Digital banks use identity verification to enable a frictionless customer experience in exactly the same way that traditional banks don’t.
Recently I received my invitation to sign up with N26, the Berlin-based digital bank, which has just launched in the UK. Having more than a passing interest in new banks, I duly signed up.
Yet again I was struck by how smooth the account opening process is with the new generation of digital banks like Monzo, Starling, Tide and Revolut, compared to the usual suspects with their roots in Victorian England.
The friction and frustration when opening a legacy bank account is typified by the need to visit a branch to identify yourself. This usually involves the production of a driving license or passport plus a copy of the ‘classic’ identity document, a utility bill (the same one that can be purchased online for ‘theatrical purposes’).
However, the new banks let you open a bank account from the comfort of your own home, on your smartphone, in a matter of minutes, with no requirement to visit a branch (which is fortunate, because of course they don’t have any).
Recently I had the dubious pleasure of needing to be added as a signatory to an account with one of the legacy banking actors. What a painful and lengthy experience it was; especially visiting the local branch on the one weekday it was closed!
So what has allowed the digital banks to open accounts, in an app, on a phone?
The answer is the smart use of identity verification, via data checks and mobile handset image capture of identity documents and faces. This has transformed the customer experience, removing the friction and frustration that typifies the legacy banking process.
Although some of the older players are starting to move in the right direction, I’ve yet to experience one of their processes that matches the customer experience of a new digital bank.