Norway’s banking onboarding system is admired and envied internationally – analysts and others who follow the development of banking technology worldwide point to Norway as an example to be emulated. One of these experts, Dave Birch of Consult Hyperion, said as much when he invited Signicat to participate in his regular Talking Transactions podcast. He also expressed frustration that it seemed unlikely that a version of BankID would be available in the UK any time soon.
We know from our research that people are unhappy with the process of applying for new financial products – so unhappy that many give in and simply abandon the process. In the UK, at least 40% of potential customers do this. In Norway, abandonment of this sort is much lower, thanks to BankID.
BankID allows banks to authenticate and conclude agreements with individuals digitally. 3.5m Norwegians have a BankID, and the system is used by all of the country’s banks. If you want to sign up for a new financial product there’s no need to go through the laborious process of inputting your detailed personal information each time. Instead, your BankID gives the bank all of the necessary information. BankID also allows banks to authenticate and conclude agreements with individuals digitally. With this system, it’s far simpler to sign up for financial services using just a social security number and mobile device – and no need to start each application process from scratch. BankIDs are used for many more applications than just retail bank accounts – insurance, secure post, age verification and student housing all now use BankID.
There are a handful of countries using similar schemes, but generally, when compared with Norway, the onboarding process is slow and uses anachronistic paper-based processes to confirm identity. So can other countries learn from the success of BankID and implement similar programs? Or is Dave Birch correct to assume that we’re unlikely to see the system replicated elsewhere?
The problem is that banks and other financial services providers are, as individual entities, looking at how to improve the user experience of their applications processes. They are asking questions such as how to guide their customer through the form, how to make the inputting of information easier, and how to tempt applicants who have abandoned their application to complete it.
All of this is important, but in order to create a BankID-like experience, the real question should be: how can the entire financial sector cooperate – potentially with governments and mobile operators – to create an identity process that is simple and universal?
There are services are going some way to do some of the work that a national ID system would do. For example, the UK’s Current Account Switch Service makes transferring a current account much simpler. However, it can’t be extended for, say, insurance products or other applications such as secure post or government services.
A system like Norway’s BankID cannot be created piecemeal by banks working separately. It requires a collaboration and creation process similar to the one that created BankID.
BankID started as a collaboration between the two organisations that merged to become Finans Norge, the trade body for the financial industry in Norway and now representing more than 200 financial service providers. As the system was borne out of a collaboration between banks and a third party, there was no risk that one single bank would own the identity process.
The key to a universally-adopted identity system is collaboration. Without this collaboration, banks will be unwilling to adopt systems created and owned by rival banks, and innovation will remain uneven throughout the industry. Only with a collaborative approach, led by an industry body trusted by all, it is possible to build an ID system that all financial service providers will buy into and will be trusted by consumers.