Can Phone Numbers be Trusted for Identification in Financial Services?

March 7, 2024
minutes read

Security and efficiency are centre stage in financial services, commanding a pivotal role in shaping the industry landscape. 

In our fifth blog in a series dedicated to the complexities of using phone as a communication channel in financial services operations, we reveal the limitations associated with relying on phone numbers as a robust identification method. 

The persistent requirement for supplementary authentication activities not only creates operational costs but also barriers to a seamless customer experience. The authentication process itself is not fool proof and can lead to failures, resulting in negative impacts on customer experience, advocacy, potential loss of business, and increased costs. 

Authentication and Identification Challenges: The Fragility of Phone Numbers

While phone numbers serve as a fundamental element in customer interactions, relying solely on them for authentication and identification introduces notable challenges within the financial services sector.

A phone number, by its nature, lacks the robustness required for identification. In an age where cyber threats and identity theft are pervasive, financial institutions face the ongoing challenge of ensuring secure interactions with clients. Using a phone number as the primary identifier necessitates additional layers of authentication, increasing the complexity of every phone interaction.

Continuous Need for Verification

The limitations of using phone numbers as identifiers lead financial institutions to incorporate continuous verification processes. This means that in every phone interaction, customers face additional authentication steps, involving personal information, passwords, or security questions. While vital for transaction security, these ongoing verification practices during phone conversations  introduce operational complexities and interrupt the seamless customer experience.

Operational Costs and Customer Experience Impact

Continuous, repeated verification efforts place a significant load on financial institutions, leading to visible operational costs. Allocating resources to set up and manage additional verification steps becomes an ongoing commitment, demanding consistent attention and investment. It's not just a one-time expense; financial entities must continuously monitor, adjust, and adapt to ever-evolving security needs, amplifying the strain on their operational resources.

Moreover, beyond the initial setup, addressing issues that arise during the verification process, such as forgotten passwords or system glitches, adds another layer to operational expenditures. Efficiently managing these challenges is vital to keep the overall costs in check and ensure a smooth verification process for customers.

Nivo Verified Identity Messaging – The Trailblazer in Digital Identification in Financial Services

One such solution that is leading the way in digital identification in financial services is Nivo’s Verified Identity Messaging (VIM) platform

VIM transforms how financial institutions authenticate customers. With advanced biometric facial recognition software, the app ensures a secure and seamless identity verification process. This cutting-edge technology mitigates fraud risks, offering a higher level of accuracy and surpassing traditional authentication methods.

The platform also incorporates messaging capabilities to enable communication between a firm and its customer and to facilitate the exchange of documents. With VIM, customers can effortlessly submit documentation, provide requested data, and sign and return forms as easy as if they were sending a text or WhatsApp message.  


In summary, the reliance on phone numbers for identification in financial services presents challenges, leading to operational costs and potential disruptions. Striking a balance between robust security and a positive customer experience is essential. Nivo's Verified Identity Messaging (VIM) platform is as an innovative solution, offering advanced biometric facial recognition and seamless communication capabilities. VIM addresses the shortcomings, providing enhanced security, user-friendly authentication, and streamlined document exchange. As financial institutions navigate evolving threats, digital banking solutions like VIM are crucial for ensuring secure interactions and building trust in the financial landscape.

To learn more about the challenges that phone is presenting to financial services firms, download our guide 10 Reasons Why Phone Communication is Destroying the Customer Experience and Staff Productivity in Financial Services.

Receive 'Leaving legacies The digitisation of regulated Industries'

For regulated industries, where risks need to be expertly mitigated, it can be difficult to make the move away from widely adopted legacy systems.In this guide, we’ll run through the benefits and challenges of digital transformation for financial services, with practical steps on how to move away from legacy systems for the betterment of business and customers.

Written by