The financial services industry believes digital IDs can help eradicate financial crime, new research shows.
According to a new study from Kroll – the professional services firm formerly known as Duff & Phelps – 81 percent of financial services staff either agreed or strongly agreed that the concept of a digital ID could improve the effectiveness of the prevention of financial crime in the financial services sector would improve. .
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The survey found that financial crime is currently the main driver behind digital ID services adoption, with 34 percent of industry professionals citing the more effective Know Your Customer (KYC) processes as the greatest potential benefit to their business.
Other benefits mentioned were lower operational costs (20 percent), efficient ID verification (20 percent) and more robust verification processes (14 percent).
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Of the financial services companies surveyed, 57 percent spend more than £ 150 on hiring a new client.
Furthermore, the survey found that more than a third (35 percent) of financial services providers said it takes an average of three to five days for an account to progress from filing to opening at their institution. Another 29 percent said this process takes more than five business days.
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“The need for a comprehensive digital ID service is only becoming more urgent as fraudsters increasingly turn to identity to deceive companies,” said Mark Turner, general manager, a compliance and regulatory adviser at Kroll.
“Companies are aware of the threat and our survey respondents cited the effectiveness of KYC processes as the number one reason for using digital ID. By digitizing this check, companies can protect themselves by getting a clear picture of their customers and the level of risk they pose.
“In addition to tackling financial crime, digitizing ID verification will also save companies significant resources in terms of efficiency, resilience and costs.
“Digital ID is gaining acceptance and will support many initiatives as more companies implement digital authentication schemes. Businesses and clients alike will feel the benefits in almost all financial transactions, from buying their first home to getting a pension.
“Current onboarding processes, which use physical ID checks, are time consuming and pose a greater risk of human error and fraud. A universally accepted digital ID scheme will close the gap and create a tool that provides users on both sides with greater accuracy, efficiency and convenience. “