Nick Caley, Head of Financial Services & Regulatory, ForgeRock
Why has digital identity technology become a critical solution for the financial services industry?
Creating engaging customer experiences has become a critical success factor in determining the winners and losers in the rapidly evolving financial services industry. New market entrants and startups across many different sectors have disrupted established players and stolen their market share due to a laser focus on user experience, convenience and better value. Digital identity is a fundamental element of creating a seamless customer journey across lines of business and different types of channels, be it web, mobile, contact centre or a growing ecosystem of partnerships. Given the regulatory demands of Know Your Customer, Open Banking, and the EU General Data Protection Regulation (GDPR), digital identity helps financial services organisations not only get in compliance but also develop innovative new products and services to stay competitive.
How will the increased use of open APIs shape the financial services market?
A new payments business model will become available to banks once open banking takes effect. By opening up API access to the traditional structures that have dominated financial services, open banking and PSD2 create opportunities to condense the payments value chain. This allows the customer to seamlessly make payments, with authentication options such as facial recognition and fingerprint sensors ensuring payments remain secure. Another new entity enabled by PSD2 and open banking is the Account Information Service Provider, which is focused on the vast potential of transaction data to provide real insights about customers. This offers an opportunity for a deeper level of customer engagement, delivering a different experience from the online bank statement and inviting customers to engage with their own financial wellbeing.
Which activities should banks be prioritising in the wake of open banking?
To lay the groundwork for stronger, more trust-based customer relationships, banks should focus on convenience, choice and control. Time wasting and duplication of effort need to be swapped out for convenience if organisations are to take advantage of open banking. It’s now about redesigning the customer journey and delivering a seamless, context-aware customer experience, enabled by secure methods of authentication, biometrics and authorisation. Choice is also vital. Open banking is designed to give customers greater flexibility. Banks should embrace this and use it to gain an edge over their competitors. This means not just complying with regulations at a surface level, but going beyond that and offering real value and choice to the consumer. Banks have a distinct opportunity to extend identity assurance to a wider system that covers customers’ different life stages and needs. Lastly, putting customers in control of their own finances is essential through establishing a system and culture that treats customer data as a shared asset, giving users transparency and control over how and under what circumstances their information can be used.
What opportunities does Open Banking present, and which commercial strategies will thrive in the new environment?
Financial services firms have a tremendous opportunity through innovation and collaboration to extend trusted identities and their attributes to new services and develop further revenue streams. I expect to see the provision of highly customer-centric, digital financial services portals that leverage customer insight gained through access lead to a more complete view of a customer’s financial transactions. Such services can enhance customer loyalty as well as open new revenue opportunities for both banks and Third-Party Providers (TPP’s).
How can firms overcome the security concerns associated with data sharing?
With a modern digital identity platform, financial institutions can protect against malicious attacks and identity fraud through multi-layered security models. Through contextual authorisation and adaptive risk features, organisations can verify the authenticity of users, devices and things continuously throughout a session and mitigate risk whenever an anomaly is detected. Integrating identity context within the security response capability allows financial institutions to monitor users and their activity, with alerts for changes to identity and access behaviour in user activity reports. With identity, there is an opportunity to develop a mutually beneficial value exchange built on trust. In return for a richer user experience, customers will share more data if they can trust what will be done with that data.
What are the best strategies to encourage customer engagement?
Organisations can use the management of consent to earn a far greater degree of customer trust by giving customers control over who gets access to their data and for how long. In this way, digital identity powers a far more effective digital transformation as organisations gain a better understanding of their customers when they share actionable information on preferences, habits and choices. This can be used to create authentic, engaging customer experiences that contribute to loyal customer relationships.
Nick Caley will be joining us for the Open Banking Summit. This high-level, interactive forum will bring together senior-level professionals from all corners of the open banking space.
CONTACT US to secure your place