Dean Nicolls: How Jumio tackles new account fraud
New account fraud isn’t new, but it’s fast becoming one of the biggest problems in the digital banking era, costing the financial services industry billions each year.
In fact, 48% of all fraud value stems from accounts that are less than a day old (according to ). Experian’s 2020 Global Identity and Fraud Report found that 57% of businesses report higher fraud losses associated with account opening and account takeover than other types of fraud.
This is a problem that must be addressed from many different angles.
That’s why organisations need to adopt a risk-based approach and leverage a number of fraud signals.
Naturally, our value proposition here at Jumio is based on the capture of a user’s government-issued ID and a corroborating selfie.
But, sometimes additional data points are needed.
equip financial service organisations with an improved ability to uncover deeper data relationships in real time by confirming the existence of a given address and/or confirming the subject actually lives at the address captured on the photo ID.
At Jumio, we offer two flavours of address services:
- Address Validation: determines if the address extracted from a government-issued ID exists in the real world.
- Proof of Residence: checks to see if the person being verified actually lives at the physical address extracted from their ID document. In the US, if the user moved, we would return whether the address provided matches the most recent address on file.
These services help bankers and their underlying systems become more efficient and smarter, while also delivering several other compelling benefits:
- Meet compliance mandates: Some regional regulations require you to validate addresses and establish proof of residence using independent public sources. This is especially helpful in the UK, where Financial Conduct Authority regulations require FIs to collect two different documents (one for ID and one for address).
- Properly formatted addresses: Jumio returns a valid and standardised address which ensures that only valid billing and shipping addresses are captured and used in your systems. With this, you can help ensure that any future communications to the new customer by regular mail will be delivered to the intended person on time.
- Single API: Instead of integrating multiple APIs for identity verification and address validation, you now just use one API.
The most comprehensive way in which to combat new account fraud without negatively impacting the end user experience is with a holistic, multi-layered approach to onboarding.
The combination of identity verification and address services helps organisations corroborate digital identities, combat new account fraud and keep their CRM data clean.
Organisations want to have higher levels of assurance when they onboard new customers, but this is becoming increasingly difficult with increasingly sophisticated fraud tactics.
Layering in address services helps triangulate a user’s digital identity with higher levels of assurance.
FIVE things fintechs must do to keep investors onboard
New investors flocked to the stock market during the COVID-19 pandemic. Thirty-eight percent of investors said they had never had a brokerage or similar account before opening one in 2020.
Low or no-fee trading options have helped accelerate the trend – nearly half of new investors said they accessed their account primarily through a mobile app. As FinTechs, how do we create the trust needed to keep new investors in the market and create a fruitful customer experience for them?
The financial industry does a disservice to individual investors if we merely offer tools that focus on making money quickly, an approach that usually backfires. Instead, the surge of interest presents an enormous opportunity for those who want to help more consumers use financial technology to educate them on responsible spending, saving, and investing in order to achieve financial wellness current fintech tools have welcomed individual investors in the door.
Now, it’s time to focus on education and improving their experience going forward. There are several ways those of us in fintech can step up to shape the future of retail investing so that it works better for everyone, starting with the following areas.
Equal access to financial wellness education
Financial health should be available to everyone — but today, not everyone has the educational resources to achieve it. One study shows that only 3.9% of students from low-income schools were required to take a personal finance class. What they aren’t learning in school or from family members, fintech companies can provide on their platforms.
The companies should move from solely offering financial services to a more responsible model of education, advice, and prescriptive choices to help consumers develop better habits and make wiser financial decisions. Not only can they empower consumers and bridge historical wealth divides, but they can also stimulate growth by opening up new consumer segments.
Just as we’ve come to expect that our fitness routines are tailored to our individual bodies, we’re also ready for finance tools that go beyond one-size-fits-all solutions. But only six percent of financial institutions say they’re using the kind of technology that allows them to deliver a deeply personalized experience. Fintech tools need to reflect that financial success looks different for each of us.
For one consumer, it may mean providing guidance on how to pay off student loans early; for another, it may mean prescriptive actions that enable them to stick to a budget for the first time; for a third, it could look like prioritizing environmental, social and governance (ESG) investments, so that her portfolio aligns with her political beliefs.
Now, we are seeing financial technology beginning to meet the demands of personalized finance in a substantial and meaningful way.
The rise of AI-Powered Advice
Big-picture advice and predictive guidance used to be a feature of high-end financial advisory firms — a perk only available to those who could afford it. But thanks to rapid advancements in data analytics and artificial intelligence (AI), that kind of holistic advice is now more accessible than ever. AI-driven robo-advisors can parse many different streams of financial information, delivering customized answers to key questions: Is it time to buy a home, or is it smarter to keep renting? Can I afford to take out another student loan?
Intelligent connectivity powered by AI can anticipate consumers’ needs and next steps, making proactive suggestions that guide them along the path to financial wellbeing. Fintech companies can also help consumers identify when their financial picture becomes too complex for a robo-advisor, and help them find a human financial advisor to meet their needs.
Focus on financial mental health
New investors are quickly finding that the market can be overwhelming. That’s not surprising, financial anxiety is common and studies show that financial stress can have an impact on mental health for some.
It’s not enough for fintech companies to give retail investors access; they also must provide the guidance and support that help consumers manage their financial well-being. Educational tools can ensure that consumers are well informed about their options.
Predictive analytics can anticipate consumers’ questions, serving them key information and insights before they ask. Features that emphasize a comprehensive notion of financial well-being, rather than short-term wins and losses, can also help ensure that consumers are keeping their eyes on the bigger picture.
Gamification for good
The surge of gamification apps has done an impressive job making investing as engaging as playing a video game or joining a social media platform.
Much of the current use of gamification emphasizes short-term thinking, but there’s also an opportunity to help consumers think more broadly about their overall financial picture. One example is peer benchmarking, a feature that enables help consumers to see how their financial habits compare to those of friends and fellow consumers.
Gamification can also be used to incentivize making smaller, smarter choices — for example, rewarding saving over making an impulse buy.
The future of fintech is about more than just broadening access to the markets. It’s about making sure more individuals have access to the tools that can help improve their financial well-being—in the ways that suit their own circumstances and needs. The potential to act within their own set of individual priorities, with their long-term financial wellness in mind is much more empowering to a consumer than simply relying on short-term, high-risk investments.