Guest Post By Sarah Clark, SVP, Global Product Management, Mitek
Increasing consumer desire for digital experiences is driving transformation throughout the financial services industry, and 2018 will be no different. Looking back through the year and our involvement with the latest advancements in fintech, Mitek has crafted four predictions for the coming year, highlighting where we believe the industry is going in 2018 and beyond. These predictions include:
50 percent of international banks will partner with blockchain companies.
The most commonly used methods for verifying a person’s identity in the digital channel are no longer secure. Many industry experts view blockchain as a potential solution with its ability to serve as the backbone for a new system of federated, digital identities. Due to know your customer (KYC) and anti-money laundering (AML) regulations, banks already perform rigorous identity verification methods on their customers which along with banking transaction data makes them perfectly positioned to serve as the stewards of consumers’ digital identities in this new system. We saw a handful of major banks announce blockchain partnerships in 2017, and we expect the new year will bring a rush of new ones, with at least half of international banks announcing partnerships or pilot projects focused on blockchain.
The number of consumer loans fully approved through digital channels will double in 2018.
The race is on for digital lending, with the market expected to reach $100 billion by 2020 (up from just $40 billion in 2016). However, to date, lenders have struggled to keep pace with consumer demand for a convenient, end-to-end digital process for loan applications and approvals. Even industry leaders are only able to approve around 20 percent of applicants through the digital channel. We expect that to change rapidly in 2018, with the percentage of consumer loans able to be fully approved through digital channels doubling to a full 40 percent. This is made possible with the prevalence of smartphones, the maturity level of today’s mobile capture and identity verification technologies and real-time risk assessment products such as instant income verification – so consumers and lenders now have all the pieces needed for a fast and easy, completely digital loan experience.
There will be 150 million new account opening fraud attempts at financial institutions using stolen or forged identity documents in 2018.
New account opening fraud and the use of synthetic identities have steadily increased in the financial services sector in recent years and we expect both to spike in 2018. There were more than 80 million attacks on financial institutions reported in 2016 using fake or stolen identity credentials. We predict this number will jump to 150 million in 2018. That’s due in part to numerous large-scale data breaches in 2017 that exposed the personally identifiable information of billions of consumers worldwide. Financial institutions that have focused efforts on protecting their digital channels and strengthening their fraud detection capabilities in the digital channel will fare better against the coming onslaught of fraud attempts.
Money transfer companies will emerge as the leaders of the hybrid branch model.
Money transfer companies are proving to be on the leading edge in adopting new mobile technologies to augment and facilitate their in-branch services. They are increasingly incorporating self-service elements – such as allowing consumers to use their smartphones to verify their identity while they stand in line at the branch – in order to both speed transactions and improve the customer experience. This type of hybrid model delivers a seamless user journey across both in-person and digital channels, and banks would do well to emulate it in their branches in the future.
With the growth of blockchain, the prevalence of new mobile technologies and innovative new approaches to the hybrid branch model that blends physical and digital channels, 2018 is sure to be an exciting year in FinTech.