We wish we had a magic crystal ball to help us make predictions for 2018. Luckily, making projections doesn’t require a supernatural ability; rather, projections are about taking known trends and extrapolating them into the near future. No magic required, instead, let’s forecast a future based on facts and trends we’re seeing in the industry.
What then, does RegTech, identity verification and compliance hold in store for us in 2018?
The Fight for Data
Who owns your data? Or, perhaps more importantly, who controls it? This battle has quietly been building in the background, but 2018 might be the year it becomes a full-blow storm. In Europe, PSD2 comes into full force, with the requirement that banks open up their customer information to third-parties. It’s also the year of GDPR, with wide-ranging effects on controlling EU citizen’s personally identifiable information (PII).
In other jurisdictions, the level of hacks is making it imperative for either new legislation or new technology (or both) to combat the issue. However, new data protection frameworks take time, so most companies will focus on complying with GDPR (if applicable) and using the lessons to improve their overall data handling schemes.
Let the Bot do it
Let’s face it, for all the creativity and intelligence humans have, we’re not very good in filling out forms, carefully reading long documents, or performing other rote, boring tasks. We’re expensive and prone to mistakes.
Thus, the ability of AI, bots, automated workflows, APIs and other systems that replace manual intensive work will increasingly become accepted into the workplace. Sure, we’ll call them names behind their backs and mock them tirelessly, but we’ll appreciate their time and cost savings and their ability to speed up customer onboarding.
Know Your (Business) Customers
Creating a business is now quicker and easier than it has ever been. Numerous tools to help entrepreneurs start, operate, market and sell goods and services are available online. So, pretty much anyone with an internet connection and bank account can start a business online. Thus, there’s a growing business need to perform Business or Merchant Verification, which involves acquiring and verifying company vitals such as company name, address, registration number, and in some cases performing enhanced due diligence — such as UBO (Ultimate Beneficial Ownership) and KYCC (Know Your Customer’s Customer) checks — to identify and verify the people behind these business entities.
There’s an increasing compliance requirement to have in-depth company records when opening an account, such as EU’s 4AMLD or US Final CDD Rule. There’s a need to speed up customer onboarding, as the average time to onboard a new client is 26 days. And, there’s a massive burden on staff to keep on top of archaic processes.
Plus, the public is becoming increasingly fed up with all the offshore accounts and other financial shenanigans of the super wealthy. This will be a year that sees major adoption of new solutions in the area. Anyone who can come up with a simple term that conveys the power of the solution will be labelled a hero.
My Phone is Me
In 2017, Juniper Research estimates that $1.35 trillion globally will be spent via mobile wallets. By the end of 2018, 27 percent of all US retail e-commerce sales will be through a mobile device. Over two billion people have used their phone for some type of purchase. However, the conversion rate on mobile phones is 270 percent less. Something is not adding up; there’s a huge number of devices and people willing to use them for transactions, but they don’t take full advantage of the capabilities.
Over the course of the year, that opportunity gap will start to close as various technologies come into play and the experience becomes more seamless, quicker and secure.
The phones themselves will get better. With the screen already taking up all available real estate on mobile devices, and the form already getting quite long, different form factors will emerge. Every major manufacturer has hints of two-screen designs, flipping out to double screen size. Or, Magic Leap is promising to finally release its AR (augmented reality) system, which will allow for a massive virtual screen.
Security, through biometrics, is getting there. At a certain point, it’s not a technology issue, but rather one of consumer trust. With the hassles and insecurities of passwords, its mobile biometrics battle to loose; 86 percent of consumers are interested in using biometrics to verify their identity or to make payments.
My API or Yours
The big gain will come from integrating these solutions into a cohesive, trusted experience. Can this eCommerce provider be trusted? How do I place my order quickly and easily? What happens with my payment information? For sellers, how can you integrate with shopping carts and payments, how can you verify the buyer, and how can you get paid timely and hassle-free?
Whether it’s mobile commerce, sending money, doing banking or other transactions, 2018 will be a crucial year in developing a full and verifiable end-to-end solution. For the consumer, they’ll get a safe, seamless online buying experience. For online retailers, they’ll get processes that work together as one, running the necessary compliance and fraud checks, integrating various payment rails and back-office operations by dropping in an assortment of APIs.
Each communication advancement makes the world that much more of a smaller place. Now, people can relate based on shared interests, no matter how obscure, or where they are located. Multiple, diffuse examples of a borderless world are growing, from international travel to cross-border commerce.
Ken Allen, chief executive of DHL Express, notes that e-commerce globally has been growing at around 25% a year. While he thought it would be domestic eCommerce driving the most growth, “the international, cross-border segment is growing faster than domestic e-commerce.”
As the processes improve, people become more accustomed to buying from micro-merchants and the trust framework grows, cross-border commerce will continue to expand in 2018.
RegTech: Powerful Compliance Tool
There’s a theme developing for 2018; the proper use of data and technology can effectively diminish money laundering, fraud and other financial dangers. Whether if it is protecting PII, making operations more cost effective (while maintaining compliance), gathering intelligence about prospective business clients, using biometrics and other technologies to improve mobile commerce, or improving cross-border transactions, new technology can improve compliance, customer experience, work life, and the bottom line.
Two years ago, RegTech needed an explanation every time it was mentioned. This year, anyone in the industry knew exactly what it meant. In 2018, RegTech will become as mainstream as its older sibling, fintech; for those in the know, it will be a much more powerful and useful industry.
Stay tuned to the Innovations in Identity blog for developments over the year. We promise it’ll be exciting, interesting and newsworthy.