June 1, 2023

In the high-stakes world of wealth management, fortunes hang in the balance. Projected to reach a staggering $500 billion market by 2030, this highly regulated industry faces intensifying threats from sophisticated fraud attacks. Traditional authentication methods like passwords and one-time passwords (OTPs) – coupled with outdated, manual onboarding processes – wealth management firms and their high-net-worth individual (HNWI) clients vulnerable. Additionally, incumbent firms must fend off mounting competition from digital-first disruptors.

The importance of verifying the genuine presence of an online client without inconveniencing them has never been higher. Biometric face verification enables wealth management organizations to prove an individual’s identity when they access services remotely, without inconveniencing the user in any way. The right solution should be secure, convenient, and easy to use.

This article explores how advanced biometric face verification technology can enhance security, build trust, and streamline onboarding nd authentication processes in the wealth management sector.

How Is Fraud Fraud Affecting Private Banks and Wealth Management Companies?

Account Takeover Fraud (ATO) stands as the preeminent threat facing wealth managers today, with incidents skyrocketing 500% year-over-year from 2019 to 2022. The consequences of such attacks can be catastrophic – in 2021 alone, for example, firms reported fraud losses up to $20 million each.

Successfully compromised accounts can erode trust between a firm and its HNWI clients, who may contribute up to 80% of a bank’s net income. In these scenarios, customer attrition becomes a very real risk, compromising future revenue streams and market share.

Moreover, outdated fraud response infrastructures that reactively investigate incidents after the fact create significant operational overhead. This inefficient approach consumes valuable time and resources that could be better allocated toward preventative measures and core business priorities.

Why Traditional Security Methods Fall Short

For such a high-risk sector, single-factor authentication simply isn’t secure. It’s easy for a savvy fraudster to bypass it. Passwords are weak and only fit for purpose as part of a wider multi-factor authentication (MFA) strategy, and social engineering attacks are rife. Plus, technology has made brute force attacks easier than ever. AI-driven voice cloning has also emerged as an issue.

In addition, there is a unique complexity to financial affairs in this industry, which increases opportunities for fraud. Private banks and wealth management companies can carry out a wide range of financial services for HNWIs and their families, including retail banking, investment management, tax affairs, estate planning, and legal matters. Establishing trust in this context is complex but essential. 

Criminals target wealth management firms’ clients because:

  • HNWIs are often a good target, offering high returns for successful scams. They do not have a standard profile for spending; patterns can cross different time zones and locations. This can mean fraudulent transactions fly under the radar.
  • It can be easier to impersonate someone in the public eye, as everything is known about them – it can be easy to find their mother’s maiden name or pet’s name, for example.
  • Clients often don’t like (and are resistant to) the inconvenience of multi-level authentication, where they are asked to confirm different knowledge-based or possession-based information.
  • Clients frequently have others managing their money for them such as money managers, PAs, housekeepers, and other staff. Traditional retail banking based fraud solutions can’t protect this structure.

How To Enhance Identity Assurance with Face Verification

iProov works with wealth management firms to verify and onboard new clients with the highest level of assurance. We have undergone extensive efforts to make its Biometric Solutions Suite one of the most accredited, thoroughly tested, and robust in the world. Amidst the evolving threat landscape that that threat management firms face, iProov’s science-based biometric solutions provide a robust defensive layer to secure wealth management operations throughout the customer lifecycle.

How does it work?

For onboarding, you complete a brief facial scan followed by a document scan. This matches a unique biometric characteristic against a trusted identity document (such as a driver’s license or passport) in order to establish genuine identity. Only the face can be matched in this way, because it’s generally the only characteristic on official documents. Critically, robust liveness technology works to ensure an online user is a real person in that moment, detecting if the face being presented to the camera is a live human being or not.

Once onboarded, high-net-worth individuals can sign in and authorize payments or other transactions with just a brief, effortless facial scan. This multi-pronged defense minimizes the risk of account takeovers, fraud, and other threats by permitting access and transaction approval only to those whose identities have been robustly verified and authenticated. HNWIs can use any device with a user-facing camera to authenticate; there are no complicated instructions or steps to follow. It’s simple, yet delivers the highest levels of security.

iProov further streamlines the process by enabling users to effortlessly recover their identity or rebind if a device is lost, stolen or replaced, without the hassle of re-verifying manually through insecure physical document checks.

In the high-stakes wealth management realm, only the most mission-critical liveness solution can assure with the highest confidence that the remote user is the the right person, a real person, and that they’re authenticating right now.  Not all facial liveness technologies provide equal levels of defense against emerging threats, so choosing the right vendor is crucial.

The Advantages of Face Biometrics for Wealth Management Firms

1. Building and maintaining customer trust

Wealth managers typically have strong personal relationships with their customers, and in-person visits are common. However, today’s HNWIs increasingly favor digital channels, with 71% preferring omnichannel experiences and 25% desiring fully remote (with remote human help if needed).

iProov’s technology enables wealth management firms to demonstrate to their clients that they are using the gold standard in online security and user experience. This builds initial trust and retains it through secure, effortless authentication that does not inconvenience the client.

2. Adding value to customer service

Private banks and wealth managers often use ‘callbacks’ to maintain security and to demonstrate a responsive and personal service to their clients. This means that transactions are validated via a callback either from a call center team or by the relationship manager. This is a common point of friction between wealth management firms and their customers: “I’m busy/in a meeting/I can’t talk now so just go ahead etc…”. It’s also a weak link in the security chain: a fraudster could manipulate this process if they’ve intercepted a user’s mobile. 

iProov helps add value to the customer service process by:

  • Accelerating onboarding, reducing the time and cost involved in onboarding new customers by automating identity verification and digitizing security processes – which accelerates time-to-revenue while boosting productivity and customer satisfaction, reducing abandonment.
  • Reducing the reliance on inconvenient (and costly) callbacks.
  • Eliminating the need for further digital authentication tools.
  • Reducing staff and client time spent combating fraud through checks and manual interventions.

3. Delivering effortless user experience and accessibility for all clients 

Each HNWI will expect a level of service that meets their individual needs. Some HNWIs will be technically advanced and want to engage with their wealth managers on multiple devices smartphones, tablets, and laptops. Others may not even own a smartphone. 

iProov offers a consistent, effortless user experience across all devices which…

  • Is accessible on any device with a user-facing camera, including mobile devices, desktop computers, and tablets. 
  • Is effortless to use. Age and ability should not be barriers to accessing services.
  • Uses carefully selected training data to ensure diversity and check for bias in our system.
  • Meets WCAG 2.2 AA and Section 508 standards.

4. Protecting against fraud

 iProov’s high-assurance biometric solutions defend against leading fraud types such as:

  • Account takeover fraud: where an imposter or fraudster gathers credentials and personal information about a target, in order to gain direct access to a client’s accounts online so they can steal money.
  • Credential stuffing attacks: achieved by taking collections of login credentials from data breaches on other less protected sites and using them to access wealth management accounts.
  • Impersonation fraud: where an imposter or fraudster pretends to be a client and approves transactions.

Criminals use a variety of tactics to steal money and cause disruption. These include malware, digitally injected attacks and the use of deepfakes. iProov is unique in being able to detect and mitigate against the use of synthetic imagery, such as deepfakes or face swaps, in attacks. 

5. Avoiding reputational risk

Wealth management firms depend on their reputations. In wealth management, a single security lapse can irreparably tarnish a firm’s reputation, jeopardizing existing and future client relationships. iProov’s future-proof capabilities minimizes your risk: we delivers industry-first active threat monitoring, which evolves defenses continually to counter zero-day attacks and emerging threats in real-time.

By delivering the ultimate in security and convenience through face biometrics, wealth managers can build powerful client trust, amplify brand reputation, accelerate revenue growth, and provide truly inclusive digital experiences for all customers.  iProov is trusted by the world’s most security-conscious organizations – such as the Department of Homeland Security, UBS, and the UK Home Office – and other banks such as Knab and Rabobank for a reason. Book a demo here.

Close up of a silver wheel combination lock on a safe