Johnny Ayers, cofounder of Socure, explains how data collection trends of millennials are evolving.
Between the Instagram selfies, Twitter hashtags and Facebook posts, millennials seem to overshare. Their life is an open book on social media, and even the tiniest of details are never too much to provide.
But when it comes time to hand over information to authenticate themselves to conduct a financial transaction, that door slams shut.
“The more information that’s asked of them, the less likely it is that [millennials] will finish the application,” said Johnny Ayers, cofounder of Socure. “Consumers understand that a business has to verify who they are, but millennials, in particular, don’t understand why they are asked for their life’s history when all they want to do is buy something online.”
Millennials expect technology to intelligently know who they are, with any investigative work done on the back end. Regulators expect banks to know that the transactions they are authorizing aren’t for bad guys or deadbeats who can’t pay them back.
Finding that right balance between what financial institutions obviously need to cover from a regulatory perspective and eliminating friction from the end user experience isn’t so easy — especially when many millennials haven’t built up enough of a credit profile for banks to easily make that call.
It’s All About The Use Case
Knowing the customer is a given — not to mention a regulatory requirement — and more challenging than ever as the bad guys become more sophisticated in their use of technology to try and outsmart the good guys. Doing business online only makes that task more challenging, as it is coming at the same time that more business is moving on line. The importance of authenticating a customer has never been more important.
There is a big difference between buying a t-shirt on Amazon and getting a loan for a new home, noted Ayers. While more information is (obviously) needed for the latter, many more businesses fall somewhere in between a simple purchase and a large loan. And they need customer data — at least some.
“There is a dichotomy between eCommerce and financial services,” said Ayers. “So, many millennials are providing such limited information for, say, when they buy a shirt or a jacket on Amazon, and they provide a name and an email, maybe a billing address or shipping address, and possibly a phone. But really, that’s it.”
“We’ve seen some of these [applications] have 40–50 questions,” he said. “But we’re seeing some institutions move away from date of birth — collecting fewer and fewer bits of information and then forcing the institution to do more sophisticated analysis passively on the back end [by] using more machine-learning tools to try and predict as much of this data as possible,” said Ayers.
But how few is “fewer?”
“I think it really depends on the use case,” said Ayers. If a retailer is selling a consumer a television, they need to collect a name, address, email, phone number and possibly the billing address if it’s different from the shipping address.
“That’s what we see in the eCommerce space at a minimum,” he said.
But verification for delivering a shirt by mail, Ayers pointed out, is nowhere near as heavy as being on the hook for a home loan or another big purchase. And naturally, an application for that extension of credit will require other validating information, such as date of birth, Social Security number and a laundry list of other due diligence-type questions, including about income, residence and longevity at a job. That due diligence is not only important for a lender to make a judgment about the borrower’s ability to repay the loan, but it checks the regulatory boxes about knowing the customer.
According to Ayers, there is a trend that swaps out the…[read the full article at www.pymnts.com]