The financial services industry believes that digital IDs could help to stamp out financial crime, new research has revealed.
According to a new survey by Kroll – the professional services company formerly known as Duff & Phelps – 81 per cent of financial services staff agreed or strongly agreed that the concept of a digital ID would improve the effectiveness of financial crime prevention across the financial services industry.
The survey showed that financial crime is currently the primary driver behind the adoption of digital ID services, with 34 per cent of professionals in the sector citing more effective know your customer (KYC) processes as the greatest potential benefit to their company.
Other advantages cited were lower operational costs (20 per cent), efficient ID verification (20 per cent) and more robust verification processes (14 per cent).
Of the financial services firms polled, 57 per cent are spending more than £150 when onboarding a new customer.
Furthermore, the survey found that over a third (35 per cent) of financial services professionals said it takes an average of three to five days for an account to progress from application to opening at their institution. A further 29 per cent said that this process takes over five working days to be completed.
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“The need for a comprehensive digital ID service is only growing more urgent, as fraudsters increasingly target identity to deceive businesses,” said Mark Turner, managing director, a compliance and regulatory consulting at Kroll.
“Companies are aware of the threat and our survey respondents cited the effectiveness of KYC processes as the primary reason for adopting digital ID. Digitising this check helps businesses protect themselves, by building a clear picture of their customers and the level of risk they pose.
“As well as tackling financial crime, digitising ID verification will also save companies significant resources in terms of efficiency, resilience and costs.
“Digital ID is growing in acceptance and will underpin many initiatives as more firms implement digital verification schemes. Both businesses and customers will feel the benefits in almost all financial transactions, from buying their first home to accessing their pension.
“Current onboarding processes, using physical ID checks, take significant time and pose a greater risk of human error and fraud. A universally accepted digital ID scheme will close the gap, creating a tool which provides greater accuracy, efficiency, and convenience for users on both sides.”