The Identity Proofing Guide: Why user experience matters in identity proofing

The following was produced by Tearsheet Studios. We worked with consulting firm Ulysses Partners to create a four-part series on identity proofing and the importance of user experience in its emerging landscape. The series is based on our co-created publication, The Identity Proofing Guide: A practical hands-on review of user experience in leading solutions.

In this session we’re joined by David Milligan, managing partner at Ulysses Partners, and Ruby Walia, advisor to fintechs and startups. We’ll be talking about identity proofing and why it matters, why we need to think about UX when it comes to identity proofing, and how financial providers can bring this technology to market.

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The following excerpts were edited for clarity.

David Milligan: I'm David Milligan. I am the managing partner of a firm called Ulysses Partners. We are a boutique consulting firm working with banks and established fintech firms, primarily in the US, but also around the world.

Ruby Walia: I’m Ruby Walia. I've led digital and technology teams in Fortune 500 companies in the media and entertainment spaces, and more recently in the last decade, in the financial services space. For the last couple of years I have been advising a number of startups and fintechs.

Identity proofing, and why it matters

David Milligan: Identity proofing is the critical job of confirming that the person interacting with an organization is indeed who they say they are, and it most typically occurs during the onboarding process – so in other words, when people sign up for something. It's critical in financial services, especially, but in fact, goes across all industries. 

Identity proofing has two elements. One, whether the real world identity exists; and two, that the person who asserts this is their identity is, in fact, the same person who legitimately owns that identity. That's a simple definition, but it's very powerful. It's increasingly critical today to get that right. And in their efforts to make onboarding smooth and seamless, sometimes we feel organizations may have been losing track of how to do identity proofing in the most robust way.

Ruby Walia: It is all about trust. Commerce, at all levels, is based on the notion that you know who you're dealing with, and that you trust them. So unless you have that foundational element in place, it's really hard to do any kind of a material exchange of goods or services. As our economy becomes increasingly digital, as our lives become increasingly digital, and as we experience more and more services digitally, it makes this element of trust – which is founded on digital identity – that much more important.

David Milligan: We're most used to it in the field of financial services, but as digital channels enter every part of our lives, it becomes more and more important. People are talking a lot about the Metaverse as a potential new digital channel, and I think we'll find that being able to prove identity in that space is going to become more and more critical. So, identity proofing is absolutely critical for many organizations, not only in financial services.

Ruby Walia: If you go back to how you would open the bank account 20 years ago: you would walk into a branch, you would have some kind of physical documentation like a driver's license that showed you were who you said you were, and the person who was opening the account would look at the document and would look up at your face, and as long as the picture matches, you must be who you say you are. Then you would sign a signature card (which the bank never really used) and they would file it away somewhere as evidence that this is your signature, and they can use it in the future, if ever needed, to match it to a check or other document. 

Today, people are opening accounts online and not walking into a branch anymore; in most cases, it's not a visit, and there isn't even a video element to it. In many cases, you're just filling out a form to apply for a credit card or open a checking account. And so how do you, in that very anonymous setting, establish that the person across the internet who's trying to do business with you or who's trying to open an account with you is who they say they are? And so I think these digital identity solutions are becoming more and more critical.

Security vs. UX

Ruby Walia: I think user experience is really, really important. There was a Harvard Business Review article written in the late 90s by a couple of professors, talking about the experience economy. And they used an anecdote in their article: the television series Taxi, where the taxi driver would periodically burst out into song or would share a sandwich with the people in the back, or point out landmarks as they were driving around New York City. Those elements made the ride memorable, and transformed what was a simple ride service. 15 or 20 years later, apps like Uber and Lyft again transformed the experience. They added something to the value of the service through the experience.

Customer experience, or user experience, are both really important terms. 

There's another macro trend around all of this: the consumerization of technology. As consumers, each of us is consuming more and more technology in our daily lives. The user experience, or the degree to which there isn't friction in those experiences, becomes a driver of how many people adopt a particular service, then how frequently they come back to use that service. That adoption, then a recurring engagement, translates eventually into customer retention and revenues, which are actually very meaningful to large organizations. 

There's both the need to delight customers with the quality of the user experience that you're creating, and this very commercial element to user experience, because good user experience demonstratively leads to customer retention and increased revenues.

David Milligan: The user experience becomes the first impression that we have in our interaction with many organizations, particularly financial services. In the past, banks would spend a lot of money in the physical world making their branches look very solid and imposing, to create the impression in the minds of their customers. 

Today, as we're signing up online in completely digital only banks, that user experience has become almost a substitute to the analog of the imposing building. How good that user experience is at that point of signup becomes one of the dominant first impressions of what you think about this organization. We as consumers become more and more discerning, in a way, because we're using digital services in so many other aspects so user experience matters very much in the onboarding process. 

Secondly, what we observed and what we've seen in the guide we released is that because they want to make the process as seamless as possible, many organizations and banks have gone the route of saying, ‘Let's remove the friction from the process.’ And they've looked at the early adoption of identity proofing, checking their license and getting the selfie, and realized that the experience slows things down. And so they've started to abandon that in favor of checking other things, but in fact, using these other data points, like  knowledge based authentication, makes it a bit less secure. 

The trade off of either having a smooth experience or being secure isn't as dichotomous as it used to be. Modern technologies, and some of the firms that we've found in doing this research, have managed to bring this much closer so that you can actually get to real identity proofing – the actual ID and the actual person – without having to sacrifice the UX.

Ruby Walia: I want to emphasize the point that we're using more and more technology in every part of our lives in all these different apps. One of the effects we've seen is that when someone sees a really delightful digital experience in some part of their life, it immediately raises the bar for every other app that they use. Even though it might be an unfair comparison, people will compare their banking app to their car ride app. So you have to spend time making sure that the user experience is great. 

And getting it right takes a lot of work. It is as much an art form as it is a science. And it is both, actually, because the people who create delightful experiences don’t do it overnight accidentally. Typically, there's a huge amount of thought and data that go into it.

In larger organizations and banks where I've worked, when we were evaluating different providers of solutions, whether identity proofing or other kinds of fintech services, we paid as much or maybe more weight to the user experience than the to the features and functions, because we felt it was easier to fill a feature gap, but getting the user experience right is much harder. And it's even hard to write a requirements document around user experience, right? Because you don't know what it is. It's one of those things that you recognize, but it's hard to quantify it until you actually experience it.

Takeaways from The Identity Proofing Guide

David Milligan: What our research found is that when you look at the solutions in the market today, they all have common features. We identified about 33 different separate factors; some very objective, like time taken to produce a step, or number of steps in the interaction. We grouped them into four headings: What was the document capture experience? What was the selfie capture experience? What was the overall UX? And finally, any other notable observations. We then did a practical hands-on evaluation of the leading solutions in the market and ones that are using newer technologies to make UX better. 

And of course, the secret sauce of document centric identity proofing is using AI and ML technology that has improved over the last five to ten years, and is much smoother than it used to be. Ultimately, what it's about is saying, ‘How well is that detection happening? Is it happening automatically?' The user experience in this process has become much better. So that is the key takeaway.

What we showed in our research and the guide is a ranking of these solutions in terms of their user experience, which we tested with users around the world using different kinds of identity documents from different countries, and seeing how each of the solutions handled this. And I must say, it's been amazing to see how far things have come.

Ruby Walia: I think organizations need to spend a lot of time, energy, and resources on staying on top of the space, because the need for good identity proofing verification solutions is just going to increase over time. And there are lots of ways in which organizations can participate in not just selecting a product and using it, but collaborating with peer organizations and even government organizations to work on the future of what's coming in digital identity. 

It's a really exciting space, and there is great innovation to look forward to.