Financial services using email - Can you be sure who you are communicating with?

Trust and security are paramount in financial services and the need for secure communication cannot be overstated. As we have highlighted throughout this blog series, email just doesn’t cut it when acting as a primary communication channel in financial services. Whether this is retrieving documents from customers, communicating with colleagues internally or relaying information to external parties, email is fraught with problems that are negatively impacting financial services operations and hindering the industry's ability to uphold its pillars of trust and security.

In this concluding blog, we delve deeper into one specific facet of email's inadequacy – the practice of sending and receiving identification documents via email.

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The Fragility of Email in Identity Verification

Email, once hailed as a revolutionary communication tool, now reveals its fragility in the intricate dance of identity verification within financial services. As we delve into the challenges posed by relying on email for transmitting crucial identification documents, a myriad of vulnerabilities unfold, threatening the very essence of secure financial transactions.

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Vulnerability to Tampering

A glaring concern emerges when employing email for transmitting identification documents - the susceptibility to tampering. Unlike specialised platforms equipped with advanced security features and solutions that incorporate biometric identification capabilities, email's inherent limitations become obvious. The absence of robust encryption and authentication measures leaves sensitive documents vulnerable to unauthorised alterations, creating a breeding ground for doubt regarding the integrity of the enclosed information.

Financial institutions, relying on email for identity verification, unwittingly open the door to potential fraudulent activities. Malicious actors, exploiting the absence of stringent security, may manipulate crucial identification details, posing a significant threat to the sanctity of financial transactions and the trust placed in these institutions.

ID Fraud and Crime

Amid the growing concerns surrounding identity fraud, the alarming statistics underscore the threat email poses to individuals and financial institutions alike. According to a report by Experian, identity theft comprised a substantial 24% of the 5,883,409 reported cases of fraud in 2022. Similarly, UK Finance's 2022 report reveals a staggering £1.2 billion was pilfered through fraud, and a significant 80% of these fraudulent activities originated online.

These substantial figures not only represent a monetary loss but also serve as a stark reminder of the critical role that traditional channels such as email play in the commission of identity-related crimes, underscoring the urgent need for robust identity verification methods that transcend the vulnerabilities in traditional email communication.

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Lack of Encryption Measures

‍Email's weakness in identity verification comes down to its lack of encryption. When you send important documents through email, which isn't secure, the information becomes open to interception and tampering. Unlike more secure methods that use end-to-end encryption, email doesn't provide this strong level of protection.

Think of it like sending a postcard – anyone who gets their hands on it can easily read and modify the information. Email's vulnerability means that unauthorised individuals could access and mess with sensitive financial details. To ensure the safety of such crucial information, it's essential to use communication channels that have robust encryption,

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Potential Breach of Client Trust

Relying on email for identity verification poses risks that go beyond operations, reaching into the core of client trust. Financial institutions risk breaching the trust placed in them by clients when using a medium prone to tampering. Clients trust institutions with sensitive information and relying on an insecure channel for identity verification raises concerns about the institution's commitment to safeguarding client interests.

Clients expect their information to be handled securely, and using email, a vulnerable method, puts this trust at risk. The duty to protect client information is not just about efficiency but about preserving the trust integral to financial services. The potential breach of client trust further underpins the need for financial institutions to re-evaluate communication strategies, opting for more secure alternatives to uphold the essential bond at the heart of financial service provision.

Regulatory Compliance Challenges

Navigating the stringent regulatory landscape of financial services demands institutions to ensure robust identity verification measures. However, the prevalence of vulnerabilities in email poses a significant hurdle in meeting these rigorous standards. Financial institutions find themselves at a critical juncture where the limitations of email become a potential barrier to compliance.

This regulatory challenge not only heightens the risk of fraud and compromises client trust, as discussed earlier, but it directly impairs institutions' capacity to fulfil regulatory expectations for identity verification. In the intricate balance of trust, information security, and regulatory adherence, financial institutions must acknowledge the broader implications of relying on email.

Effectively addressing these challenges necessitates a comprehensive approach that extends beyond immediate security concerns to encompass operational efficiency, client trust, and regulatory compliance. By adopting secure communication alternatives, financial institutions can fortify their defences against fraud and navigate the regulatory landscape more adeptly, ensuring a holistic and resilient approach to identity verification in the dynamic realm of financial services.

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Nivo Verified Identity Messaging – A Trusted ID Verification Platform for Financial Services

When it comes to identity verification in financial services, Nivo’s Verified Identity Messaging (VIM) steps forward as a beacon of reliability. The solution incorporates biometric identity verification, so you can be certain the person you’re engaging with is who they claim to be.

Unlike the vulnerabilities associated with email, Nivo provides a robust solution tailored to the unique needs of the industry. Its advanced security features, including robust encryption and authentication protocols, offer a resilient defence against tampering and unauthorised access, ensuring the integrity of financial transactions and fostering a secure environment for the exchange of crucial documents.

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Conclusion

In the realm of identity verification for financial services, email falls short, presenting significant risks to security and trust. Its vulnerability to tampering due to the lack of encryption measures poses a clear threat, exposing sensitive information to potential manipulation by malicious actors. This susceptibility not only jeopardises the integrity of financial transactions but also opens the door to identity-related crimes, as evidenced by alarming statistics on identity theft and fraud.

Moreover, the regulatory compliance challenges associated with email further hinder financial institutions in meeting stringent standards. To address these shortcomings, a shift towards secure communication alternatives, such as Verified Identity Messaging, becomes imperative to securely verify and authenticate user identities in financial services.

To learn more about the challenges that email is presenting to financial services firms, download our guide: 10 Reasons why Email is Killing Efficiency, Speed, and Security in Financial Service Operations today.

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