Hashching creates virtual ID system for first fully-digital loan approvals

Hashching creates virtual ID system for first fully-digital loan approvals

Hashching, a website for home buyers to choose mortgage brokers, has built the first fully-digital process for home loan verification in Australia, which would allow banks to comply with strict regulations for identifying clients without having to send them to a branch.

This weekend, Hashching, which has processed $2.6 billion of mortgages since launching 15 months ago, will begin the pilot for a biometric identity verification service allowing brokers on its platform to satisfy strict “know your client” (KYC) banking regulations by asking a customer on a video call to hold up a proof of identity to the camera on their computer or mobile phone.

Across the banking industry, KYC verification for mortgages – designed to prevent money laundering by criminals – is still conducted with in-person meetings; customers either have to travel into a branch or receive a visit from a bank or broker representative. This delays the process and can be intrusive.

Hashching co-founder Mandeep Sodhi said he will soon begin discussions with major banks to attempt to change their bureaucratic internal processes that have created a tick-a-box compliance mentality and made banks resistant to change.

“We want lenders to try it, we will be promoting it to them, we want to collaborate with banks,” he said. “We want to take the risk and then present the results to them.”

Brokers, who facilitate around half of all mortgages in Australia and are responsible for the KYC checks on those loans, could use the platform to reduce the costs of establishing identity and to improve customer service.

Banks could also be interested in fully-digitising their own mortgage application processes in their proprietary channels. This could help retaining customers who start an application process but could be lost to alternative financing options during the delay between loan inquiry and settlement.

Yet banks may be hesitant to move to a fully-digital process, given any reduction in foot traffic to their branches could reduce the potential for customers to be cross-sold other products like insurance or financial planning services.

This month, iSelect launched a digital conditional home loan approval process. However, it does not use video to do the KYC check.

Facial recognition

Designed with technology consulting firm e4, the application taps Microsoft Cognitive Service’s Face API, which makes facial recognition software available to the public.

Using a Skype-like video call, the app scans the applicant’s face along with the picture on their driver’s license or passport. An algorithm read both faces before the broker is provided with a prediction of correct identity, based on a percentage confidence level. It is ultimately up to the broker to determine whether they are comfortable that identity has been properly established.

The system also plugs into the Attorney-General’s department’s Documentation Verification Service (DVS), which checks the presented ID against government databases and provides a confirmation of authenticity in seconds.

Atul Narang, the fintech’s other co-founder, said the innovation was developed because some of the 1700 brokers who have been admitted to the platform have reported that many customers are delaying visits to the bank branch for weeks or cancelling scheduled appointments.

Delays in applications are also being created by the paper-based process of mailing contracts, he added. Hashching, based in the Tyro fintech hub in Sydney, has created a digital process using electronic signatures that allows property contracts to be executed on a screen.


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Source: Hashching creates virtual ID system for first fully-digital loan approvals | afr.com