Digital validation of clients top pain points of Philippines banks

MANILA, Philippines — Silicon Valley-based global analytics software firm FICO said the complexity and cost of validating digital banking clients emerged as the top pain points of Philippine banks.

In a report titled Identity in Digital Banking Survey, Subhashish Bose, lead for fraud, security and compliance in Asia Pacific at FICO, said half of Philippine banks which participated in the survey cited the high level of manual handling as the key challenge when validating a customer’s identity.

“Identity challenges are intensifying with digital banking,” Bose said.

Another top challenge is consistent collection of supporting data/documents, as well as the need for physical validation of identity. The time taken to verify identity and the cost of third-party verification services were nominated by more than 40 percent of respondents.

“You can see from the survey that many Philippine banks still have issues with manual processing that slows down the process, introducing friction into digital applications,” Bose added.

The survey showed that a third of the respondent banks still force customers to go to a branch to open a personal bank account.

“However, lenders will need to shift toward identity verification that is seamlessly integrated into the digital application process and can be rapidly confirmed or risk losing business,” Bose said.

FICO’s previous consumer study found that a large percentage of Filipinos, about 45 to 67 percent, said they should be able to complete all aspects of account opening online or on their phone.

In fact, if all actions required to complete an account opening could not be accomplished in-session, only 41 percent of Filipino consumers said they would carry out the necessary offline actions as soon as possible, while 13 percent said they would try a competitor and five percent said they would give up completely.

“Filipinos are comparing their banking experience not just to other lenders, but to other digital businesses. The notion that banks can afford to ignore delivering the kind of instant gratification delivered by companies like Uber, Netflix, and Amazon just because they are selling financial products will disappear this decade,” Bose said.

Authentication strategies at Philippine banks are driven more by security than by regulation as concern over the sophistication at 50 percent or volume at 29 percent of attempts to breach access controls is much higher than in the other seven countries surveyed.