User Onboarding: Top Trends Shaping the Financial Services Sector in 2024

Explore the top trends, compliance, and regulations you should know and expert insights on how you can stay prepared.

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2024 is marked for continued transformation in digital identity verification, especially for the financial services sector. From deepfakes to ever-evolving compliances, there’s a significant number of trends shaping the future of user onboarding for finserv businesses.

In this article, we will explore the top trends, compliance, and regulations you should know. We’ll also offer expert insights on how you can stay prepared.

Let’s dive right in!

1. AI-driven digital identity verification is the future

Physical IDs and manual verification processes are becoming increasingly rare, ushering in the era of digital identity verification. Furthermore, the digital identity verification process is much more effective in detecting and preventing identity fraud.

With the increasing prevalence of digital onboarding processes, newer compliance regulations have been put in place to protect customer data and ensure security. Regulations like the Data Protection and Digital Information Bill aim to enforce stricter regulations on the collection, storage, and use of personal data by financial institutions. Similarly, Electronic Identification and Trust Services (eIDAS) 2.0 aims to provide a harmonized framework for secure and seamless electronic transactions across EU member states. This includes the onboarding process for financial services.

The use of AI in identity verification is changing the way businesses approach fraud detection. With its ability to process large amounts of data and recognize patterns, AI has significant implications for identity verification. What does this mean for you? Conduct a strategic reassessment of your existing fraud detection mechanisms and processes.

“HyperVerge aims to be the vanguard against identity fraud. Our AI-driven identity verification solution has been honed over 13 years to always stay one step ahead of fraudsters. Safeguarding trust is not just a commitment; it’s the cornerstone of a secure and resilient future.” adds Kedar Kulkarni, CEO of HyperVerge

HyperVerge Insight: Take on identity fraud proactively. Invest in AI-powered identity verification systems capable of detecting and responding to sophisticated attempts at fraud. Keep a tab on and adapt to new legislative frameworks, such as the EU AI Act, that are designed to regulate the trustworthy use of AI in identity verification.

2. Biometrics are here to stay!

Emerging trends include continuous authentication, mobile biometrics, and behavioral biometrics. Continuous authentication entails ongoing monitoring of behavior and biometrics throughout a session, adding another layer of security.

Behavioral biometrics are catching on, where user habits such as keyboard patterns and mouse movement are analyzed to improve security with proactive detection of abnormality. Facial recognition is gaining widespread popularity as well. 

As the financial sector embraces these technological advancements, regulatory compliance, cybersecurity measures, and user education become critical factors to ensure the responsible and secure implementation of these technologies.

HyperVerge Insight: The importance of liveness detection cannot be overstated. Liveness detection is the process of accurately detecting if a captured biometric sample originates from an actual person or source, such as a photograph or a masked individual. This is significant in eliminating fraud and maintaining the authenticity of onboarding.

Read more about the future of biometrics here.

3. Deepfakes are a real threat

There were 500% more deepfakes generated in 2023 compared to 2019. Let that sink in! 

In a recent scam, fraudsters used deepfake technology to pose as the CFO of a Hong Kong multinational company in a video conference call. The company lost a whopping HK$200 million ($25.6 million) to deepfake fraud!

Deepfake creation is getting more sophisticated by the day, making it very challenging to detect them real-time and financial institutions are bracing themselves for a wave of deepfake fraud.

Here’s a recent example of the potential threat of AI-generated deepfakes in user onboarding and KYC:

deepfake scam in onboarding

Believe it or not, this is a deepfake depicting a woman holding a piece of paper with handwritten text — just like the KYC process!

“Financial institutions must be vigilant in implementing robust security measures to detect and prevent deepfake attacks. Deploy advanced algorithms to analyze biometric data and detect anomalies that may indicate a deepfake”, emphasizes Kedar.

Advanced deepfake detection solutions employ machine learning algorithms to identify inconsistencies in facial expressions, voice patterns, and other subtle cues. Check out HyperVerge’s deepfake detection solution to know more.

4. The shift from APIs to an end-to-end platform

Traditionally, financial institutions have relied on APIs (Application Programming Interfaces) to integrate various systems and services for user onboarding. However, this approach comes with certain drawbacks.

APIs may introduce complexity and maintenance challenges, requiring ongoing updates and integrations as new technologies emerge. Additionally, APIs may limit the flexibility and scalability of user onboarding processes, as they are often designed for specific use cases.

As we look towards 2024, there is a growing trend towards shifting from APIs to end-to-end identity verification platforms. Moreover, the constantly evolving regulatory landscape adds to the burden on the IT team to keep up with the new compliance laws and update your existing workflows within rigid timelines. An end-to-end platform eases that burden from your shoulders and automates compliance as per the latest requirements.

These platforms offer a more comprehensive solution for user onboarding, encompassing all the necessary functionalities, from digital identity verification to building custom onboarding workflows and drop-off analytics.

Know more about our end-to-end onboarding platform, HyperVerge ONE here.

Wrapping up

In conclusion, the landscape of user onboarding in the financial services sector is constantly evolving. As we step into 2024, businesses must stay abreast of the latest trends and embrace innovative solutions to deliver a seamless and secure onboarding experience for their users.

From digital identity verification and data protection to the rise of biometrics and the shift towards end-to-end platforms, there are numerous trends shaping the future of user onboarding. By understanding and leveraging these trends, financial institutions can position themselves at the forefront of the industry, ensuring they remain competitive and meet the ever-changing needs of their users.

Nupura Ughade

Content Marketing Lead

With a strong background B2B tech marketing, Nupura brings a dynamic blend of creativity and expertise. She enjoys crafting engaging narratives for HyperVerge's global customer onboarding platform.

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