Credit unions focused on growing membership already know that letting people onboard and manage their account digitally is important. Ask a younger person to visit your local branch and complete a paper application and you’ll likely get an eye roll in response — at best.
Shifting your entire onboarding process to digital might be too large of a lift to tackle all at once. Instead, let’s focus on a hurdle that could be (relatively) easy to jump: online identity verification (IDV) at onboarding.
How does identity verification work?
IDV is the process of collecting and verifying identity information about a person to make sure they are who they say they are.
- In-person verification: At a branch, this might involve asking a new member to show a government-issued photo ID, comparing the image to the person, and verifying that the ID is real.
- Digital verification: Online, it can happen when you collect identifying information about a person, such as their date of birth and Social Security number (SSN). You then compare it with information from a trusted source, such as a picture of their government-issued ID or a third-party database.
IDV is an important part of complying with Know Your Customer (KYC) and anti-money laundering (AML) regulations, which require financial institutions to collect and verify customers’ identities. At a minimum, compliance often involves verifying the customers’ name, date of birth, address, and an identification number.
Verifying identity can also help you detect bad actors who might try to open an account with a stolen identity. Or, who try to create synthetic identities to commit fraud.
How is digital IDV different?
Manual and digital IDV both involve collecting and verifying personal information, what you could call active signals and third-party data. A digital IDV process also allows you to gather and analyze passive and behavioral signals:
- Active signals that the member provides, such as their name and Social Security number.
- Passive signals from the member’s device, such as its IP address.
- Behavioral signals from how the member interacts with an application or tool, such as whether they copy and paste data, or use autofill.
- Third-party data from private and government databases, such as credit bureaus and the Social Security administration.
Generally, the process for digital IDV during onboarding looks like:
- The new member takes or uploads a picture of an approved identifying document, such as a government-issued photo ID. Pre-processing confirms that the image is usable (it’s not too blurry, the full ID is captured, etc.) or asks the person to take or upload a new image.
- The tool extracts information from the document, such as the person’s name, date of birth, and the ID’s number and expiration date. It then compares the extracted information to what’s on the application and data from third-party databases.
- The tool monitors passive and behavioral signals for signs of risk, such as an application coming from a device that was previously associated with fraud or a user hesitating before typing their name. Depending on the signals and your risk tolerance, you can approve, deny, or manually review the application.
- You can ask the member to take a selfie, then compare the selfie to the picture from the ID. This is called “liveness detection.” It can help detect deepfake selfies, and this added verification can offer more assurance that the applicant is who they say they are.
How to move from manual to digital IDV at credit unions
Credit unions can use digital IDV solutions in different ways depending on their capabilities and preferences. Here’s a progression we see as credit unions digitize document collection and identity verification:
- Manual (non-digital) review: You collect a potential member’s information from a digital application or at a branch when they apply to open a new account. Then, you manually review the documents and verify their identity offline.
- Manually send a link: You send new members a link to a digital IDV tool after they submit an application. They use the link to start an online process,
- Link from the online application: Your online application gives users a link to an IDV tool. The process is similar to manually sending a link after receiving an application, but embedding the link can help onboard new members faster and decrease your team’s workload.
- Integration with the online application: The IDV solution is integrated into your online application. New members use the tool to upload documents, and you can verify their identity without asking the member to leave your website.
The benefits of using digital IDV during onboarding
Online IDV is table stakes if you want to attract new and younger members who prefer digital experiences. But adding members isn’t the only benefit of going digital. Other benefits include:
- Making things more convenient for members: Allowing members to submit their identity documents from a computer or mobile device can be more convenient than requiring them to come into a branch during business hours.
- Collecting additional data: You can collect information online that you won’t get from an in-person review, such as a device fingerprint, that can help you stop account takeover attempts.
- Deterring more fraud: With online IDV, you can run additional verifications in real time. For instance, Social Security numbers and driver’s licenses can be verified against issuing databases to confirm that the information matches what’s in the database. These can help you stop identity thieves and detect synthetic identities.
- Building trust: You can educate members about how collecting and verifying their identity digitally can help you protect their accounts.
- Support more types of documents: Online IDV makes it easier to verify identities based on information from foreign databases. This can allow you to confidentially onboard new members who recently arrived in the U.S. or are temporarily visiting for work or school.
In short, it can be safer, easier, and faster to verify identities online.
Once you have the systems in place, you can also use the same tools to strategically reverify members when there’s a high-risk request. For instance, you might ask members to take a new selfie when they try to change their account information or make a large withdrawal.
A small step toward digitization can be a big win
Your long-run goal may be to create a fully digital onboarding experience, where new members can easily apply for an account, verify their identities, and start using your services without visiting a branch.
You may also want to have systems for selectively adding friction based on risk signals to detect and deter bad actors. For example, only requiring medium- to high-risk applicants to submit a selfie. Eventually, you could automate these processes and requests, allowing your team to focus on strategic objectives rather than manually reviewing applications and requests.
But these types of digital transformations don’t happen overnight. Starting with a simple step, such as sending new members a link to an identity verification tool, can be a quick way to improve your digital onboarding.
How Persona can help
At Persona, we offer the building blocks that companies use to power their identity verification and fraud prevention processes.
You can choose and customize the tools you need to fit your goals and capabilities, including creating branded processes for your members. There are even no-code options for creating and sending links to members to complete the identity verification process.
These include various types of verifications, including government ID, document, mobile driver's license, e-passport, phone and email, and selfie verifications. We can also run watchlist, PEP, and adverse media reports. And you can consolidate data from verifications, reports, internal sources, and third parties to manage cases in Persona.
With Graph, our link analysis tool, you can spot trends and abnormalities in members’ accounts. Shared data points, such as phone numbers, IP addresses, or device fingerprints, can help you uncover connections and shut down sleeper accounts and fraud rings.
We recently partnered with Member Driven Technologies (MDT), a Credit Union Service Organization (CUSO), to help bring these capabilities to credit unions. And we’d love to learn more about your digital account opening process and how Persona might help.
You can contact us, get started for free, or try an instant interactive demo to see what your digital onboarding could look like.
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