MyBank ID verification pilot points to data-rich future for banks

MyBank is rolling out an identity verification scheme that points to a possible future for banks performing a wider role as trusted sources of data. A pilot phase for the Identity Verification Service will start in mid-November 2015 and run until February 2016, with payment service providers (PSPs) invited to take part.

MyBank lets customers make online payments directly through their bank account, which means they do not send payment details or personal data to any third parties. Payment initiation, mandate creation and transaction validation all occurs in the banking back-end. It’s a model that is growing in popularity and it seems the infrastructure built for this can be put to wider use.

Preta, the subsidiary of EBA Clearing that owns MyBank, says there is growing demand for a pan-European identity verification service, with around 225 billion authentication transactions per year across email, social media, e-commerce and e-government.

The MyBank scheme is designed to protect the consumer’s privacy while letting businesses and public bodies verify or request information about someone’s identity.

“Electronic identity services are, as yet, fragmented across Europe. With this initiative, MyBank is responding to a tangible market need for a pan-European solution,” said Elaine Oldhoff, policy advisor for E-Commerce Europe.

The possible use scenarios for this are endless, from performing a simple age check when buying alcohol online to filling out tax returns and applying for a passport.

According to MyBank it will support services such as age verification, customer due diligence, contract agreement, registration or C2C sign-up in the new “sharing economy”.

Just as in the MyBank payments model, the consumer has total control over what information is sent to third parties, as any transfer of data needs to be “explicitly authorised” via their secure online banking platform.

It all rests on the fact that banks are a trusted store of consumer data. For example, banks have to carry out rigorous Know Your Customer (KYC) checks – so it makes sense to utilise this information. MyBank says banks and other payment services providers have a “durable competitive advantage” in the identity verification field thanks to rich and accurate customer data (KYC); proven, fraud-resistant authentication mechanisms; and the fact that customers still trust their banks with their data.

“Thanks to the secure and trusted information that can be requested from consumers via the online banking account, MyBank Identity Verification is a significant step in the right direction for merchants across Europe,” says Ms Oldhoff.

It also meets a very important customer requirement. “The practical problem facing consumers is how to prove who they are in a digital setting without handing over large amounts of personal data to players who they do not know, and who they may or may not trust,” explains MyBank.

Trust is a two-way process. Businesses need to trust the information is correct and accurate, but the consumer needs to be happy that the data is secure. MyBank is confident that its platform fulfils this by simply routing everything through the banking back-end.

Banks can open up the vast data they own for other purposes, adding value and creating new revenue streams. And new legislation will mean they have to. MyBank’s pilot ties in with PSD2 – the new payment regulation for Europe that forces banks to open up their systems to third party payment providers.

“Of particular interest to the financial services industry is the Access to Account provisions in the second Payment Services Directive (PSD2) and the pressure to open up APIs (Application Programming Interfaces) for third-party access to accounts,” notes the MyBank consultation document. “MyBank provides a shared, open framework to meet these challenges.”

Written by Andy Brown

Andy Brown

Andy is marketing director for payments at NCR. He has nearly 30 years' experience in e-payment systems from the delivery and support of systems in the Far East and Europe, from both the product management and marketing perspectives. Based in the UK, Andy is responsible for marketing NCR payment solutions.

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