Lending Nirvana Part 3 Digital Authentication

In the third and final step on the journey towards lending nirvana – where the ultimate online lending experience is achieved by both credit union and loan applicant -- the focus is on digital authentication.




On the path to “lending nirvana,” you’ve learned the value of unifying the front end experience and point of sale. You’ve also taken a close look at best of breed decisioning technology.

In the third and final step on the journey towards lending nirvana – where the ultimate online lending experience is achieved by both credit union and loan applicant -- the focus is on digital authentication.

Digital Signatures vs. Digital Authentication

By now you are used to signing in on an electronic pad or simply tapping in your PIN number for everything from groceries to gasoline. This familiar process is not digital authentication. Rather, it is a “digital signature” that falls under a transaction driven by pin technology. Your signature and ID have been encrypted at the point of purchase – thus, technology seamlessly approves your identity.

The difference between digital authentication and digital signature is that the latter is tied to a specific institution, financial or otherwise. At some point, the user applied for the right to use the ATM or credit card in question. That prior registration -- and subsequent approval -- gives the user ongoing “rights” to use and reuse their card.

Digital authentication features greater immediacy and power. Once digitally authenticated, online loan applicants are verified and certified within minutes. And full digital authentication is ‘e-signature compliant:’ it fulfills the provisions as dictated by the E-Sign Act, the June 2000 law signed in by President Clinton that made digitally signed electronic transactions equally binding -- legally -- to handwritten ink signatures.

Loan Applicants: Authenticated, Certified, and Most Importantly, Satisfied

“Digital authentication has arrived. It is able to verify the individual at the keyboard and provide a certificate – or stamp of approval – for each transaction,” says Toby Myers, VP of Strategic Alliances for Signix, an Atlanta-based company. Signix supplies bleeding-edge, back-end technology to service providers like Digital Insight who bestow online, non-manual lending technology to its financial institution clients. Signix wears many hats, including that of Certificate Authority (issues, publishes, and revokes, if necessary, digital certificates), as well as a Registration Authority (verifies the identity of the applicant before the CA issues the certificate).

It’s astonishingly simple for the user to complete secure lending online: the applicant – an existing credit union customer -- calls into a call center or applies online. Whether via a customer service representative or electronically, the application information is taken. A secure e-mail link including the loan documents is then sent to the customers e-mail address. Included is a list of “challenge questions” that includes information that only the user will now. For example, “what is your favorite color” or “name of favorite teacher” or “what is your pet’s name”. The user, who has provided the basic information (social security number, date of birth, etc.) online or to the CSR during the call, will then click on the link within the e-mail and open their loan document, a pre-filled, PDF formatted document.

The loan applicant then must answer the challenge questions to confirm their identity. If they are successful, a request is made by Signix for the user to create an online PIN for use in conjunction with their digital identification. Upon doing this last task, the digital identity is complete. The applicant can effectively sign legally-binding documents from any PC with an internet connection, empowering them with full legal rights as dictated by the E-Sign Act.

To see what the digital authentication process looks and feels like for online users, go to https://www.signix.biz/signix. This mock demo will give you a chance to understand what the user experience might be like for prospective credit union lenders.

Credit Unions: Safe and Sound

For many loan officers, it’s difficult to abandon the tactile world of driver’s licenses and social security cards. But those ready to adapt to digital authentication – or those who have already done so – will reap the rewards. Online loan applicants, like everyone else in our fast-paced world, want what they want -- as quickly as possible.

The good news is that credit unions don’t have to sacrifice best practices and security to meet these demands. The technology used for digital authentication is light years ahead of existing online verification services. Documents are run against over 300 databases. “Our rule is that you aren’t who you say you are until we prove it’s true,” adds Signix’s Myers. A 57-step, mathematically weighted algorithm filters the data, verifying the loan applicant at the keyboard.

Have You Achieved Lending Nirvana?

Thank you for taking the time to learn how to achieve what we call “lending nirvana.” You’ve discovered how the front end experience and point of sale needs be one, unified service to be most effective. You’ve delved in to what constitutes best of breed decisioning technology and how automated loan fulfillment can be achieved with the same due process as with a “live” loan officer. And now you understand how secure it is to authenticate online loan applicants, providing your members with the convenience they crave.

For more information about the topics discussed in this or any of the "lending nirvana"series, contact Digital Insight at 888-344-4674, option 6 or visit digitalinsight.com. We wish you a fruitful journey on the path to lending nirvana. We're quite certain you’ll never look back.




July 11, 2005



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