May 26, 2020

Digital is the new normal

We don’t yet know for sure what ‘the new normal’ is going to look like once the Covid-19 outbreak has been brought under control. The latest indications from the Government are that we could be living with the consequences for years to come, with the potential for fresh waves or mutations of the virus to spring up. Not a particularly cheerful outlook, so we have to try to keep ourselves and those around us safe, and adapt the way we work and go about our daily lives to reflect the new circumstances.

One impact that has already become evident is to accelerate the trend towards remote working. It seems unlikely we will all just snap back into commuting five days a week and renting out expensive office space, when the alternatives seem to be perfectly satisfactory. This will have important implications for business processes: the new normal means these are increasingly going to be digital.
It’s surprising how many firms continue to rely on manual, paper-based

processes for all sorts of operations when this approach costs them both time and money, and is often prone to error. This seems particularly true when it comes to verifying client ID, where it is not uncommon to encounter the strongly entrenched view that reference to original documents is the best and only way to do this reliably.

Even at the best of times, this is a misguided notion. There are countless would-be fraudsters who are adept at producing fake or falsified IDs and unless your firm happens to employ an expert in detecting these, it is unlikely you will pick up on that until it is too late.

With social distancing more or less certain to be in force for the foreseeable future, and increased remote working likely to continue even after that, the task becomes even more difficult. It is not practicable for clients to present original documents in person so firms need to explore alternative methods.
We have recently introduced a biometric facial recognition feature which allows users to compare scanned ID documents against video ‘selfies’ provided by prospective clients. On its own, however, this is not enough as the issue with potential falsification of documents is arguably even greater when dealing with scanned copies rather than originals.

Facial recognition needs to be backed up by comprehensive checks against credit reporting data, which allows users to establish a reliable address history for individuals. There are two great advantages to this from a business point of view: it is practically impossible to falsify this data so it is extremely reliable and secure, and it can all be done remotely without any need for physical documents. In the current situation, this is invaluable, as it means business continuity does not need to be compromised.

There have been some suggestions that there should be flexibility in the application of money-laundering regulations to reflect the difficulty firms reliant on manual document checks find themselves in. At the same time, though, there have been warnings from experts, including the Financial Action Task Force – the international body charged with setting the global anti-money-laundering strategy – that there is a heightened risk of fraud and financial crime during the current crisis. Far from taking a more relaxed approach, firms should be doubling the guard to ensure they do not fall foul of this.