In 2017, only 33% of consumers worldwide had ever used one or more fintech platforms. Today, that figure has almost doubled. This staggering rate of growth in the fintech field over a relatively short amount of time can be attributed to the millennial generation’s preference for digital-first services, the onset of the COVID-19 pandemic (over a quarter of U.S. consumers tried a new method of banking during the pandemic), and the development of new technologies broadly. Unfortunately, the incredible strides made by the fintech industry in terms of convenience and financial inclusion for consumers have come at a staggering cost in terms of security. Eliza Haverstock and Jeff Kauflin of Forbes capture the magnitude of fintech fraud in their article Fintech’s Fraud Problem: Why Some Merchants Are Shunning Digital Bank Cards:
“…fintech companies like neobanks and robo advisors have an average fraud rate of roughly 0.30%. That’s as much as double credit cards’ historical rates of 0.15% to 0.20% and three times higher than debit cards’ less than 0.10% fraud rate. While these percentage differences might seem small, they’re significant given that banking profitability is measured in basis points or hundredths of a percent. And these seemingly tiny percentages add up. In 2020, identity fraud alone caused $56 billion in losses across all U.S. financial services firms, according to research firm Javelin.”
In light of astronomical rates of fraud, fintechs face an existential crisis. How do they deliver on their key differentiator of offering frictionless user experiences while putting a stop to the rampant fraud before they lose the widespread trust of the public? In a recent report, the experts at Aite-Novarica, an independent advisory firm, studied how a leading fintech (“Company A”) was able to do just that by simultaneously improving customer experience and reducing fraud.
In the report published by Aite-Novarica, Shirle Inscoe took a deep dive into the operations of Company A before and after it implemented the Prove Pre-Fill solution. Prior to implementing Prove Pre-Fill, Company A relied exclusively on scanning photo IDs:
“A consumer took a photo of a government-issued photo ID (e.g., driver's license or passport), then took a selfie during the onboarding process. The consumer’s document was validated as authentic through a variety of tests, a liveness test was performed, and the selfie was matched to the photo on the ID document to ensure it was the same person. While this identity verification process worked very well, the user experience was intensive and time-consuming. If the lighting wasn’t good, photos had to be retaken, and other issues could arise that would require consumers to redo other steps.”
While scanning IDs provided adequate security, it drove customers away because it added friction to their onboarding experience. Realizing they needed to reduce customer abandonment ASAP, the executives at company A went shopping for a better onboarding solution. Their must-have list included: “adequate identity verification coverage, accurate results, cross-channel coverage, and performance.” Fortunately, Prove was able to check all of these boxes and the speedy implementation of Prove Pre-Fill produced some incredible results: approval rates surged from the low-70s to mid-90s (meaning more legitimate customers successfully completed the process) and the average time it took to complete the application on a mobile device was slashed from 47 seconds to 10 seconds (a 78.7% decrease).
While the results described above are noteworthy, they are far from unique. Because Prove Pre-Fill leverages phone-centric identity to auto-fill forms with verified bank-grade data, it simultaneously shortens onboarding times for legitimate customers and forces fraudsters to self-identify as such by opting out of the service. To learn more about how leading fintechs are leveraging Prove’s phone-centric technology to protect consumers from fraud and accelerate onboarding, read the full Aite-Novarica report.
To learn about Prove’s identity solutions and how to accelerate revenue while mitigating fraud, schedule a demo today.
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