How to respond when digital customers want fortified protection — without any trace

A version of this article first appeared in BAI’s May Executive Report: Unlock what’s next for digital. You’ll find insightful coverage in the issue on seamless consumer touchpoints, AI-powered loans, layered identity verfication and more. 

We’ve hit a tipping point in the battle between traditional financial institutions and fintech disruptors. With fintech’s digital banking solutions gaining nearly universal adoption, 8 in 10 consumers now use digital financial tools, and half of Americans engage with fintech daily.

However, despite executives at traditional financial institutions saying they are losing up to 20% of customers annually due to poor digital customer experience (CX) and slow digital transformation, only 4% of bank leaders say they deliver excellent digital CX.

Security, seamless interactions and consistent digital experiences across products and services will all matter if traditional banks are to compete out of the gate.

There’s no question that traditional banking maintains a significant advantage over fintech because they hold the majority of assets under management and so have a greater resource pool to tap. To keep their edge, traditional financial services leaders no longer have the time to ask the question we hear most often from them, “What are other banks doing?” Now is the time to enhance digital-first, app-centric experiences for their customers, and expedite their move to cloud-native infrastructures to support modern CX.

To help give traditional banks and credit unions the push they may need to accelerate their digital shift, here’s a look at some of the consumer identity and access management (IAM) trends we’re seeing.

Trends in consumer IAM

Banks walk a tricky line with consumer IAM: customers say they want frictionless experiences, but they also expect security to be table stakes. In fact, as security breaches dominate the headlines, consumers increasingly want more visible security features to give them peace of mind. As such, we’re seeing more and more banks lean into IAM as the critical enabler for their customer-facing innovations.

While many point to solutions on the market today to tout themselves as IAM-forward, few platforms offer holistic support. Leaning into IAM puts CX and security at the core — enabling traditional FI leaders with a secure platform foundation that they can plug solutions into.

Using IAM to unlock digital- and mobile-first services

Financial institutions have an opportunity to get creative in bridging security with frictionless CX.

Leading banks are using advanced IAM solutions to strengthen their security stance while keeping most of it invisible and painless for the customer. For example, banks can integrate IAM with tools like e-signature, notary and other innovative apps that digitize historically in-person experiences.

The goal here is to make it possible for customers to get all their banking needs met without ever stepping into a branch if they opt for this route. And, critically, this is not limited to online banking — as consumers increasingly trust their smartphone security over computers, we’re helping these banks enable a truly mobile-first experience.

Digitizing and harmonizing customer-facing apps

As financial institutions rapidly digitize their customer-facing apps — everything from retail and commercial banking to loan financing, wealth management, insurance offerings and other services — they’re running into the problem of disjointed or siloed customer experiences. Successful leaders in digital CX are building consistent digital experiences across apps, even when those apps span multiple lines of business — and they’re seeing revenue gains in the millions by doing so.

Larger banks are keeping this app development in-house (with the resources to do so). But small- to medium-sized banks will need to outsource the build of these apps and banking platforms. Banks must be careful in selecting vendors, avoiding two challenges: 1.) vendors with legacy on-prem infrastructure that doesn’t support modern authentication on their end, and 2.) vendors who prioritize the stickiness of owning identities over the best security interests of the banks they’re partnering with.

Multi-layered security architecture

Banks might opt for a vendor that levels up protection and stops the most advanced threats, such as a best-practice security architecture using web app firewalls (WAFs) and bot proxies in front of the tenant.

Bank customers are also smart to engage help in leveraging API gateways to control and monitor all API calls between the bank and the technology or banking platform. And multi-layered approaches can integrate additional ID-proofing technologies on the market like Jumio, Onfido and LexisNexis Risk Solutions to create an extra layer of identity authentication.

No one-size-fits-all banking transformation

Staying updated on industry trends is crucial for financial institutions amidst the digital revolution. However, there’s no universal solution.

Your path to modernizing customer experience and infrastructure depends on your organization’s specifics: product portfolio, customer demographics and existing tech setup. Your institution’s path to modernized CX and cloud-native infrastructure should align with your business structure. In other words, avoid copying others’ strategies blindly.

You can’t get ahead by following

But there’s something even more fundamental to consider when thinking about trends. When leaders ask, “What are other banks doing?” it often hides a deeper underlying sentiment: “I’m scared to be the first to try something new.”

Fintech disruptors generally aren’t afraid to be the first to market and they’re attracting traditional banking customers sometimes because they are willing to try new things. Bank leaders need to recognize that they can’t get ahead tomorrow by looking at what others are doing today. The winners will be those who break out of the norm and act on new, modern approaches.

Kyle Holden is Principal Customer Success Manager at Okta.