Simplifying identity verification for financial services

Garrett Allen
Oct 29 · 6 min read

This is the first in a series of articles about uPort’s journey as part of Cohort 5 within the UK Financial Conduct Authority’s (FCA) Regulatory Sandbox. This article is primarily focused on the problems we are solving with portable KYC and the process to implement a solution. Other articles will cover additional learnings and outcomes from our pilot. Stay tuned!

Today, consumers and financial service companies alike are burdened by the process of identity verification. It remains a very costly and lengthy process for companies in the financial sector to comply with the latest KYC/AML regulations. As for customers, it is time-consuming to undergo the same lengthy verifications at each service provider, and this often leads to high drop-off rates. For example, 59% of customers looking to open a bank account have walked away from online applications in 2018.

Earlier this year, we applied to the UK FCA Regulatory Sandbox in a joint application with Onfido, a global identity verification service, and were accepted as part of Cohort 5. In the sandbox, the problem we are looking to solve is how to lower the burden of identity verification during the onboarding process for low-risk financial products. Tackling this problem is top of mind for financial service companies since onboarding time is continuing to increase with increased regulatory pressure. An example from a 2017 Thomson Reuters survey quoted by Forbes “found customer on-boarding time increased 22% in 2016 and was expected to increase by another 18% in 2017.” Through the work with our partners, we are aiming to reverse this trend.

Our approach to designing the pilot

There are multiple drivers for the increasing burden of identity verification for KYC. It is important for us to analyze them closely as we build out a solution:

  • Difficulty to verify customers online, amidst prevalence of bots, bad actors and identity fraud
  • Increased regulatory burdens that require financial businesses to do extensive KYC/AML checks to comply with regulations and report regularly

Together, these drivers increase the customer acquisition costs and friction to onboard new customers.

As we designed the pilot, we set out to test whether portable, reusable verifiable credentials can be used to reduce KYC-related costs. In our hypothesis, we believe by allowing users to manage their own credentials, they can get verified once and then they are able to reuse that verification across multiple financial service providers. This ultimately reduces costs and time burden of the KYC process across stakeholders.

For the test, we are relying on our existing infrastructure, such as the uPort mobile app, and are specifically looking to test:

1.) Verification process: As consumers go through the flow of getting verified with Onfido and receiving a credential to their uPort mobile app, do they understand the value of a portable, reusable ‘identity’? Do consumers see the value of storing a digital credential with their identity verification in the uPort mobile app?

2.) Onboarding for new services: Will consumers use the digital credential to sign up for and gain access to (multiple) financial products?

To answer these two questions, we divided the pilot into multiple phases.

For the first phase, we asked pilot testers to ‘get verified’ with Onfido using uPort. This is a new concept for most users, as the normal KYC process they are used to is normally integrated within the financial service onboarding process. However, in this instance, we are aiming to educate them that the KYC process can sit outside of a specific product — and can be reused across multiple services! We want to test whether this would be intuitive to pilot testers, and what the completion rates would be (i.e. successfully received a verified Onfido credential in their uPort app).

We worked directly with Onfido to integrate our libraries, creating a credentialing service for their identity verification (IDV) product. This service issues Verifiable Credentials (VCs) to users’ uPort mobile app that can be used within the financial ecosystem we are building in the FCA Regulatory Sandbox. All data management and storage meets GDPR guidelines, and we never store any personally identifiable information (PII) on the blockchain.

The verification process to receive an Onfido ID credential

For the second phase, we are partnering with the PwC UK team to test how users can reuse their credentials to sign up for multiple financial services within an ‘open banking’ financial ecosystem. This phase will consist of testing within a demo environment first, before moving to real financial service providers. While we will be completing this phase by the end of this year, we’ve completed a few integrations already to understand user sentiment as they go through the onboarding process for financial services. Notably, we developed a ‘Marketplace’ landing page to act as a marketplace of financial services that accept the Onfido ID credential when signing up for services.

This allows us to test the reusability of the credential for different types of products, while also building the pilot in a way that companies can easily join. Through this approach, we lowered integration barriers for companies to accept / consume the Onfido ID credential.

Developing a product with the end-user in mind

When solving for the customer problem through user testing, we built a solution to meet the customers where they are. By utilizing both mobile and desktop channels, we empower them whether going through the happy path or an edge case.

As a cross platform company, there are different combinations of using mobile or desktop to access the PwC ‘open banking’ ecosystem flow or Marketplace landing page prompting the user to go through the identity verification process and receive an Onfido ID credential to the uPort app. There are many areas where users can get tripped up along the way between these platforms, and we included prompts to hand hold them in both the desktop version and the mobile app to ensure a seamless experience.

Additionally, the concept of user-controlled data is new for users and we made sure to explain at each step what was happening, providing feedback to the user. For example, after going through the IDV steps, they could either be verified or not verified by Onfido, or they could decide to share or not share their personal information when signing up for a financial product, causing our team to provide personalized messaging.

Setting expectations as users receive their Onfido ID credential

Along each step of the user journey, we made sure to create an experience that gives users confidence in the uPort app, the identity verification process, and that we’re meeting their expectations.

Quantitative and qualitative analysis to measure outcomes from the pilot

Lastly, to measure outcomes from the pilot and continue to iterate, we’re relying on a mix of quantitative and qualitative metrics from pilot testers.

We’ve been encouraged so far to see that in the first stage of the pilot, we had ~40% conversion rate of users successfully receiving their Onfido ID credential in the uPort app from those that were invited to participate in the pilot.

We also conducted some qualitative research, completing a series of customer interviews and surveys to receive feedback and make necessary enhancements to the product. Most feedback was positive and constructive with users exclaiming, “I submitted my KYC and was verified quickly,” but they were awaiting phase two of the pilot, saying that “all examples of services I could access were ‘coming soon.’”

In the second phase of the pilot, we will be measuring ease of use and verifying the perceived benefits (outlined in the hypotheses section above) to the different stakeholders.

Next steps

As we set up the second phase of the pilot, we’re excited to continue engaging closely with end users and deliver a product that is intuitive and simple for them to use, while showcasing the benefit of reduced onboarding friction to service providers. Through the pilot we’re testing how customers use the Onfido ID credentials, creating a more seamless sign up process for financial services, and ultimately learning how to return control of data back to the individual.

Email us at partnerships@uport.me if you’d like to be part of our pilot and accept the Onfido ID credential to onboard customers. To stay informed on the latest uPort news, sign up for our monthly newsletter here.

Garrett Allen

Written by

Product @ uPort / ConsenSys

uPort

uPort

Self-sovereign identity and user-centric data platform on Ethereum

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