Why is Identity Verification Important for Wealth Management Companies?

Until recently, onboarding new clients has been a long and largely-paper based process for wealth management companies. With large amounts of money being transferred into stocks and shares, pensions and other investments, wealth managers have, understandably, placed great emphasis on carrying out their due diligence when opening new accounts for high-net-worth individuals.

However, customer expectations are quickly changing. A growing number of WealthTech start-ups have disrupted the sector by reimagining the customer experience. From making it faster to sign-up to giving clients the ability to manage investments via an app, these start-ups are moving the goalposts for wealth management companies. While at the same time, cutting costs by using technology to automate many time-intensive processes, such as manually verifying new clients.

The pandemic, too, has had unexpected impacts. With offices closed and wealth managers and their clients working remotely, there has been much less emphasis on face-to-face meetings. Instead, wealth management companies have been forced to find ways to provide the personalised service that their high-net-worth clients are accustomed to, via secure video calls and other digital channels.

Wealth managers must continue to innovate to meet rising expectations and secure future growth. Digitising and streamlining the experience of new and existing clients is now a top priority. However, in a sector where reputation is everything, wealth management firms and financial advisors must ensure that clients are protected from the threat of online identity fraud. While continuing to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.

To securely verify the identity of clients and safeguard their assets, wealth management companies must embrace digital identity verification methods. Yet while taking every precaution to prevent fraud and money laundering will always be a top priority, it’s also important to meet and exceed the expectations of high-net-worth clients when opening accounts, logging in or managing investments.

Verifying Clients Online: ID Document Verification and More

As wealth management companies adapt to evolving customer expectations, many firms are now using ID verification solutions to verify the identity of clients. Identity verification services typically work by checking the identity of account holders against data from a range of different sources.

In addition to verifying ID documents such as passports and driving licenses during the onboarding process, many services also process contextual data. This can prevent the risk of fraudsters accessing existing accounts, without requiring time-stretched clients to do anything. For instance, by checking that the device used to access an account has been used by the client on a previous occasion.

As well as onboarding new clients, there are several other moments when wealth managers may need to verify the identity of their clients. For instance, when a user logs in from an unusual location, requests to make a high-value trade or change personal details linked to the account.

In instances such as these, clients may be asked to present proof of identity. This could be by taking a photo of themselves so that it can be authenticated against verified ID documents or entering a unique code sent to a mobile device or a secure e-mail address.

Although identity checks can help to give clients confidence that their investments are safe, this must also be balanced with convenience. Today, high-net-worth individuals expect to be able to open accounts and manage investments with minimal friction. If wealth management companies fail to meet the expectations of their clients, they could find clients switch to other WealthTech services.

Why Are Identity Verification Services Important?

Identity fraud is growing in scale and sophistication every day. Fraudsters are increasingly using fake, stolen or synthetic identities to open accounts. While tactics such as phishing attacks can easily trick users into giving away secure login information, allowing fraudsters to take over existing accounts.

In a sector built on reputation, wealth management firms must do everything within their means to ensure that clients are protected from the threat of online identity fraud. Digital identity verification services can play an important role in bringing together the data needed to spot and stop fraudsters while delivering the seamless experience that high-net-worth clients demand today.

Find out how GBG is helping wealth managers prevent fraud and meet client expectations.