What Is Instant Account Verification?
Instant account verification (IAV) enables businesses to verify whether a customer’s source of funding is valid in a matter of seconds.
How Does It Work?
A customer at a financial services company enters their username and password for the account they need to verify. A financial aggregator then logs in on behalf of that customer, securely returning the account and routing number to the institution as verified.
It’s as simple as that.
What Are the Benefits?
To fully understand the value of instant account verification, it helps to contrast it with the cumbersome, outdated, and expensive process of verifying an account via micro-deposits. In that situation, two small deposits are made into the chosen financial account. The customer then has to wait anywhere from one to three business days for the deposits to hit their account, at which time they have to log into their financial account as well as the business asking for verification to validate their account.
Customers who have to verify via micro-deposits often forget to check back in, and by the time they do, their enthusiasm for signing up is often diminished or gone — resulting in a devastating blow to the bottom line.
The truth is that if anything goes wrong with the onboarding process, customers bail and don’t return. Those few moments of onboarding are in some ways like the first few moments of an interview or a first date: They can make or break the experience. They’re the most essential moments in defining whether a business succeeds or fails.
That’s why instant account verification is so essential. By streamlining the onboarding process, you ensure that your customers ride their initial enthusiasm for your offerings through to finishing the transaction. Anything that shortens the time between wanting to make a purchase and actually making the purchase increases a business’s bottom line. It’s one reason that Amazon’s one-click ordering patent is worth billions.
To get specific, according to data we’ve gathered from a range of financial institutions as well as internal data, the onboarding drop-off rate for businesses using the micro-deposit process is as high as 49% while the onboarding drop-off rate for businesses using instant account verification is as low as 1%.
Finally, instant account verification is far cheaper than micro-deposits. Whereas a single micro-deposit transaction costs a business around $1, instant account verification typically costs nearly half that. What’s more, in many cases if a customer initiates the micro-deposit process but doesn’t complete the process, you’re still hit with the cost since each drop-off is money lost. For example, if on average you pay $0.85 to verify an account and look to connect 50k users, with a drop-off rate of 49% you have a net loss of $17,701.25.
When contrasted with using micro-deposits to verify an account, instant account verification is clearly an all-around winner.
Here’s a comparison at a glance:
Time To Verify
Micro-deposits: 1-3 business days
Micro-deposits: Up to $1 to verify an account
IAV: Around 60 cents per account
Micro Deposits: Up to 49%
IAV: As low as 1%
Get Reliable and Secure Instant Account Verification
For instant account verification to be worthwhile, it has to work reliably. To thrive on this front, it’s ideal to use a financial aggregator that implements multi-sourced aggregation. This way if an account connection becomes deficient, it can be rerouted so the connection remains viable and customers are able to still verify their account.
In addition, you’ll want an instant account verification process that not only validates each customer’s credentials but also corroborates that information — plus first and last name — with any Know Your Customer (KYC) data you have on file.
When it comes to instant account verification, MX offers these differentiators and more. Read about our IAV product here, or request a demo directly.