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How ID Scanning Could Boost Mobile Account Opening

Banks are gravitating toward a new technology they think can help customers more easily open mobile accounts: allowing customers to photograph their driver's license from their smartphone to help them auto-fill portions of their application.

Equifax and Zoot unveiled a product Monday called MobilityPlus designed to promote this time- and effort- saving technology and remove a key reason why customers abandon trying to open an account — the hassle of filling in all their data on a small screen.

MobilityPlus will help with filling in the application and perform a search-match analysis to help authenticate the customer's identity as well as determine whether the device in use may be associated with fraudulent activity. It can also incorporate knowledge-based identity questions and automated OFAC screening.

"We are meeting the customer where they are at," said Dennis Dixon, president of Zoot.

Last summer, Radius Bank introduced a similar feature to its mobile banking program, allowing customers to take a photo of their driver's license and using it to fill in an account application. It was one of the first banks to test such technology.

But the interest in the technology underscores an important change of thinking in banking: while branches continue to be the No. 1 place where sales are made, some view mobile as the next major customer acquisition tool. It is particularly true for millennials who have grown up on the Internet and won't put up with PDFs or requests to mail in documents when seeking financial products online.

Mary Monahan, executive vice president and research director of mobile for Javelin Strategy & Research, said the promise of the imaging tech is to save the consumer typing and time when they are shopping for bank products.

"People don't want to have to go to the bank," said Monahan. And the younger they are, the likelier they want to do a task through mobile.

Radius is one of only a handful of institutions to use this technology. BankMobile, a digital-only offshoot of Customers Bank in Phoenixville, Pa. that uses tech from Mitek and Malauzai, recently made the photo input feature available through its mobile app.

More banks are expected to follow suit as the tech matures.

Julie Conroy, a research director for Aite Group's retail banking practice, said numerous institutions are looking to capture the data off an identity document to simplify the mobile data entry process. They are also making investments to let people begin an application in one channel and complete it in another.

Radius, for one, thought simplifying the task for mobile was a necessity.

"Our overall mantra is to make everything a really great customer experience," said Rob Landstein, executive vice president and chief information officer at Radius. "It's the biggest branch: the online channel."

It's reaping results. The bank, which made the scanning feature available through its responsive design website, said it has observed a 96% increase in account application page viewing on mobile devices in the five months following the technology upgrade year over year.

Amol Shah, a director in AlixPartners' financial services practice, said banks nationwide are evaluating their distribution models as ever-more consumers are doing banking activities online, including the way they switch their primary banking accounts. The research firm's most recent survey showed that 18% of those polled said they completed and submitted the application online, up from 15% in a survey released six months prior.

Additionally, a number of institutions are evaluating the photo technology and other methods designed to ease the burden of applying for accounts on the mobile device, said Shah.

But consumers are setting the terms of what they want in digital. "What we see and what we hear from banks is innovation and investment in mobile is consumer led," said Shah.

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Comments (4)
ID scanning technology provides consumers the convenience of secure and fast mobile account opening from anywhere, on any device. This valuable capability allows financial institutions (FIs) to quickly address Know Your Customer (KYC) identity verification, while automatically filling out the personal information needed for account opening. Customers can also instantly fund their new account by taking a picture of an existing credit card or check--ultimately providing the consumer a new account, at that moment, directly from their mobile device.

For clarification, when a customer uses the camera on their mobile device to take a photo of their drivers license, the backend technology automatically pulls only the necessary information needed for opening an account from the photographed ID, then authenticates the individual's identity, analyzes fraud, and makes an automated credit decision, all in real-time. This process saves the customer time and frustration by eliminating the need type in their information on the mobile device's small screen. If a customer prefers to open an account at a branch location, they will still be asked to provide identification. What this ID scanning capability addresses is demand by consumers for real-time, risk-assessed, and effortless mobile account opening.
Posted by Eric Lindeen | Monday, March 30 2015 at 10:17AM ET
Both very good points listed above to be considered. I agree with jonb that if we can't source all the information the bank needs through the digital channel/mobile phone right up front, than it is effectively defeating the purpose of collecting the Drivers License, etc via mobile. I believe what the banks are simply trying to do in this is reduce 'friction' (i.e., the pain and strain associated with a consumer furnishing all required credentials when they are looking to open an account, get a new credit card, loan, etc) during the account opening process for folks like you and I. Statistics have shown that individuals who attempt to open a new account online generally abandon the process most often when they get to the stage of providing these types of credentials (utility bill to show proof of residence, DL or passport to show proof of identity, etc). The one very helpful tool that a mobile phone or tablet has is a camera, which arguably would make it quite easy (or easier) to simply snap a picture of these types of documents while completing the online application, and be done with the documentation requirements all in one step. As this is a relatively new concept, it is natural for it to bring some initial trepidation from the consumer base. But if done right, it could make life alot easier for consumers to apply for credit and banks to lend, and I believe that is the end game. To AllRegs point above, there are some privacy concerns related to DL. Good news is that there are some OCR technologies out there that can literally screen scrape the required fields needed off of the driver's license and submit only those fields needed from the DL to the bank. It will depend on how the bank sets it up, but there are ways to manage that DL image appropriately to both respect individual's privacy while providing the needed information by a bank to process a new account request. Time will tell how this plays out. My firm supports banks across the country with mobile and digital banking solutions, and we're experimenting with some of these OCR technologies now. More to follow as this area matures...
Posted by kenjhans | Thursday, March 26 2015 at 11:08AM ET
A drivers license may have information on it that is not permitted to be requested or used in connection with an application under Regulation B S 1002.5, including race, color, and sex. A picture or other information on a driver's license may routinely contain that information. Generally, lenders only capture an image of a driver's license under the CIP rules for the verificaiton of identity after approval. In fact, the CIP Q&A, while permitting the retention of a photocopy of a driver's license, contain a warning about improperly using it for purposes outside the CIP rule. If the image is not available to the underwriter, and no data prohibited by Reg B is stored or can be seen by the underwriter, or by anyone else until after approval, it may be acceptable. Controls on the image and data would have to be fairly tight.

As practical matter, sending someone an image of your driver's license seems a bit scary, especially in this age of data insecurity.
Posted by AllRegs | Wednesday, March 25 2015 at 2:56PM ET
Photo of drivers license? As a substitute for filling out an application? What is that..., name, date of birth, drivers license number, address? I would rather write all that down for them than get out my driver's license, take a picture of it, and email it to the bank, and then still have to call them to provide the rest of the information they need. Sorry, we are over teching here.
Posted by jonb | Tuesday, March 24 2015 at 6:39PM ET
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