Creating A Frictionless Member Experience

Posted by Julie Esser on Jul 10, 2019 9:00:00 AM

When it comes to relationship building, credit unions are known as leaders in the financial services industry; however, many members are frustrated with antiquated methods to confirm their identity. Whether it’s a personal identification number (PIN) or a series of personal questions, the financial services industry has long taken cumbersome and time-consuming measures to verify identity.

Every interaction between credit unions and their members start with verifying one another’s identity. Credit unions need to know the person is who they claim to be and deliver a positive member experience while remaining compliant with Know Your Customer (KYC) requirements. Historically, credit unions have relied on asking personal questions that, in theory, only the member would know the correct answer. These questions might include deeply personal information, such as verifying the last four digits of their social security number, stating a full home address or listing the last three purchases made through the account.

On the other hand, members are increasingly interested and cautious in verifying that it is truly their credit union and not a bad actor or fraudster. This is especially true as artificial intelligence has made automated calls increasingly realistic. Take Google’s A.I. Assistant, for example. The A.I. Assistant sounds like a real person, understands the flow of the conversation and even makes decisions on behalf of the caller. With the rapid advancement of technology, members may ask themselves when speaking to their credit union over the phone or online include, “How do I know this entity is what it claims to be?” or “How do I know they won’t misuse my information?”  

Member Friction is A Real Issue

As credit unions continue to combat an increase in fraud across all channels, member friction has increased significantly, particularly in remote channels. On average, 40% of members abandon applications due to authentication requirements. This is in part to the overwhelming number of usernames and passwords consumers have, which can average around 200 usernames and passwords each. Lengthy or deeply personal verification requirements may result to abandonment as well.

Members are unaware that most credit unions rely on multiple vendors and authentication methods for several applications, which can lead a complicated or frustrating user experience. But, as the need for data security and privacy continues to increase, credit unions are looking for and relying on outside support. Until recent technology developments, credit unions were forced to rely on multiple vendors because the technology simply did not exist to address all their compliance, fraud management and member experience needs in one solution.

Using Decentralized Identities to Enhance Member Relationships

Decentralized identity creates a faster, more secure method to confirm a member’s identity because its built on blockchain or distributed ledger technology. One of the key benefits to blockchain or distributed ledger technology is that it reduces the role of centralized identity providers in managing trust and can possibly circumvent central authority altogether. While it may seem counterintuitive to some, decentralized identities create a more personal experience when verifying identity, going far beyond repetitive login questions.

Decentralized identities enable credit unions to consistently and securely verify a member’s identity within a few seconds, eliminating the need for personal questions. Members are able to authenticate themselves easily across all channels, whether digitally, in the branch or the call center, and have confidence that the organization asking for their credentials is truly their trusted credit union, and not a bad actor.

One of the main member benefits of decentralized identities is that each individual member has full control and ownership over their personal information. This technology also allows members to selectively disclose personal information, protecting them from divulging more information than necessary to conduct business with their credit union.

By adopting a KYC-compliant, member-controlled, interoperable digital credential built on distributed ledger technology, credit unions can pave the way into a new era of the member experience.

Topics: Digital Experience