an exciting, specialised and constantly shifting field where new technologies, changes in consumer behaviour and compliance regulations are all considerations for new products and services. We need to be proactively at the forefront of this technology, rather than reacting to the changes it brings.