In today’s digital world, customer expectations have shifted toward fast, convenient, and secure solutions, especially when it comes to managing their finances. However, after attending several financial industry events and speaking with representatives from various banks, it’s clear that many still rely on outdated methods like call centres and SMS/text-based authentication for simple but crucial tasks, such as verifying a customer’s identity when their credit or debit card is blocked, when they get locked out of their online banking app, or when they need to update personal details like a mobile phone number. The banks admit that this approach is inefficient, costly, frustrating for users, and, in many cases, simply not secure.
The result of all this? Unmotivated employees, low customer satisfaction and growing fraud.
Call centres: costly and inefficient for banks, frustrating for users
For years, banks have relied on call centres to handle tasks that require verifying a customer’s identity. When users find themselves locked out of their accounts or unable to access their banking app, they often have no choice but to call customer service. Maintaining call centres for identity verification is costly and labour-intensive for banks. It also affects negatively their staff; dealing with frustrated, sometimes angry customers daily takes a toll on customer service representatives' mental health.
Human-in-the-loop identity verification is also inherently insecure, being very susceptible to social engineering-derived attacks. People checking customers’ identities remotely is a job that is impossible to remove all risk from.
For customers, this process is often just as frustrating and risky. Waiting on hold, verifying personal details, and answering security questions can be a slow, cumbersome experience. Additionally, the security of these calls is questionable as banks commonly use knowledge-based identity verification, which relies on information that can be easy for fraudsters to find or guess. One needs to assume that all personal identifiable information is known, as stolen identity information is unsettlingly easy to find for sale in the digital age.
Today, with the rise of data breaches and social engineering, such methods have lost all their effectiveness. Fraudsters can use bits of readily available personal information to bypass bank’s questions. Additionally, even legitimate users often struggle with knowledge-based questions because they may not remember or know the answers. As a result, genuine customers can find themselves locked out of their accounts simply because they can’t recall specific answers. This not only adds to their frustration but also reduces the effectiveness of knowledge-based identity verification, as legitimate users may fail verification checks that fraudsters, armed with leaked information, could potentially pass.
Text message-based authentication: not secure enough for the banking industry
In addition to call centres, many banks also use text message-based authentication—where a verification code is sent via SMS—in various scenarios, such as transaction authorisation or account recovery processes. While this is convenient, it is far from secure. Vulnerabilities like SIM swap attacks, phishing, malware on mobile devices, security issues with SS7 protocol make SMS-based verification an inadequate safeguard for banking. For high-risk transactions, these vulnerabilities can pose serious risks to account security and can lead to significant financial losses. All that the fraudster needs to achieve is control of the phone number in question to be able to defeat checks performed via these channels.
Should banks continue investing in these inefficient and unsafe processes? With the inherent risks and costs associated with call centres and SMS-based verification, it’s worth asking: should banks continue investing in these outdated methods, or is it time to adopt more efficient and secure identity verification processes? The answer is obvious – the need for change is urgent.
The solution: leverage chipped identity documents
Banks seeking a more secure, self-service, and customer-friendly solution for identity verification during account recovery and step-up authentication should consider ReadID, a remoted NFC-based identity verification solution that leverages chipped identity documents and a smartphone to securely verify a customer’s identity in seconds. When paired with biometric facial verification, this method provides the highest level of assurance that a user is both alive and the rightful holder of their identity document, enabling them to prove who they are and carry out their digital banking remotely without the need to speak to a customer service agent.
For the bank, such identity verification is infinitely scalable, secure and economically advantageous. Isn’t it time for banks to make the switch to a smarter, safer approach to identity verification? ReadID can be implemented into an existing mobile banking app or as a standalone app designed for deletion after the identity verification process is complete. You can try NFC identity verification for yourself with our free app ReadID and your own chipped identity document to see just how easy remotely verifying your identity can be.
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