Identity: Expanding membership in a digital age


It’s no secret that every day, more and more of our interactions take place online. We bank, pay bills, shop and can even receive an education virtually, from the comfort of our own homes. We all do it. As consumers, digital interactions create convenience for us – we’re able to perform many of life’s daily tasks on our own time. The same can be said for the credit union space. Members expect high-level service from their credit unions and access to many services online, including loan applications, money transfers, and checking and savings accounts.

However, the anonymity of the online world has its drawbacks. Criminals can leverage the same technology and online platforms for nefarious purposes. It goes without saying, the ability for credit unions to effectively verify a member’s identity is emerging as the most critical component of commerce. Whether it’s the issuance of a new loan, monitoring the movement of funds, or allowing a member to log into their account, continuous confidence in the authenticity of the member is crucial.

Amid this digital revolution, there are two other important factors for credit unions to consider. First, the number of people in our country that are underserved by traditional financial services is estimated to be a staggering 100 million people. These are individuals with little-to-no credit history, making it difficult for lenders to properly assess credit risk. Add to this the estimated 11,000 people who turn 18 years old in the U.S. every day who are newly enabled to participate in our financial system, and credit unions have enormous opportunity to help these individuals gain access to financial resources. Second, after interviewing more than 10,000 people for our most recent Global Identity and Fraud Report, we found that security is the number one priority for people interacting online, and that online trust is formed through the use of visible verification efforts, with a strong preference for biometric verification.

Take a minute and consider the story that’s developing. Within the next 10-15 years, online access will become nearly universal. With nearly every person on the planet reliant on the digital economy, the opportunities, risks and critical significance of identity will be the driving forces of commercial activity. For those that are online, security is an expectation and a more harmonious customer relationship can be built by ensuring it. That said, while people’s access to online services are growing quickly, their access to financial services is not. They might be online, but large numbers of our neighbors and potential credit union members struggle for access to resources that can improve their lives.

Fortunately for credit unions, this is where the story gets interesting—and where there’s potential benefit.

Part of the challenge for people who can’t access financial services and resources is the “credit-first” paradigm. In most lending situations, identity assessment doesn’t even begin unless an individual qualifies for credit. For those people who have limited credit histories and can’t access financial services, it’s not only hard to enter the system, but from an identity standpoint, there isn’t much reason for institutions to build a relationship with the prospective borrower and establish confidence in the authenticity of their identities.

With a unique, two-tiered approach that allows credit unions to cultivate “members” separate from “borrowers,” these organizations have an opportunity to establish a relationship with all prospective members. As more underserved people move online, real opportunities will emerge to authenticate documents remotely, verify identities, capture biometrics and establish their legitimacy and engage them as community members who have—or will have a need for financial services. As the migration toward digital interactions continues and establishing identity online becomes even more important, credit unions can build a relationship that potentially lasts a lifetime.

Moving beyond identity management at the point of loan qualification, credit unions could expand membership prior to taking on lending risk. Once a member is established with a confirmed identity, credit unions can offer education, financial literacy and other resources, such as Experian Boost, which allows the use of utility and mobile phone payments to increase credit scores through the online environment. This small shift in approach to identity can bind members to the credit union as a preferred source for the services that will be needed over time. There’s an opportunity to leverage the digital revolution to confidently identify those community members with current or future financial needs and position credit unions to meet those needs. Other financial institutions that disregard identity where credit is lacking will miss out. Regardless of a person’s capacity to use financial services today, there’s value in knowing that they are people with needs that can be coached and nurtured to become members with who credit unions can find mutual benefit.

Credit unions have a unique opportunity to expand the role of identity management and positively impact their membership base, as well as the financial health of consumers. Many people lack the extensive credit history needed to secure a line of credit. By connecting with prospective borrowers (even those that may not currently qualify for a loan), credit unions can make a difference in the financial health of many individuals.

Chris Ryan is a Senior Fraud Solutions Consultant at Experian. He delivers expertise that helps clients make the most from data, technology and investigative resources to combat and mitigate fraud risks across the industries that Experian serves. Ryan provides clients with strategies that reduce losses attributable to fraudulent activity. He has an impressive track record of stopping fraud in retail banking, auto lending, deposits, consumer and student lending sectors, and government identity proofing. Ryan is an expert in consumer identity verification, fraud scoring and knowledge-based authentication. His expertise is his ability to understand fraud issues and how they impact customer acquisition, customer management and collections.

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