From social media scams to fake government texts, phishing links in business emails and false phone calls, fraud has risen sharply since the start of the COVID-19 pandemic. More than 2,500 scams had been reported to investigators in the UK by the start of April alone.

The threat doesn’t show signs of slowing down either. By early May, more than 160,000 suspect emails had been flagged to Action Fraud over a two-week period.

While not every instance of new fraud is relating to banks and bank accounts, it’s a critical juncture for the financial services industry. With people’s finances under serious strain, more people are opening bank accounts and applying for loans. Since lockdown, people are signing up for more online services than ever before. 

Banks need to protect their own businesses amidst this economic turbulence. More importantly, they need to protect their customers against the tidal wave of fraud. The key to achieving both? Knowing your customers are who they say they are, it’s that simple right? Let’s find out.

The move towards selfies

It wasn’t so long ago that every bank still required new customers to onboard in a branch, face-to-face. Since the start of the COVID-19 pandemic, it’s not just this that has changed. Our whole world is now online.

That’s why the FCA’s recent call encouraging banks and financial institutions to use selfies to verify new customers was a welcome relief. It was finally the step forward that many in the industry had been calling for, for years. For banks still operating on archaic in-person checks, almost impossible during lockdown, it was a call to arms. 

In-person checks stem from the need to verify the identity of every customer, to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. Banks need to know that we are who we claim to be. If they don’t do their due diligence here, they face enormous fines from the regulator, and massively increase the risk of fraud for themselves and their customers.

According to Experian, 95% of businesses believe they can identify their customers accurately. But 55% of consumers disagree. This may be because for too long, these checks have been taking place in person, or in long-winded online forms. Both require documents that are hard to find and hurdles that are laborious to jump through.

To fight off increasingly sophisticated fraud threats, banks need equally sophisticated technologies. But it’s no use relying on technology alone. Even more important is combining technology with the human eyes from a team of global security experts, well trained to identify fraudulent documents and faces. This is where digital identity verification – and the humble selfie – comes in.

The move towards selfies by the FCA proves that the regulator believes now is the time for every bank, not just the most digitally advanced, to move towards digital identity verification. Having a new customer take a selfie, and a photo of their ID document, and then compare the two is quick and effective. It also puts up a very strong fight against fraud, if the right technology and service providers are used. 

User-friendly experiences

During the pandemic, consumers are more conscious than ever of the experience they have when interacting with brands and institutions. We’re buying more online and becoming much more reliant on digital channels to do everyday things. As such, consumers are now forced to become more digitally-savvy.

 This also means that customer satisfaction is more important than ever, a fact that has not escaped the banks – particularly with the Competition and Markets Authority’s customer experience ranking weighing on executives’ minds. A quick and simple onboarding experience, without sacrificing security, tops the list for both banks and their customers. No one wants to be left out in the cold right now.

Protecting all ages

With that in mind, many believe the ‘selfie-first’ approach could potentially leave out some of society’s most vulnerable. Take the over 70s. Ensuring that older generations can access the same speed and simplicity of service is vital – especially at a time when millions are shielding or self-quarantining in their homes, at greater risk from the virus than their younger counterparts.

A couple of years ago, this may have been an insurmountable hurdle. Older people prefer in-person interactions – it was a universal truth. But now, 95% of UK households have access to a mobile phone, compared to just 80% in 2010. Since we know that older people, especially those living alone, are much more susceptible to fraud, this shift towards digital is absolutely critical.

But a mobile phone is not all it takes for digital identity verification to be a success. Being able to use a mobile phone is one thing, but signing up to new digital services and setting up online banking accounts may seem like a Herculean task to this audience. 

Banks and fintechs must ensure that these processes mimic the in-person interaction that older people are so used to. Onboarding should be personal, simple, speedy – but not compromise security. Getting this right will be key to helping navigate this ‘new’ fully digital world, both as the threat rises during COVID-19, but also long-term. We should be doing all we can to give the ‘golden generation’ access to the digital economy that has so far shut them out.

But it’s not just older generations. There are also increasing threats to children’s’ online identities, which worryingly also need protecting from fraudsters. A record number of data breaches in 2019 exposed over 15 billion records – a new worst year on record. On the black market, children’s clean, unused identities are worth top dollar.

For parents, it’s critical to start protecting your child’s identity sooner, rather than later. This means putting as many barriers in place as possible. Opening a bank account in their name, which will need to verify their identity, is one of the simplest ways to do this quickly and effectively.

So, in a world where taking a selfie to sign up to our bank no longer seems narcissistic, but rather necessary, might we finally be able to fight fraud off once and for all? It will be an uphill battle, both for the institutions who need to prove their security chops and for the consumers putting their best face forward – quite literally – to make their most important financial decisions.

The power of digital identity verification means it’s unlikely to stop with sign-ups and onboarding. The opportunity posed by easy-to-access digital identities, verified by a combination of AI and human expertise, is huge. Now, organisations need to get on board fast – before the fraudsters catch up.