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US Digital Banking Revolution: Importance of Digital Identity

While most of the banking landscape across the country was on track toward a successful digital banking revolution, the Covid-19 pandemic fast-tracked the process. Regardless, some parts of the US financial industry are still operating in the dark. As the United States is often at the forefront of many things, it doesn’t make sense that the US falls behind other countries in an area as important as banking. The US digital banking revolution has been a slow process, but the situation is turning around.

Most of the time, when a customer decides to open a new bank account or send money overseas, they have to visit a physical branch. Even after so much growth in the technological department, customers still have to stand in line to get their tasks accomplished. Most customers find that the manual process takes too long and it doesn’t meet their needs. Pre-pandemic, more than 160 million people relied on online businesses, and over 56% of customers stated that the primary way they accessed bank accounts was through a mobile app.

As the digital world is growing, customers demand more convenience, time efficiency, and instant access to their finances. This isn’t possible without all banks taking part in the digital banking revolution. And, digital identity plays an important part in this.

Challenges in Fraud Management, Privacy, and Customer Experience

Most banks skip out on digital transformation because it’s a time and money-exhausting process. Going digital comes with tons of challenges for both customers and businesses. Some of the biggest challenges include online fraud, user privacy, and friction in the customer experiences. 

For example, fraudsters can easily set up fake bank accounts using leaked SSNs and fake ID documents. In 2020, the estimated amount of global fraud losses was $32.39 billion, which is triple the amount it was in 2011. Preventing fraud isn’t the only major challenge that banks have to face. Providing consumers with a seamless and secure onboarding process is also essential. Over 44% of all US customers abandon the application process during onboarding if the process is too complicated or invasive. 

Protecting consumers against fraud while providing them with a smooth onboarding experience is the most important part of digital banking.

Importance of Identity

By focusing on the identity part of digital banking, banks can build strategies that put customers at the center. This starts with a robust digital ID verification process that verifies who the user is and authenticates their ID to provide them access to digital solutions. 

In Europe, and the UK, digital ID verification allows banks to provide their customers with digital solutions almost instantaneously. By focusing on digital customer identity, banks can speed up the onboarding process, prevent fraud and scale their business as per their needs.

Importance of Getting Identity Right

There’s a lot US banks can learn from banks in the EU. They build their digital banking strategies by keeping customers at the center. They know who their customers are and they can verify their customers in a digital-first banking environment. 

A modern approach to digital ID verification is combining a government-issued photo ID document (passport or driver’s license) with biometrics data (selfie, face scan, or fingerprints) to make a secure and seamless customer authentication process.

A recent study found that almost 60% of customers prefer to use biometrics data instead of using passwords that are a hassle to remember. By the end of 2025, 85% of all banks will be using biometrics data to verify and authenticate their customers instead of using passwords and OTPs.

How US Banks Can Move Forward In the Digital Banking Revolution?

Currently, the UK is the world leader when it comes to providing a secure and seamless digital banking experience. The United Kingdom also has a lower number of physical bank branches than the US, which forces them to build their digital banking landscape even better. To be successful in the digital banking revolution, banks shouldn’t compromise between security and seamless customer experience. With the ideal online ID verification and online document verification technology, banks don’t have to cut corners. 

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What is Open Banking, and How Will it Impact You?

Open banking is pretty simple yet completely innovative, it lets you share your bank data with other companies with limited problems. Open banking APIs or the overall process is designed in a way that provides more security and reliability even while using basic financial services like Venmo or Robinhood. With the widespread adoption of open banking, you as a customer will be able to experience the best technologies without having to compromise for cheaper and less secure options. 

In the US financial market, Open Banking is just taking baby steps. But the UK market is leading the world in open banking-based financial products and services. For both banks and customers, open banking can open up new avenues and create opportunities for you and your money. Here’s everything you need to know about open banking and how it can affect your financial lifestyle.

What is Open Banking?

Open banking, also known as “open bank data.” is a financial practice that offers third-party financial service providers open access to consumers’ banking, transaction, and open financial data from banks and non-bank financial institutions, using application programming interfaces (APIs). Open banking will allow the networking of accounts and data across institutions to be used by consumers, financial institutions, and third-party service providers. Open banking is pushing innovation which can lead to the transformation of the banking industry. 

Here are the key factors for remembering open banking:

  • Open banking is a banking system that allows access and control of consumer banking and financial accounts by leveraging third-party applications. 
  • Open banking has the power to reshape the current level of competition in the banking industry and improve consumer experience tenfolds. 
  • Open banking can enhance the potential for both promising gains and financial risks as customer data is shared more widely and excessively. 

What’s New in Open Banking?

On 9th July 2021, the White House issued a statement in the favor of open banking. President Joe Biden issued an executive order which included a provision encouraging the Consumer Financial Protection Bureau (CFPB) to issue rules that allow customers to download their bank data and offer it to competitors. 

The CFPB is tasked to create regulations related to sharing and consumer financial account data online. Joe Biden’s encouragement to Open banking provides CFPB with the required push to boost the task that CFPB was already doing. 

In October, CFPB issued an advanced notice of proposed rulemaking, related to building regulations around consumer data sharing. CFPB, which had been focusing on the issue for several years, has collected customer feedback on customer data collection. New rules could still take years to implement. 

Years ago, the only way to keep track of the comings and goings of your money was through a monthly mailed bank statement and physical checkbooks. This process has now improved as customers can log into a mobile banking app or website to check on their finances and conduct all kinds of financial activities in one place. For the experience to work well, you need to hand over your keys to the digital portal, your bank account which then allows your app to grab the data for you. It’s also known as screen scraping, and it provides all the information available in your bank account to other companies. And obviously, it’s one of the least secure options available. 

Over the years, several banks have been accused of blocking companies from collecting data when you wish to share it with them. FinTech companies have often complained that banks and financial institutions are anti-competitive, while banks state that they’re just trying to protect their customers and their data from parties that can be a threat. 

Recently, the situation has changed and FinTechs and Banks have made arrangements for better data sharing among themselves. But there is still confusion if consumers are sharing enough data to support the open banking models.

What Will be The New Opportunities with Open Banking?

Open banking is meant to share customer data in a safer and more secure way compared to just handing over your login credentials to a third-party app, including other bank apps. All the data sharing happens behind the screen so you won’t notice it whenever you log into the bank app or conduct any normal financial activity.

The customer doesn’t have to do anything different, it’s just a newer and faster model of data sharing. Customers still have an app on the phone, the only thing that’s different is the level of security you get and you can be sure that your data is kept safe.

The ability to easily share your financial data with other companies is expected to boost innovation throughout all financial industries. It could also help more people get loans by verifying transaction history instead of checking credit scores. Open banking can also improve the mortgage application process, and reduce the time taken for approval of mortgages.

The widespread adoption of open banking can make huge changes in financial services. Open banking requires financial institutions to spend more money and rethink new ways of securing assets and customers’ data.

How Will Open Banking Affect Customers?

In the end, open banking is designed to make financial activities simpler for you to switch lenders and use tons of FinTech apps. Whether it’s access to a cheaper type of credit, managing personal finance, or accessing better direct payments. There are tons of things that customers can do to make their money more automated and all of it revolves around customer data.

Here are some key points that open banking will improve:

  • Increasing access to financial services
  • Saving time from opening an account or taking out a loan
  • Offering better products and services

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Open Banking Recurring Payments and Innovation

Compare the current financial service market to the one a decade ago and you’ll see enormous changes. It’s all because of technology. When the concept of open banking was introduced in 2019, it opened the floodgates for innovation in the industry. The financial data of consumers were now open to be accessed by any authorized financial service provider and consumers themselves had more control over their data. As banks in the UK were required to let consumers share their transaction data with authorized third-party providers, the era of innovation began. For the first time, consumers were able to explore a range of alternative financial services and payment options from technologically forward FinTechs and financial institutions. 

Open banking has become fairly mainstream in the financial services industry today as more and more customers are becoming technologically demanding. It’s fair for customers to demand instant, intuitive, and convenient digital solutions that can meet their demands, both for personal and professional use. 

FinTech-based open banking innovations have changed the way customers and businesses send and receive payments. They’ve changed the way payments happen, be it one-time or recurring payments. 

The open banking recurring payment is the next step toward simplifying the online payments initiative. This provides an innovative and seamless method of the transaction on a regular basis.

History of Recurring Payments

For years, the only way to collect regular payments such as mortgages, rent, and utility bills were “Standing Orders and Direct Debits.” These two methods were the leaders of the industry but they came with their fair share of limitations. Both the methods are prone to errors as customers have to manually enter their bank data. There’s also a high rate of drop-off or abandonment during the payment process because the customers have to leave the ecosystem to set up the instructions. 

All thanks to the rise of subscription-based services, banks and eCommerce companies save a customer’s payment credentials on a file, combined with other necessary information to authorize a recurring payment. While this process seems better than Standing Orders and Direct Debits, it also leads to a poor and error-prone customer experience during set-up as customers have to manually enter the debit or credit card details.

For businesses on the receiving end, debit and credit card payments aren’t ideal. They’re expensive as businesses have to pay a percentage of the value on each transaction. With millions of payments, this can end up being a huge loss in revenue for businesses. Businesses also need to keep reminding customers to update their debit and credit card information in case of expiry. Payments can take up to 3 business days to reflect into the recipient’s account and that’s why it is essential to have a seamless recurring payment method.

Open Banking Recurring Payments: A New Era

Fortunately, open banking recurring payments are opening up new avenues for recurring payment services. It has allowed for a new method of online payments using “Open Banking APIs.” payment initiation or open banking payments are an instant, cost-effective alternative to accepting card payments and bank transfers. 

Operating separately from traditional banking card payments, payment initiations enable businesses to redirect end-users directly to their bank or building society so they can make payments seamlessly.

With open banking payment initiations, customers only have 3 steps to follow:

  • Customers have to choose their bank on the merchant’s page
  • Customers are then redirected to their banking app and authorize the payment
  • They’re then directed back to the merchant’s payment completion page. 

Customers don’t have to go through the hassle of finding their cards or manually entering debit or credit card details or account numbers. Open Banking Payments offer a customer more control over their finances compared to direct debits, enabling the transfer of money to a third-party account.

Power to Innovate

For businesses that work on a recurring or subscription-based model, and need better solutions, this exciting iteration of open banking payment initiation promises to accelerate innovation in payment experiences and promotes the creation of new types of financial products and services for the customers. 

With their wide applicability, Open Banking Recurring Payments will help businesses from all sectors streamline their long-term relationships all the while providing customers with innovative experiences. 

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Steps for Digital Transformation in Banking Industry

Consumers’ expectations from banks are changing and the need for seamless and efficient processes is growing. Banking Digital transformation helps banks evolve and stay competitive. Most banks have a huge task ahead of themselves and they need to step up to customer expectations to stay relevant in changing times. 

As per data collected through a survey, 14% of US consumers were looking forward to changing banks, with 43% of customers planning to do so in the next 3 months. To retain customers and gain new ones, banks and financial institutions need to invest in digital and on-demand services. Customers who are on the market looking for a new bank will definitely prefer the ones that offer services beyond their expectations. This can be achieved by digital transformation in the banking industry. 

The financial services industry has been under huge turmoil in recent years, as tech companies have made subscription-based and on-demand services a normal habit. This unique environment has also entered the financial services industry. FinTechs have been filling the gaps that traditional banks lack. This newfound preference for FinTechs over banks is challenging for large financial institutions, as they need to innovate. This is why digital transformation in banking and financial services is becoming a necessity. 

Most financial institutions have started investing in digital transformation, and a lot of them are still struggling to keep their customers happy. In this article, we’ve mentioned the steps that banks can follow for successful digital transformation.

Best Steps for Successful Banking Digital Transformation

1. Leaders Should Focus on Innovation

Digital transformation in the banking industry requires huge changes and a cultural re-vamp. For innovation to be a major part of the industry, it needs to come from the top management to the lower level. Making this happen requires bringing in new leaders who have innovation experience.

To embrace digital transformation in banking and financial services, leaders should be the ones who try to implement innovative solutions the most. The innovative ideas should focus on long-term ROI and should help in building a lasting competitive advantage rather than attempting to avoid the short-term costs of making impactful structural changes. 

To make sure the innovative processes are working ideally, there are six areas to focus on:

  • Skills: Build teams that have the skills to adapt to new methods
  • Security: Gain customers’ trust by providing data security
  • Stability: Create resilience in IT systems to ensure that digital and online apps don’t experience downtime
  • Scalability: The solutions should be able to scale up or down to meet changing customer requirements
  • Speed: Focus on building multi-functional teams that can handle several projects at once and can reduce time.
  • Satisfaction: Make sure that customers are satisfied with the end product.

2. Unlock Data Framework

Software built-in in older times didn’t take data integration in mind. Keeping customers’ financial data in silos that can’t be easily accessed outside the company. This is changing as people want to access their money anytime, anywhere. 

With the digital payments apps of today, it’s almost seamless to send and receive to friends and businesses. If a particular bank can’t connect to these third-party payment services, customers will switch to a bank that can. 

Financial institutions need to invest to build better online customer experiences, financial institutions should invest in a centralized data-linking system. To get a data-linking system, financial institutions can either build one from scratch or choose a third-party vendor that can do the heavy work themselves.

3. Build Data Partnerships

Internal data is valuable, but it doesn’t provide the full picture of your customers’ financial lives. To offer the best products and services, you have to be able to access permissioned data from financial accounts they hold somewhere else. Up until recently, accessing consumer financial data from outside banks was next to impossible. But, in the last ten years, there are several technology companies that allow banks to do that. 

For retail baking customers, linking an external account is relatively simple. They select their outside bank and enter the username and password for those accounts. 

Data partnerships can paint the complete picture of a customer’s financial life, providing banks with the ability to build solutions that are able to keep up with customer demands. This can help in refinancing their mortgage at a lower rate or offer to target savings tips. 

In addition to data partnerships, banks can also consider relying on open banking API infrastructure that makes data sharing seamless. Partners like these can be a good solution for resource-limited banks that want to follow the digital transformation in the banking industry.

4. Recruit Technical Talent

Technical talent is critical for successful digital transformation in the banking industry. Without proper technical talent, financial institutions can’t build the much-needed solutions. 

Recruiting high-performing product managers, designers, and software engineers starts with building an innovative environment. Financial institutions aren’t exactly perceived as tech giants, so most technical talents don’t wish to work for financial institutions. According to a report, 50% of financial institutions say that they have challenges in finding IT talent. 

Fortunately, the culture is shifting, so banks need to offer enticing incentives for IT professionals. An ideal solution is to offer salaries that are up to par with top IT companies such as Google and Amazon. This may be the only way to recruit several tech workers and possibly the most effective solution.

5. Focus on Solving Customer Pain Problems

Once a bank gathers data and the people it needs, it can probably identify the gaps that digital transformation can fill. For example, a bank’s data team may need to find a significant number of customers, the problems they’re facing, and how to fix them. 

Addressing issues customers face can involve working with designers and engineers to build innovative solutions that can fix the pain problems. This is one of the biggest benefits of digital transformation in banking, as it focuses on improving customer experience.

6. Adopt a Product Mindset

Digital transformation in the banking industry isn’t a one-off process, it’s a continuous process. Ahead evolving customer expectations requires having a product-focused mindset.

Here are some of the key factors financial institutions need to keep in mind:

  • Identify a key performance metric to improve upon
  • Get to know the needs of your audience and the type of problems they’re facing
  • Figure out ideas on how to solve the problems for the target audience
  • Identify the top 3 ideas and build prototype solutions around them for testing
  • Measure the impact of those tests and evaluate their results.
  • Choose the most ideal process and implement it

7. Choose Carefully Between Building and Buying

Not every financial institution can shell out millions of dollars annually for seamless digital transformation. For most banks, the challenge is how to deploy limited resources in the most impactful way. To make the digital transformation successful, banks and financial institutions need to decide which solutions to build and which technologies to buy. 

Let’s say, if an institution has an amazing onboarding flow, they should build upon it and make sure that they boost the process. They can do this by updating their existing technology or getting third-party technologies such as online document verification solutions or other solutions to enhance the process.

Digital Transformation In Banking Can Overcome Consumer Problems

The financial services industry is changing and is soon to be disrupted by external factors such as FinTech and cryptocurrency. Under these circumstances, history has shown that only a couple of players stand tall at the end. Others either go out of business, get acquired, or slowly go toward the decline. The great news is that the standing players come out stronger than ever.

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Open Finance and Changing Role of a Bank Manager

The digital revolution in the banking industry has been put into overdrive since the pandemic, and many sectors are changing customer landscapes. Business banking is no exception. Banks are now facing growing pressure to introduce new processes in line with customers’ heightened expectations.

One finance can transform SMB banking by replacing traditional manual processes. It also allows businesses to support digital onboarding and automated monitoring, and it can reshape the role of a local bank manager.

What Is Open Finance?

Open finance is the next step after open banking APIs and it extends to a wider range of financial data. The primary purpose of open finance is to provide consumers and businesses with better control over their finances which allows users to transform the way they access financial services.

In layman’s terms, open finance leverages consumers’ financial data with their consent, and by using this data, banks can build new products and services such as online accounting, banking, and eCommerce platforms.

Challenges Faced by Bank Managers

For a long time, banks and bank managers have played an integral part in the high street and the wider SMB economy, however, since the last decade, things have been changing throughout the financial institutions. 

In the last 10 years, the biggest banks globally have closed tons of their branches. With growing large portfolios, reducing favor of credit cards, and ineffective and old internal systems, bank managers have been having trouble in recent years. Even before financial services had to battle with the pandemic, onboarding times were slow and customers often faced poor customer experience.

With traditional processes, bank managers are focused on admin work instead of adding value to their customers. Strong customer relationships and their presence in the community are important, winning and keeping business is a vital job when the competition is FinTechs that offer better services to the customers. The challenger bank, Starling, is the success story in the industry, and they’ve had a huge impact on the industry.

In the old times, banks relied on their bank managers to build relationships and tackle digital competition. As customers are becoming more tech-savvy, it’s not possible to tackle digital services with the old and traditional services.

How Banks Can Utilize Open Finance to Their Benefit?

Bank managers have 3 core responsibilities:

  • Onboarding
  • Monitoring current customers
  • Being active in new product offerings

Let’s dive deeper into these core responsibilities:

1. Digital Onboarding: So, what does online customer onboarding look like with open finance? Instead of the usual back and forth of documents for ID and address verification, in just a handful of clicks on SMB simply connect their bank with their accounting, banking, and commerce platforms. Then banks are able to pull all necessary data for customer verification into the internal systems for an instant decision.

2. Automated Monitoring: Instead of banks asking customers for documents to keep monitoring updated, customer data can be leveraged to maintain continuous monitoring.

3. Meaningful Insights: Open finance allows bank managers to have a real-time and ongoing view of customer financial health. Bank managers don’t have to focus on 9-18 months of credit bureau data which boosts relevant and timely outreach. By leveraging open finance, bank managers can have a variety of tools in their arsenal that they can use to serve their customers better.

Adoption of Open Finance for Banks and Consumers

FinTechs are rapidly evolving and adopting financial technologies based on customer demand, the path for larger financial institutions is less clear. Now that Visa has started using open banking provider Tink, it’s just a matter of time before other providers will follow suit. Whatever happens in the industry, for banks to survive and expand, they need to keep up with the latest technologies.

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Digital Account Opening and BSA Teams

Small and large businesses are the same as they are required to follow the same Bank Secrecy Act (BSA) regulations. The associated costs and workload are manageable for big institutions with big teams, but it’s tough for smaller compliance teams. Fortunately, by implementing digital compliance tools, banks of all sizes can enhance their compliance procedures. Automated compliance tools enhance customer experience, boosting the acquisition and conversion rate of customer onboarding.

Online document verification software and online ID verification software have the potential to relieve pressure on manual compliance teams. Online verification platforms are designed to automate workflows and reduce the risk of fraud and false positives. Banks that operate with automated solutions improve compliance efficiency by more than 50%. This also reduces the workload from BSA teams and enables a renewed focus on big-picture compliance initiatives.

Complying with The Requirements of the Bank Secrecy Act

Maintaining compliance with BSA regulations can be highly expensive for most banks. Community banks may not have the budget to manage personnel for potential fraud cases. To be able to comply with the allotted time limitations is tough and expensive. However, the costs for non-compliance are even more as regulatory bodies tend to charge huge fines.

In theory, BSA providers have to use protective measures. The result is that most banks are hesitant to invest in the latest technologies or services because of how they’ll affect compliance. Even the most common banking procedures like bank account opening can become inefficient if the staff has to spend a lot of time on KYC/AML procedures.

How does Digital Banking Impact Compliance?

BSA teams usually find that legacy technologies aren’t compatible with the development of fast and accurate compliance workflows. The alternative is new technologies that can replace legacy systems to automate key procedures. Newer and more advanced technologies should also maximize compliance protection programs. The U.S. Department of the Treasury has stated that technological innovations are vital for smooth BSA compliance.

The best technologies for account opening offer multiple benefits.

1. Automates KYC/AML Evaluations

KYC and AML compliance during the account opening is the foundation of BSA compliance. Technologies provide workflows that are built to analyze data and context clues vital for detecting fraudulent activity while providing fewer false positives.

Banks can set up unique technologies to build a comprehensive profile for each applicant. Banks have to control every element of the KYC decision workflow in real time.

2. Reducing False Positives

Any transaction monitoring system generates a lot of false positives. False positives just add to human hours as they have to be investigated quickly and reported if they seem suspicious. And its worst, banks close down legitimate accounts or reject worthy applicants as a caution against false positives.

BSA/AML automation systems trigger way too many false positives which increase the burden on the BSA compliance team instead of reducing it. Doing identity checks is important but if the technology is profiling most applicants as suspects, then the solution isn’t doing the job necessary. The right type of technological solutions aims towards reducing false positives offering the BSA team relief from the overload of work.

3. Streamlining the Compliance Process

Using ideal digital solutions offers your compliance team a few critical advantages to maintain compliance. Automation is the key to success. Manual interventions slow down the processes, be it account opening, fraud investigation, or auditing. When certain factors are effectively automated, the staff has room for managing other tasks. With the right automation steps in place, your team has the bandwidth to address the risks as they emerge, thus streamlining the compliance process.

Automation of BSA Compliance to Stay Competitive

Digitization in banking comes with a lot of perks, this also reduces the workload for the bank’s BSA teams, in turn improving compliance efforts to avoid fines by regulatory bodies. Using digital account opening software isn’t just a way to streamline compliance, it’s also an opportunity to improve competitiveness by offering customers easy-to-use solutions.

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Identifying Fake Bank Statements: How to Fight Fraudulent Applications

Prospective tenants, bank account openers, and other bad actors can use fake bank statements to commit a series of illegal activities. While fraudsters are getting smarter, they also utilize technologies to make near-perfect bank statements. Manual verification methods can’t keep up with the standards set up by bad actors. Identifying fake bank statements is the need of the hour to reduce fraud as much as possible. There are some common methods that can be utilized to identify fake bank statements.

How to Fight Fraudulent Applications?

Unfortunately, the problem of fake bank statements is still prominent and it has grown even bigger with the pandemic putting millions of people out of jobs. As a matter of fact, the problem with fake banks has become an even bigger nuisance for banks, financial institutions, building owners, and so on. The percentage of fake bank statement use increased from 15% to 29% in September 2020.

What makes this situation worse is that one in every 4 applications tends to go unnoticed. The increase in the number of undetected fraudulent applications can be allotted to the lack of proper verification solutions. Also, manual methods of verification can’t detect highly sophisticated forged bank statements. Automation and data utilization can be used to fight fraudulent applications.

Identifying Fake Bank Statements

1. Ensure that All The Figures Match Up

One common mistake that fraudsters make is that they don’t put in too much effort to ensure that all the numbers on the bank statements add up. If there is no money for automated verification processes, then you’ll need to take up your time to figure out if the numbers add up.

While identifying the bank statements, it is always a good idea to keep one thing in mind: people who fake bank statements will often use round figures. Proper round figures are usually a red flag while identifying if a bank statement is real or not. 

2. Take to a Bank Rep

If as a business you’re uncertain that you have received a fake or genuine bank statement, then one way to be sure is to reach out to a banking representative. Call the bank yourself, don’t rely on any information that’s listed on the bank statement. Once you get through to a banking representative, confirm all the details you want to confirm. 

In most cases, a banking representative will ask for a mail copy of the document. Chances are that you may not get much support from the bank. Various banks will try to prevent the manipulation of documents by adding some kind of digital signature to the PDF files, although this feature is usually to protect investment accounts. 

3. Search for Inconsistencies and Errors in Documents 

The first potential red flag regarding the bank statements is the major & minor inconsistencies in the documents. Are the font size and the font type consistent with other document types of the same bank? Is the bank’s logo accurate and up to the standard? People who create fake bank documents often get lazy and these inconsistencies can help in preventing online fraud. Do the numbers add up in the document and do the ending balance make sense? Are there any withdrawals that are suspicious? If the bank statements contain any of these inconsistencies, then you may need more research.

4. DIRO’s Online Document Verification

While you can rely on manual methods of verification for a lot of things, they still have some limitations. By utilizing technologies, you can easily distinguish between fake and real documents. DIRO’s bank document verification software verifies documents instantly and provides strong proof of verification backed by verifiable credentials. DIRO’s online document verification tool can verify over 7000 documents from all over the world by cross-referencing document data from an original web source.

The technology can eliminate the barriers of manual verification and enhance the overall document verification process and eliminate document-related fraud. 

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Chatbots in Banking Sector: Use Cases

Chatbots are amazing. They’ve helped countless sectors improve customer engagement and customer service. Now that the global banking sector has started seeing the benefits of integrating technologies into their process, there are so many technologies left neglected. Providing seamless customer service and experience is vital for retaining customers for any bank. And, in this age of digitization, customers expect banks to be more innovative in their workflow and how they offer services to their customers. The use of AI chatbots in the banking sector is another innovation that can be useful for banks and customers.  

Customers’ expectations are high when it comes to digital banking services as FinTechs are putting new digital products and services on a daily basis. Integration of high-end technologies such as artificial intelligence and open banking APIs can help in streamlining or completely transforming the recurring and mundane tasks. In this age of AI-powered tools, chatbots in the banking industry are another solution that the banking sector can use. 

There are several benefits of chatbots in banking that leverage AI and machine learning to serve customers better and make more fluent and effective conversations with the customers. AI chatbots in the banking sector can easily provide the consumer with a human-like chat experience while answering their questions.

Chatbots in the banking industry has become a common utility throughout retail banking services as they play a vital role in handling customers using access to real-time data analysis.

In this guide, we’ll list the use cases of chatbots in the banking sector.

Chatbots in Banking Sector: Benefits

Let’s start with how chatbots in banking help retail banks provide a better and more streamlined customer experience by leveraging consumer data and AI.

1. 24/7 Instant Customer Service

One of the most common chatbot use cases in the banking sector is that banks can offer 24/7 online customer support, without having to invest in human operators. Plus, they’re more durable as AI chatbots will end up providing better service than humans.

AI chatbots in the banking sector run state-of-the-art algorithms that can understand and complete the most common commands, over time the AI learns more about customer queries and teaches itself to provide answers to more complex commands as well. This process is known as machine learning.

The more an AI chatbot interacts with customers, the better it’ll become in handling a variety of customer requests.

2. Time and Money Savings

The widespread use of chatbots in the banking sector can help in saving both time and money. Chatbots can work faster and require less training compared to human operators. At their core, chatbots act as virtual financial assistants, helping customers find answers to their problems. This frees up the human operators to focus on more complex problems that can’t be fixed with a chatbot.

With machine learning algorithms, human customer support staff can rely on AI chatbots to get smarter and handle more complex problems raised by customers. This makes the future of chatbots in banking bright throughout the industry.

3. Honest Customer Feedback

Another chatbot use case in the banking sector is that it helps banks get an insight as to what their customers feel about their services. As AI chatbots help out a customer, they can gather valuable customer feedback which can help in figuring out the weak points in a bank’s workflow.

Most customers tend to leave feedback at the end of their conversations with a chatbot. Getting reviews in chats often helps in understanding how a customer is feeling instead of the old-style email surveys. This can help banks and financial institutions significantly improve their customer engagements and improve their most problematic areas. This is one of the best benefits of chatbots in banking.

4. Personalized Offers

Chatbots in the banking sector can assist banks in offering personalized products and services without feeling too pushy. With the higher standards of customer privacy and permissions, chatbots can understand customer transactional patterns and habits.

The data collected from these conversations can be used to provide a more personalized experience to the customers and can even help them learn about investment opportunities and build their financial profiles.

5. Boost Product Adoption

Banks and financial institutions can make their chatbots ask new visitors on a website or customers looking for help if they’re interested in a particular product or service. These service offerings could be anything including loans, savings accounts, credit cards, etc. This customer engagement can provide helpful information for the sales process that focuses on meeting customer needs in a timely way and offers services in a way that feels natural.

The conversational environment via a chatbot can help enhance customer satisfaction with their banks. If a customer is happy with one product offering from their customer, they’ll also be open to getting new products and services from the same bank.

Examples of Chatbots in the Banking Sector

Here’s a list of top banks that are using chatbots to improve their customer interactions. If other banks follow the below-listed examples, the future of chatbots in banking looks great.

1. Bank of America Erica

In 2018, Bank of America unveiled their AI chatbot “Erica”, which also acted as a virtual financial assistant. Erica is available only through the Bank of America’s mobile banking app and it can help customers with simple tasks such as bill payments, credit reports, and getting e-statements.

With time, Erica is improving tremendously. As more and more customers are using digital services, Erica will get to learn more about consumer behaviors. 

2. Capital One Eno

Capital One’s AI Chatbots in the banking sector also come with their mobile banking app, it understands consumer behavior and their preferred way of banking. Through Eno, customers can pay the bill instantly and receive real-time updates about account balances, transaction history, and credit limits. Eno leverages machine learning to gain insights into consumer behaviors and helps customers when they need help. 

3. American Express Amex

American Express credit card holders can connect their cards with the AmEx chatbot on messenger to receive updates and personalized offers. These often include recommendations, payment reminders, exclusive card benefits, and real-time sale notifications.

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Virtual Debit Cards: Everything You Need to Know

As the name suggests, a virtual card isn’t a physical card made of plastic, it’s just a set of sixteen digits like a credit card number combined with a CVV code that’s generated using the software. Virtual cards can be both debit and credit cards.

What’s a Virtual Debit Card?

A virtual debit card is the same as an ordinary debit card, but the randomly generated number is linked to a debit account instead of a credit card. These virtual numbers act just like a debit card and they can also be used to make purchases remotely, although a user can’t use a debit card to make in-person purchases. 

When charges are made using the virtual debit card number, the amount is detected from the linked bank account. However, people can’t trace the number back to the originating account or access money by using the number. 

What’s a Virtual Credit Card?

A virtual credit card is also a series of 16 numbers that are generated at random with a CVV code that these numbers can be used to make goods and services online. Charges can be made with the card numbers online or on the telephone, but you can’t use a virtual credit card in person.

When a card number is generated, the charges are linked to the original credit card number. Similar to a virtual debit card, a virtual credit card can’t be traced back to the original card, and it will not work after the purchase.

What is a Virtual Card Used for Payments?

Virtual card payments are payments that happen online or over the phone without cash or check transactions. These payments are done using the generated numbers securely. 

When payments are made online, hackers who steal the generated numbers will not be able to use them. The numbers stop working after you’ve made the payment and they won’t work to allow access to your accounts or your company. Virtual payments can help to reduce invoices and enhance the payment process.

Who Needs Virtual Cards? Why are they Used?

Virtual credit and debit cards are incredibly famous among consumers and now businesses are also beginning to use them. They are also used to make purchases remotely and prevent fraud. 

Since the numbers are basically throwaway numbers, hackers and thieves have no use for them. When you choose to use virtual credit and debit cards, you can eliminate the chances of card fraud. Your employees also won’t be able to use the numbers to make unauthorized purchases.

Virtual Cards for Business: Good Idea or Not?

The use of virtual debit cards can allow businesses to eliminate the need for drafting checks. They help in saving businesses from fraud and using virtual payment methods can help you save time and money.

The owner of the card can restrict what can be purchased and what can’t be purchased from virtual numbers that you generate. You can also save money on transaction costs that might otherwise be involved with requisition forms, PO (purchase orders), invoice processing, and checks. Using virtual debit cards can also help in streamlining the payments and your expense management. 

Where Can You Use a Virtual Card?

As virtual cards are not physical, they can only be used to make purchases online or via telephone. You can’t take a virtual number to a physical store and expect to pay for goods with it. Virtual numbers can be used online or via telephone to make purchases from companies that accept all the major credit cards including Visa, Discover, Mastercard, or American Express. Once they’re used, the numbers expire and are worthless. If you want, you can set an expiration date that allows purchases to happen for a couple of days, and then the card can expire. 

How Can You Add Money to the Virtual Card?

To add money to a virtual credit or debit card you need to decide how much money you want to allocate to the card from your debit account and credit card from which it originated. The funds are then automatically transferred to the virtual numbers you’ve selected. 

When you see that the balance is low on your virtual cards, you can refund the money by an electronic transfer from your bank account. There’s no need for you to make a withdrawal of cash from your account to add money to your cards.

How Easy are Virtual Cards to Use?

To use a virtual credit or debit card, you can use proprietary software used by your card issuer. You can generate as many random numbers as you need in a few minutes. The cards allow you to assign spending limits by the day or week. 

Once you’ve generated these numbers, you can distribute them to your employees, and your employees can use them to make payments to suppliers of vendors online or over the phone. The numbers can be charged similar to plastic debit and credit cards.

How Safe are Virtual Cards?

As virtual card numbers can be traced back to your account or credit card, they’re much safer to use for buying products and services from unfamiliar online vendors and suppliers. The suppliers or vendors that you pay money to won’t be able to charge you for more than you’ve authorized, thus saving you from fraud. 

Using virtual numbers and cards for purchase provides you with an extra layer of security, if you generate numbers and forget to use them, there’s a chance that someone will be able to steal the numbers before they expire.

Conclusion: Use of Virtual Debit Cards

You should keep in mind that virtual debit cards aren’t plastic, while they’re known as “cards”, they’re just random numbers that are linked to your existing debit and credit cards or bank account. 

No one can use these numbers to make purchases in a physical store using the numbers and you can limit them to single purchases from specific suppliers or merchants. Some businesses use multiple numbers for multiple vendors and only authorized vendors can use these cards.

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Open Banking: Global Developments, Current Landscape, and Future

If there’s one core element that can be credited for the surge of digital transformation in the financial industry, it’s the global COVID-19 pandemic. It’s more than clear that banks, credit unions, payment providers, and other financial service providers are looking to take advantage of technologies to gain an upper hand against their counterparts. The adaptation of Open Banking has also seen an upward curve in the last couple of years. According to industry experts, the total number of Open Banking users globally will reach 64 million by 2024. 

While there’s obviously a global development of Open Banking in the industry, it’s still the beginning. If careful measures are taken, Open Banking can take the financial situation to a whole new level for businesses and customers.

Revolution of Open Banking

The gist of Open finance is that it provides customers with complete control over financial data which in turn can change the financial habits of millions of users regarding money and savings. 

In the future, third-party service providers, by gaining customers’ consent, will be able to access mortgage data, investment data, insurance, savings, and pension data. Data is the core element in Open Banking and Open Finance. By leveraging this crucial customer data, existing companies of the future will be able to tailor financial services based on customer needs and interests. 

With access to seemingly endless data about customers’ financial lives and habits, there will be no end to personalized services and products. With every FinTech, Bank, and other financial institution trying to build custom products and services, there will be a surge in innovation throughout the financial industry. Ultimately encouraging businesses to leverage the latest tools and technologies as much as possible to stay relevant in the industry while ensuring the best products and services for existing and potential customers. 

Collaborations for a Better Open Finance

Countless businesses across the globe have their own unique take on Open Finance and their own ideas on how to utilize the data to build better products and services for the customer. To help the Open Banking revolution take a better turn, companies across the world need to move ahead with a centralized approach. Without proper frameworks or the incentives to work on Open Finance, it’s less than likely that the industry will be able to utilize the full benefits of open finance.

There needs to be an untied sense of urgency for open banking to take center stage in the financial industry. FinTechs all over the globe are focused on developing Open Banking APIs that banks can collaborate with to enhance day-to-day workflow. Open Banking APIs like online document verification APIs, online proof of address verification APIs, and online bank account verification APIs can streamline the KYC, KYB, and AML workflows. 

Regulatory bodies will need to be more vigilant as open banking becomes more prevalent in the financial industry. With so much customer data open to access, there will be a need to build strong rules and regulations. If we talk about the situation of open banking in the USA, then President Joe Biden has issued a series of customer-friendly executive orders that are primarily focused on ensuring that the US banking system can transition to open banking as seamlessly as possible. 

Australia’s consumer data right offers Australians the right to access all their financial, utility, and telecom data. While it’s true that the open-by-default approach has taken more time to implement than expected, the country is now well on its way to building a strong and secure open banking infrastructure. Another example of the Open Banking revolution is in Canada, similar to Australia, they’ve built a similar plan of action, and they’re expected to roll out their open banking infrastructure by 2023. 

To successfully deliver open banking to consumers on a large scale, there will be a need for collaboration between banks and the government. As the main regulator for most of the firms that would work on the open banking landscape, the regulatory bodies will have to set forth some key rules and regulations. To successfully deliver innovative open banking products and services to the customers, the Bank-FinTech collaboration will be essential. The primary example of this is Open Banking APIs offered by FinTechs globally that can enhance the day-to-day of banks.

What’s Next for Open Banking?

The next step for global open banking is straightforward, it has to be based on a centralized, to down approach. There have been some great initial steps from regulatory bodies and government entities, but there needs to be a centralized approach to building a proper Open Banking infrastructure. Only then will companies be able to leave traditional banking behind and transition to open banking? Needless to say, open banking and digital transformation are well on their way, the result is just about time.