The digital drive to replace the passport in financial services

Introduction

Identification is a process that appears to have been left in the dust by technological advancement. While many digital options are available to customers when it comes to opening a bank account, taking out a loan, or creating an investment portfolio, the authentication stages of these processes still pull us back to an age where the paper document is king.

For most actions that require authentication the fallback remains a digitized version of an existing physical identification (the scan or photograph of a passport or driver’s license). When you consider that proper identification and know your customer (KYC) controls sit at the very heart of a vast majority of the financial services industry, it’s not hard to imagine the role a digital replacement could play.

Information accuracy is critical for banks, brokers, intermediaries, and lenders. The smudge on a poorly scanned passport image affects not only a firm’s ability to offer prospective customers the right services but may also complicate its risk profile.

Regulators stand ready to lay massive fines at the door of noncompliant companies and are becoming increasingly interesting in gaining oversight on transactions. This makes watertight and proper handling of data another persuasive argument for widespread digital identity.

Sitting outside of the interaction between regulator and compliance officer are the customers. As their worlds become increasingly digitized and real-time, they have begun to expect a seamless experience in nearly every interaction in their lives. For many, it just won’t do for an account opening process to be held back by a week-long authentication process.

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