It’s no secret that digital adoption rapidly accelerated this year due to the COVID-19 pandemic, and the financial services industry has been no exception.

This has resulted in new challenges for financial service institutions of all sizes looking to protect their consumers, while also opening the door to new opportunities for businesses looking for ways to improve the customer experience and build digital trust.

We recently hosted a webinar featuring a panel of financial services industry leaders who discussed the future of digital banking, emerging trends, and the technology investments that will help businesses build an agile digital architecture for fueling digital connections.

This blog post summarizes a few of the key takeaways from the webinar, but you can also access the full on demand recording here.

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Emerging trends resulting from the financial services changing digital environment

New consumer behavior patterns are forming, and here to stay

One unanimous prediction among the panelists is the notion that increased usage of digital channels isn’t temporary. In fact, it’s strongly believed the rise in digital activity is the new standard for consumers looking to conduct business with financial service providers.

“I think everyone fully expects we’re going to see a much more digital-first customer base than when we started,” says Julie Conroy from Aite. As of April 2020, use of mobile banking apps reached 72% of customers at the four largest U.S. banks1. Similarly, TransUnion’s research showed a 250% rise in digital channel usage since the declaration of the pandemic.

Whether it’s due to convenience or necessity, consumers are going online to facilitate account payments, account updates, money transfers and additional banking needs, which is likely reinforcing the accessibility and convenience that digital transactions provide. Fiserv’s John Horn describes this change as the market establishing a new digital normal that will likely persist beyond the pandemic. “We don’t think it goes away at all,” he says. “We just think it’s a new baseline.”

Reducing customer friction is more important than ever

A common initiative continuing well into 2020 is financial services providers working to drive friction down for good consumers. “If you recognize them, you shouldn’t have to throw a multifactor authentication at them,” explains Loren Russon of Ping Identity. Many institutions are looking to find the proper balance between protecting consumers and simultaneously providing a good user experience.

This becomes even more critical when you consider the new genre of consumers, or “digital newbies”, who have rapidly emerged in the last year. These consumers are generally more sensitive to the customer experience and also more susceptible to fraud scams. “There’s this balance of businesses asking, ‘How do I protect the data and what customers are accessing, and then how do I create that good user experience as they interface with the digital world?’” says Russon.

Emerging fraud types are forcing digital risk assessments across all institutions

As existing fraud types like credential stuffing attacks (or bot attacks) have become more sophisticated due to the pandemic, application fraud is at an all-time high as well. Fraudsters are also using this opportunity to prey on the newly unemployed. “We’ve seen every institution we operate and serve reassess themselves this year with respect to digital risk,” explains Horn. These massive upticks in volume have required companies to quickly adjust, something Russon has experienced firsthand. “A lot of the companies we talked to have their 5-year plan becoming 8 weeks,” he says, adding that this has required them to focus on prioritizing additional intelligence to combat these emerging trends.

Investing in an agile, digital architecture that protects against risk

Leveraging a centralized data platform that recognizes identity

The power of shared data was not to be underestimated by our panelists. These experts all agree that there is a tangible benefit in sharing fraud data within a consortium, especially one that recognizes fraudsters while making note of good consumers. “In order to [remove] friction, you have to know what you know really well,” says Horn. “That centralized risk platform is one of our strongest recommendations.” He also shares that in order to fully maximize your data, “you have to always keep adding data sources into the real-time mix to challenge your own decisioning.” Routine data analysis offers critical insights into areas for improvement, gives you a good understanding of consumer identity, and ultimately paves the way for good customers to transact with confidence.

Building a flexible framework that allows for customized authentication

What was traditionally a single sign-on experience has evolved into more advanced authentication methods. You have to be sure you have the right solution to not only mitigate risk, but identify what authentication method to use. According to Julie Conroy, there has been a movement of financial institutions investing in “one-stop-shop” customizable platforms that cater to specific risks and users.“If you have a hub capability with multiple authenticators associated with it, it becomes much easier to be agile as fraud starts to adapt,” she explains. “Plus, you’re able to orchestrate an authentication process that is commensurate with the risk of the transaction event.”

As the future of digital banking continues to evolve, so will consumers' expectations and reliance on digital platforms. The more businesses that recognize the key role of data in helping drive the customer journey, the more consumers will be able to enjoy seamless self-service interactions “Those tools enable consumers to identify themselves and leverage their device to essentially create a path and add more intelligence,” Russon explains, creating a more agile experience as well as additional , but also more security.

To hear our expert panelists dive deeper into the topics of digital acceleration and building agile and adaptive systems, you can access the full webinar on-demand by clicking here.

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    J.D. Power Research (https://stories.wf.com/digital-banking-soars-in-the-covid-19-pandemic/)