Digital identity is a relatively new and transformative industry which offers significant benefits for regulated financial services institutions. It has the power to optimise customer acquisition strategies through digital channels and it is a concept which is now at the heart of the regulatory technology agenda as a robust tool for KYC (know your customer).

Digital identity platforms can be used in financial services to:

1.      improve customer experience

2.      speed up onboarding

3.      reduce operational costs

4.      enhance standards of regulatory compliance for KYC

5.      mitigate the ongoing risk of fraud through customer authentication.

In financial services, digital identity is already being used by a number of early adopters, which has transformed the customer digital experience. Consumers are now becoming accustomed to this technology and as such it is fast becoming the expectation of the norm. 

Whilst there are clear uses cases for regulated financial services to explore, other industries are also pioneering digital identity to make life easier, safer, and speedier for consumers. As an example, Yoti is working with governments, airports, social media sites, retailers, convenience stores, the nightlife economy, ticket agents and property managers.

There is now genuine interest in widespread adoption of digital identity as a solution across financial services, which can position the UK as a leader in regulatory technology solutions. This can lead to new and effective controls in the fight against economic crime. For example, KYC onboarding and ongoing monitoring of customers is still perceived as a problem area. Digital identity can assist this process through assured knowledge of (i) the verified identity of the individual and (ii) identity credentials which provide sufficient information pertaining to that individual in order to determine that they do not pose an unauthorised anti-money laundering risk.  

Amongst a number of other digital identity pilots being run in the UK, Yoti's Project Endeavour is a shared KYC scheme which aims to put the consumer in control of a digital onboarding experience through the consent-based sharing of their identity profile through a digital wallet app. The objective of Endeavour is to provide a managed outsourced KYC scheme for subscribed regulated firms. The subscribed firms, who together form a trusted network, can share financial crime risk indicators on the same individual customer and work collaboratively to keep out identified bad actors, whilst at the same time making the onboarding journey simple and fast for those who are not.

Gareth Narinesingh is Yoti's Commercial Director for Financial Services and will be presenting in the Pioneer Zone at UK Finance's Digital Innovation Summit on 15 October 2019. If you are considering digital identity as a solution or are interested in this field of technology and its potential impact on industry and consumers, this is a talk for you.