NAB’s most recent acquisition, 86 400, has enlisted Sydney-based digital identity developer, OCR Labs, to implement a new biometric verification system for mortgage applications.

OCR’s Verification of Identity (VOI) system is expected to “streamline” the neobank’s mortgage application process, ensuring mandated identity checks can be completed remotely via an applicant’s smartphone “in minutes”.

Through the new VOI system, applicants take snapshots of their ID documents (passports and drivers licences, for instance), check their data has been captured correctly, and, finally, capture a selfie which is then analysed by a real-time ‘liveness detection’ scanner – an AI-based tool that determines whether the source of a headshot is real or fake – to confirm the applicant’s identity.

ORC Labs’ chief customer officer, Will Ryan said its VOI system now forms “a key part in 86 400’s reimagined home loans application process, verifying the identity of new mortgage customers securely and with ease”.

OCR’s solution promises “real-time decisions with no human intervention”, with an integrated AI that can be “improved through training”. The company also touts is security credentials, employing “end-to-end encryption, flexible and secure hosting options [and] policies that exceed ISM standard compliance”.

Identity verification checks are required for all mortgage applications in Australia.

While physical verification for property transactions – most often checked and confirmed through face-to-face meetings with brokers – is still preferred by most institutional lenders, a number of non-major lenders have moved to allow for remote, or digital, verification.

The adoption of virtualised verification and eSignature services gained pace during last year’s Covid lockdowns, with challenger banks ING, ME Bank, and Bankwest adopting some form of digital verification or eID services for home loan applications.

The big fours have, so far, remained virtual VOI hold-outs. Westpac has, nevertheless, acknowledged that VOI remains a “key concern” for brokers, with the lender last year stating it will continue to revisit its policies and procedures for customer identity checks.

Regulator ASIC has, however, urged financial services organisations to stay the course and fast-track the adoption of digital VOI post-pandemic.

Speaking at an ASIC webinar on responsible lending last August, loan market chief compliance and regulation officer David McQueen expressed a hope that the industry does not “go back to what [VOI] was before Covid-19”.

“Working within the mortgage space, the clients we are going to be dealing with are going to change,” he said. “Clients are going to be far more comfortable with using digital tools.”

“For a lot of larger institutions, we know it’s harder to make change happen. But it’s in their interests to speed up their ability to change. Especially when it’s the right thing to do for the institution and the consumer.”

86 400’s implementation of the remote VOI system follows a successful pilot of OCR’s solution in its call centre late last year.

86 400 chief executive Robert Bell said OCR’s VOI deployment is the first of “a slew of smart features” expected to be rolled out this year, “providing our customers with a market-leading banking experience that’s smart, secure and convenient, underpinned by the very best home-grown Australian technology”.

Following news in January this year that NAB would acquire 100 per cent stake in 86 400, the neobank, and the entirety of its core systems, will likely be folded entirely into NAB’s own digital-only banking arm, Ubank.

As of January this year, 86 400 had more than 85,000 customers, $375 million of deposits, $270 million in approved residential mortgages and 2,500 accredited brokers.

“The acquisition of 86 400 will accelerate UBank’s growth by combining its established customer base, brand and colleagues with 86 400’s experience and technology platform,” NAB said in a public statement.