With the rise of new players in the banking space over the last few years, traditional banks have been inundated with the same advice: innovate or die. But when the COVID-19 pandemic hit, this message became an immediate call to action. Quite simply, banks currently have a small window of opportunity to innovate in order to gain new customers and keep the ones they have. The challenge is that the innovation must be both smart and secure.
Jumio
Some banks have met the challenge with great success, focusing on attracting new customers through streamlined onboarding experiences and creating powerful apps, websites and features that make it easy for customers to manage their money without ever stepping foot inside a bank. The following best practices demonstrate how successful banks have faced these challenges:
1. Keep an Eye on the Tech Giants
When we talk about new players, we don’t just mean challenger banks (small retail banks) and neobanks (online-only banks). The true threat to traditional banks are the large technology firms — new players in the financial space who are goliaths when it comes to innovation.
2. Balance Fraud Prevention vs. Friction
Customers want to be able to apply quickly with a minimal number of clicks and a simple, intuitive user experience. It’s critical to keep bad actors out of your company, but it should not be at the expense of an easy onboarding experience for legitimate customers.
3. Honestly Assess When to Buy vs. Build
IT teams are always spread too thin with multiple projects, and it typically takes 18 months to design, develop, test, refine and release an effective solution — at which point the solution is already outdated. DIY thinking puts these banks well behind the competition and provides a golden opportunity for new players who can innovate quickly and gain tremendous market share.
4. Harness Insights from Third-Party Services
Even if you decide to build your own solution, you can cut down dramatically on onboarding time and vastly improve identity verification accuracy by harnessing the near real-time insights offered by third-party service providers. For example, with Jumio, you can perform address validation, proof of address and driver’s license lookups on the fly.
5. Never, Ever Skimp on Security
In the rush toward digital transformation, some banks moved too quickly to provide features like online onboarding and opened themselves to security risks. Whether you buy a solution or build your own, security is paramount to maintaining your reputation and avoiding expensive fines and lawsuits.
6. Stay Ahead of the Compliance Curve
Consumers are more and more willing to bank online, apply for a loan right from the website where they’re making a purchase and pay through social media — as long as they trust that their bank is keeping their money and identity safe. You need to keep their trust by ensuring your compliance program stays ahead of the criminals and that you stay out of the headlines.
Summary
It can be a daunting task for a traditional bank to develop and execute a strategy that will attract more business, keep bad actors out while streamlining the process for good customers, ensure security and compliance, protect the bank’s reputation and maintain their customers’ all-important trust that their money and data are safe. This guide provides more information on the best practices in each of these areas so you can future-proof your business.
