Fintech Startups: Find out how remote eKYC verification can be used to scale Customer Onboarding

by James · December 5, 2022

A new paper outlines the impact of fraud on customer trust. According to the study paper “Fraud vs. Friction: How the Need for Speed is Creating a Using onboarding Crisis,” 71% of customers are “less likely to trust a fintech service that has been damaged by onboarding fraud.”

The research, which describes Onboarding fraud as a growing pandemic, “highlights the rise in advertising abuse or ‘promo fraud’, where threat actors – often on a large scale – defraud organizations by exploiting marketing initiatives such as sign-up incentives, referral rewards or loyalty discounts.”

According to the survey, “nearly half (47%) of all respondents saw a fintech that enabled ad fraud to go undetected to be lacking in security.”
Still, marketing programs remain a successful growth tactic, with more than two-thirds (66%) of respondents saying they would choose a financial platform with discount code over one without.
This exemplifies “a growing industry dilemma where risk managers are increasingly finding it challenging to balance expansion goals with security.”

Research by the Royal Society for Arts, Manufacturers and Commerce (RSA) “found that 48% of fraud incidents originate from accounts that are less than a day oldwhich demonstrates the extent of the danger currently associated with incentivized growing techniques,” the report’s conclusions reflect.

Fraud risk “also puts a company’s current consumer base at risk.” “According to Pi’s analysis, 32% of existing consumers are “extremely likely to stop using a fintech service and cancel their accounts after any occurrence of fraud.” “Additional controls” are listed as a possible remedy against onboarding fraud, but the survey also discovered that Seamless onboarding was still a top priority for customers. “

Despite their fear of fraud, more than 70% indicated they would abandon the registration process if they had to go through more than three Identity Verification Checks.”
The paper continues, “using PayPal as a remarkable illustration of the damage that ad fraud can cause.”
The payments giant “was a major victim of account opening and onboarding fraud” in the first half of 2022.” More than 4.5 million fake accounts “were established as a result of the company’s incentivization Approach to customer acquisition,” resulting in a 25% loss in PayPal’s stock value, the largest single-day decline ever.

While the “onboarding problem” affects the entire sector, “fintech in the growth phase is likely to feel it more strongly.”
Despite forecasts that the fintech business will “expand to a value of $937 billion by 2030”, worldwide fintech investment by investors continues to shrink, with a 33% reduction in funding observed in Q2 2022.

Each instance of Onboarding fraud is “a cost that fintech must incur, making fraud risk a significant factor for potential investors.”

This is where intelligent AI is based eKYC verification solutions come in, including the latest ML and AI algorithms to seamlessly verify documents, IDs, Liveness, Face Match, and provide complete Identity verification by the customer or the user on the platform. As we have just seen that most fraud cases were detected within a few days of signing in, using screening solutions helps secure digital platforms right from the registration process.

How IDcentral’s ID verification reduces fraud and delivers a customer-centric Face Match solution

IDcentral is flexible Digital Onboarding solution comes integrated with the latest AI technology for accurate ID verification, precise liveness detection and fast identity verification. Enable Remote-Digital Onboarding capabilities with our API-based solutions that have variable levels of identity verification procedures according to your customer base and compliance requirements.