Walking the Tightrope Between Legal Compliance and User Experience in the Financial Sector

Walking the Tightrope Between Legal Compliance and User Experience in the Financial Sector

by February 23, 2022

The digital revolution has upended the business practices of countless companies operating in almost every industry imaginable – but perhaps none have been quite as affected as the financial sector. With data security and cyber crime such high priorities for customers and banks alike, it’s imperative that the latter ensure the former have access to the best products and services for guaranteeing their safety online.

This is not only crucial for protecting their reputation among their existing and prospective customer base, but also for complying with the latest national and international regulations surrounding Know Your Customer (KYC) and anti-money laundering (AML) legislation. Nonetheless, banks must still strive to achieve that compliance without impacting on the user experience of their customers.


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The importance of user experience

Indeed, these days, it’s not enough for a bank to keep the assets of their customers safe and protect them from fraudsters and would-be thieves. At the same time, they must also ensure that the banking experience they provide is second to none, meeting and exceeding consumer expectations at every turn.

Indeed, research by one former Gartner Analyst has revealed that not only do a majority of consumers switch from one service provider to another due to a dissatisfaction with service levels, but that it’s six to seven times more expensive for a company to attract new customers than it is to retain existing ones. Clearly, prioritising user experience should be a chief goal for any bank.

Compliance infringing on convenience?

When it comes to achieving legal compliance on data security and identity verification, the friction created by traditional onboarding processes can negatively impact the user experience. For example, asking an applicant to upload copies of their passport, driving license or other identifying information might be easier to overcome for some people than others – but it creates obstacles for all.

The same is true for in-person agent-based verification. If a person does not reside close to a branch, works hours which make it difficult or impossible for them to attend or simply has no desire to frequent a brick-and-mortar establishment, they may refrain from doing business with a specific bank. This can happen regardless of the motives behind the identity checks, which are often in place to safeguard the customer themselves.

Tech to the rescue

Thankfully, the modern march of technology has provided solutions to sidestep these issues. For example, AI-powered ID verification for financial services has revolutionised the way banks are able to onboard new clients, by handling everything remotely and with precision efficiency. By leveraging digital identity cards, biometric scanning capabilities and near-field communication (NFC), the whole process becomes far more streamlined.

Even if a customer isn’t entirely comfortable using AI to verify their ID, the advent of video chat greatly facilities remote verification by a banking agent. It is solutions such as these which empower banks with the tools they need to walk the tightrope between a happy customer base and a tight ship that is covered from a practical and legal standpoint.

While fulfilling the ever-increasing list of data security, KYC and AML obligations might seem like a thankless task which only alienates the client, there are digital solutions to these digital problems which can help.