Banks Target Repeat Checks That Drive Customers Away

A recent pilot project by the SOLO Network is testing whether banks and financial technology companies can streamline the customer onboarding process by standardizing and reusing completed customer verification records. The initiative, observed by the Financial Crimes Enforcement Network (FinCEN), aims to alleviate the recurring identity verification process that customers and businesses often face when establishing relationships with multiple financial institutions.

The pilot follows data from PYMNTS Intelligence, which revealed that 74.6% of financial services firms experience inconsistent identity verification results, 56.3% report excessive checks, and 43.7% cite high manual review costs. Moreover, 76% of firms generate more than three-quarters of their revenue through digital channels, making identity verification a critical component in customer acquisition.

Problems during verification can hinder growth, with 76.1% of firms stating that KYC and KYB processes have prevented them from adding or expanding customers, markets, or geographies. Onboarding abandonment due to friction was cited by 55%, and 49% reported delays that negatively impacted conversion or time to value. Under the SOLO Network's model, participating institutions generate standardized, auditable verification records detailing the evidence reviewed, work performed, and standards applied.

These records can then be evaluated by receiving institutions against their own compliance and risk requirements. While receiving institutions do not automatically accept another institution's work, they can still independently determine whether the verification meets their requirements. The pilot's goal is to reduce the need for customers and businesses to repeat verification when establishing new relationships, allowing them to authorize participating institutions to evaluate previously completed verification processes.

The SOLO Network expects to measure the pilot's success by how often a receiving institution can utilize prior verification without having to recreate the work. If the standardized records prove effective across participating institutions, verification completed during one onboarding could have value in subsequent financial relationships.