UK consumers are being put at risk of fraud because banks are “seriously lagging behind international competitors” when it comes to security.
New research has revealed UK financial services organisations are failing to invest and not keeping up with digital investment seen in other sectors.
While other countries are taking a lead in facial recognition, social media data and automated electronic data capture to ID customers and improve the customer experience, British-based banks are stuck in the dark age.
A third of British banks and fintechs say they are ‘seriously lagging behind international competitors’ when it comes to fraud checks.
And 84 per cent of UK financial service firms are concerned about their ability to identify customers.
The research also revealed that UK firms are less inclined to invest in new technology to address this and are more focused on cost-control than their global counterparts.
Mick Hegarty, Managing Director at identity data intelligence specialist GBG, said: “As consumers, we’re so used to technology being used to speed up the identification process, as a result our expectations have risen.
“Facial recognition and automated electronic document capture have been used in airports for some time now, and the iPhone X has taken facial recognition to an even more mainstream level, so it seems particularly clunky and outdated to have to visit a branch and produce a hard copy of an identity document and/or a utility bill to open up a new account.
“The likes of Amazon, Apple and Facebook have really raised the bar and everybody else needs to keep up.”
Despite the UK’s reputation as a world-leader in artificial intelligence, interest in new technology such as facial recognition, automated data capture and social media data analysis has yet to be widely adopted in the UK.
According to the study conducted by Forrester, this is just one symptom of the UK financial sector lagging behind China, Singapore, the US and Australia in its approach to customer identity.
Major regulatory changes this year including Open Banking and GDPR, as well as ongoing Brexit negotiations, are impacting the sector.
At the same time customer expectations continue to rise as a result of digital empowerment and great experiences from the likes of Amazon, Apple, and Facebook.
In order to improve customer retention, loyalty, advocacy and customer satisfaction, UK financial service firms need to address the gap between their approach to new technology and that of their global competition.
Financial service firms should build relationships through services that exceed customers’ current expectations and anticipate their future needs, improving financial wellbeing.
Hegarty adds: “Although the UK is currently behind the rest of the world in its digital approach to customer identity, there are some promising signs for the future.
“Our research shows that UK fintechs are more interested than the established banks in adopting new approaches and more are planning to increase investment in the next 12 months.
“These new challenger banks will prove vital to the UK financial service sector in keeping pace with the rest of the world whilst we navigate a challenging year of legislation and policy change.”