North American banks struggling with ID fraud risk
A banking customer identity and authentication survey conducted by independent research company Omdia on behalf of FICO, a registered trademark of Fair Isaac Corporation in the U.S. and other countries, maintains that banks in North America are falling behind in their fight against fraud risk.
In today’s digital era, banks striving to combat online fraud may be harming their customers’ digital experience, the report found. The May 2020 survey of respondents from 172 banks, (of which approximately 34% live in North America), reveals several shortcomings.
FICO’s Customer Identity Management Survey of leadership in banks across the U.S. and Canada found that even though COVID-19 quickly turned online banking into an essential service, financial institutions across North America “are struggling to establish practices that combat online identity fraud and money laundering, without negatively impacting customer experience.”
Many banks fail to meet their customers’ online identity fraud and digital banking needs, according to the survey, and such flaws in digital banking experience can be costly to banks.
According to FICO’s recent Consumer Digital Banking study, 75% of consumers would open a financial account online, yet at 23%, nearly a quarter of these prospective customers “would abandon opening an account if forced to prove their identity via another channel.”
Only 49% of North American banks presently use digital methods to capture or verify identity when opening personal bank accounts (checking accounts).
Over half, or 51% of North American banks are still asking customers to prove their identities by visiting branches or posting documents when opening digital accounts. The same applies to 25% of mortgages or home loans and 15% of credit cards opened digitally.
“The pandemic has forced industries to fully embrace digital. We now are seeing North American banks that relied on face-to-face interactions to prove customers’ identities rethinking how to adapt to the digital first economy,” said Liz Lasher, FICO’s vice president of portfolio marketing for fraud. “Today’s consumers expect a seamless and secure online experience, and banks need to be equipped to meet those expectations. Engaging valuable new customers, then having them abandon applications when identity proofing becomes expensive and difficult.”
The study found that only 16% of U.S. and Canadian banks employ the type of secure, fully integrated, real-time digital capture and validation tools for consumers to open a financial account online. Often digital ID verification methods expect consumers to use email or visit an “identity portal.”
The lack of automation when verifying customers’ identity is a pain point for customers and 53% of banks. Primarily because regulation intended to prevent criminal activity such as money laundering typically requires banks to review customer identities in a consistent, robust manner that “is harder to achieve for institutions relying on inconsistent manual resources.”
Up to 75% of banks in the U.S. and Canada reported plans to invest in an identity management platform within the next three years.
“By moving to a more integrated and strategic approach to identity proofing and identity authentication, banks will be able to meet customer expectations and deliver consistently positive digital banking experiences across online channels,” the report notes.
New American integrates Zigzy’s RE tech
Private mortgage lender New American Funding (NAF) recently teamed up with Zigzy, a real estate and mortgage fintech startup. Under the partnership, NAF is integrating Zigzy’s signature real estate solution Townify into its lending platform.
Townify allows real estate agents to access and manage all the mortgage transaction related operations and data they need aggregated into a “one-stop shop” format.
- Schedule and host a virtual open house, complete with a personally branded sign-in sheet for all prospective buyers that attend
- Manage the pipeline using fully developed CRM (customer relationship manager) for real estate agents, so they can track clients from property viewing, to application and loan closing
- Create and automate branded marketing customized for single-property websites, flyers, and other unique offerings
- Build an agent-branded home shopping app that is accurate and filters out competitors’ ads – which agents can use to offer clients direct access to multiple listing services
- Manage social media content by making it easy to post open house announcements, property information, and other content
- Monitor real estate production information, including access to data from peers across the country, enabling agents to track competitors’ closings, compare buy and sell side transactions, “and identify the best candidates to recruit to their team,” the company said.
The platform also gives real estate agents real-time mortgage loan status, access to key contacts on the loan transaction, including loan originator, listing agent, title company, escrow officer, and more key data.
In celebration of the partnership, Rick Arvielo, CEO of New American Funding, was a featured speaker at the first “Townify Summit” virtual seminar hosted by Townify on October 14, 2020, alongside other mortgage lenders and nationally renown real estate agents who have been relying on critical technology solutions that support the housing market “in these unprecedented times,” the company said.
NAF is a family-owned mortgage lender that also manages a $36 billion servicing portfolio of over 146,000 loans, recognized as a fast growing firm by Inc. 5000’s list six times, that reportedly provides loan officers with innovative mortgage technologies and training.
PURE launches luxury home risk report
Privilege Underwriters Reciprocal Exchange (PURE), a policyholder-owned property and casualty insurer for high net worth, luxury property owners, has launched PURE Home Spotlight report.
The PURE Group of Insurance Companies affiliate announced its new Home Buying Report, a digital tool that uses risk data to help PURE’s membership of more than 97,000 families from across the U.S. to understand risks of potential luxury home purchases.
“Historically, about one in seven PURE members has purchased a home in a given year. With mortgage rates at an all-time low and the growing demand for vacation homes and suburban residences, we could see an increase in real estate shopping among the PURE membership,” said Matt Schreibeis, head of member experience for the PURE Group of Insurance Companies.
“PURE Home Spotlight adds greater transparency and confidence to the home buying process for our members while reducing the friction that comes when finding out too late that the home may not be insurable or that insurance may not be as affordable as expected.”
Exclusively available to the PURE membership, Home Spotlight assists homebuyers by offering “data and insights on property-specific risks that could identify homes at greater risk for future insurance claims,” the company said, in addition to initial evaluation of whether the home would qualify for PURE insurance.
PURE focuses on high net worth families, providing customized coverage for high-value homes. The home buying report includes several sections.
- Hazard data: Based on the typical geographical risks, data on fire, flood, hail, earthquake or other local threats in the report are added to “additional perspective on how the data is relevant to the property.”
- Loss history: As part of the pre-underwriting process, the report shows if real estate brokers have filed any property claims in the multiple listing service databases for a specific location within the past five years.
- Permit data: Where allowed, the report contains a summary of the publicly filed permits on the property, including the date and valuation for projects, including repairs and improvements.
- Insurability rating: The report begins the underwriting process and indicates the likelihood that PURE would insure this property based on available data.
“With so many unknown variables in the world, making a large financial decision like buying a home …you want as much information as possible before moving forward with that decision,” said PURE member Dan Feder, adding that PURE Home Spotlight provides “clean, coordinated information that shows the full gradation of fire, earthquake and flood risks.”