We are living in an era, where convenience is one of the final goals for most products and services, but it often comes at the expense of our privacy, when we trade our personal information for a better customer experience. As data is called the new oil, it is no wonder that institutions around the world are introducing stricter security measures to protect our personal information and discourage identity theft. According to research, attempts of ID theft are so common that 40% have been targeted by IT thieves at least once. At the same time, 72% of consumers would agree to give out more personal data to access their accounts more easily. To maximize comfort and innovation without compromising security, The Swiss Financial Market Supervisory Authority FINMA decided to propose revising the Circular on “Video and online identification” to introduce additional, online forms of identification for financial institutions. The consultation on the subject will run until 1 February 2021. How can potential new revisions change the way people in Switzerland can go through the identification processes?
Proposed revisions take into account the latest technological advances, which make it possible to use and store information more securely than ever. By maximizing the efficiency of data flow using tech solutions, FINMA hopes to leave more room for innovation in Switzerland. Seeing the importance of secure, automated identification processes, they introduced a possibility for online identification by scanning the client’s biometric passport chip. The process requires extra steps just to maintain a high level of digital security, but it is enough to make a bank transfer or scan the biometric information document chip to fully verify your personal information. Clients can use a special smartphone app to transfer their personal data and photo straight to their financial intermediaries, eliminating the need to visit any office in person to verify their identity. Interestingly, contrary to popular belief, digital identification process was judged to be safer, as the lack of personal contact decreased the chance of abuse, such as bribing officials. Why is it such an important change? As fintech industry is booming with promise and digital banks such as Chime (USA), Revolut (UK). Klarna (Sweden), and Xinja (Australia) raised millions in funding rounds, traditional banks have to adapt to the digital reality not to fall behind banking newcomers. Although only a small friction of banks uses online verification tools, 75% customers would be willing to open a bank account online, and 71%, on average, would provide a biometric to their bank for security purposes. What is more, in many countries, people actually expect the introduction of biometric for future authentication when they start their accounts — on average, 43% of the surveyed spoke in favor of such a solution. Switzerland’s willing to introduce innovation into the banking systems is in line with the EU’s approach to the digitalization of finance. In “Thirty Recommendations on Regulation, Innovation and Finance” published in 2019 by Expert Group on Regulatory Obstacles to Financial Innovation (ROFIEG), digital identity verification is a 19th recommendation, as authors highlight the necessity to investigate “potential models (including decentralized models) for efficient, robust and trusted digital identity verification.” With the introduction of new ID verification processes across Europe, the continent’s banking ecosystem will enter a brand new, digital era of finances.
The revisions of “Video and online identification” in Switzerland may seem like one small change for many customers, but it is one giant leap for digital banking. It symbolizes the sector’s willingness to embrace digital solutions and offer customers faster, more efficient service, leaving the days of slow, tedious banking practices in the past.
Source:
https://www.finma.ch/en/news/2020/11/20201116-mm-online-identifizierung/
https://safeatlast.co/blog/identity-theft-statistics/#gref
https://www.fico.com/blogs/fico-digital-banking-study-security-and-authentication-digital-world
https://www.consumeraffairs.com/news/study-finds-most-banks-lack-digital-identity-verification-102020.html
