False positives stymie bank digital ID checks

One of Australia’s smaller mutual banks says its plans to introduce online digital identity checks are being held back by false positive errors.

Hume Bank, a predominately rural mutual with around 60,000 customers, said it has been testing third-party digital identity checking services and found that at least one would accept fake drivers license data.

Chief information officer David Rowe was reluctant to name the supplier but conceded that such discoveries were slowing the bank’s efforts to improve its online service.

Hume Bank has been dabbling with systems that access public utilities and driver’s license data. However, Rowe conceded the findings had made the bank cautious.

"That’s one of the biggest reasons that we’ve been hesitant, because we understand the success rate through that methodology is only around 20 percent,” Rowe said.

Banks are scrambling to establish credible online identity checking systems in order expand their ability to onboard customers via the internet with as few human intervention bottlenecks as possible.

The banks not only see this as a way to meet the demands of younger, digitally-savvy consumers but also as a crucial hedge against disruption from emerging fin-tech start-ups.

For Hume Bank it was just as much about unlocking its geographic customer reach as it was demographic. Without the online verification, it can only carry out identity checks in its branches.

“We do need to move to it. There’s no two ways about it. It’s only a question of how and who our partner will be,” Rowe said.

Hume Bank is one of few banks to speak candidly about the reliability of available online identity verification systems.

The issue is a sensitive one as banks are held to strict regulations requiring them carry out 100-point evidence checks, and the establishment of universal digital identity tokens mooted by the federal government’s financial system inquiry is still some way off being developed.

Still, Rowe said he was confident that Hume’s third-party supplier would be able to iron out the false positive bugs in time to start delivering an identity verification module next year.

“All we need them to do is find out why they had this issue and to get it resolved, which I’m sure they will,” Rowe said.