Blog: Security and Future of Digital OnboardingNovember 2019
Purely digital onboarding is not fully allowed in the Czech Republic. Despite this fact, some Czech banks still allow accounts to be set up completely digitally. The law considers a combination of online verification and verification payments from a client’s account with another Czech bank to be an acceptable alternative. Legislation presumes that full physical verification has already been carried out when setting up the account at the other bank and that the financial institution with whom the client is setting up the new product can trust this verification.
Digital authentication of documents and a person’s real appearance may not seem 100% reliable at first glance. On the other hand, in the real world, using false identification to deceive a member of the staff at a branch or a courier when handing over document to you on the street is probably not that much more complicated. Of course, this is a problem for the banks, because an unpaid loan provided to a fraudster with a false identity is hard to recover. The bank also risks severe penalties if cases of money laundering or funding terrorism are detected.
As a result, banks often deal with this issue by limiting access to the full portfolio of services for digitally verified clients and might require additional personal verification when handling higher amounts. Most banks, for instance – even those that offer digital onboarding – will still not allow a client to get a mortgage without visiting a branch in person. However, a bank that does not want to play the proverbial second fiddle on the market should be capable of offering basic services fully digitally, despite the risks described above.
Vision for the future
Digital onboarding will likely play a very important role in the future of banking and will help banks with the rapid acquisition of clients and a reduction in costs, as well as introducing interesting innovations. Ideally, these innovations will lead to even more empathic services and an improved user experience.
An example of this kind of innovation could be identifying a client through facial recognition technology without the client ever visiting the bank in person. Digital onboarding verification allows the bank to have an electronic record of what a person looks like and will be able to identify them immediately via a camera at the branch.
From the first second, the bank advisor will be ready for a specific client and will immediately see an overview of his products in front of him and be able to help and advise them with relevant and up-to-date info. This will lead to less time spent at the branch and increased client satisfaction. Banks that are agile and flexible when it comes to process digitisation will gain a significant competitive advantage.
Potential involvement from the state may be an important factor that could also have a significant impact on the entire digital client authentication field. An increasingly discussed topic is the potential use of a citizen’s banking identity to communicate with state authorities (e.g. the “Sonia” project in the Czech Republic). Almost everyone has a bank account today and the authorities can obtain a reliable identifier with almost complete coverage. However, it is still possible that the state will continue with its smart identity card project, smart card readers will be more widely used, and these identity cards could be used to make digital contact with the bank.
About the Author
Product Manager, BSC
Lubomír Tomány is responsible for the product roadmap of Digital Bank OS, with which BSC has come to dominate both the domestic and international markets, making it a key player in the field of banking sector digitisation.