Today’s announcement from American Express that it is to invest in America’s 70 million underbanked citizens is welcome, albeit overdue.
For the 70 million US and one million UK underbanked traditional verification methods such as database verification or Knowledge Based Authentication don’t always work. This is because a large number of potential customers simply don’t have previous history with mainstream banking and financial services and as such don’t appear in credit industry verification databases. By using only database-led verification procedures for account origination, many financial services companies are preventing themselves from acquiring a large number of potential customers.
Reviewing account opening procedures is becoming an increasingly urgent matter for financial services companies to address. In addition to their traditional KYC methods cutting off access to the underbanked, the sector is lagging behind in adopting new technology and platforms to streamline the account opening experience for the consumer.
For instance many banks have failed to adequately take advantage of the huge consumer growth on mobile and whilst basic transactions and balance checks can be done online, the account opening process still relies on offline processes and sending original or copy identity documentation into the branch. Hopefully Amex’s investment in servicing America’s unbanked will kick-start a period of reform and innovation in the sector so that financial services are more accessible to more people and easier to open.