Executive Summary

Community banks face rising fraud risks with outdated logins. Adopting myID as an authentication method strengthens security, prevents fraud, and positions them as leaders in safe, modern banking.

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Problem Statement

Community banks risk falling behind in security and fraud prevention as private sector authentication evolves. A quick look at some community banks’ login flows shows many still rely on traditional logins like member numbers and password systems — methods that are neither secure nor user-friendly.

The Problem with Traditional Logins:

• Vulnerable to hacking through social engineering or Card Not Present (CNP) fraud
• Sometimes frustrating for users, leading to poor password practices (Customer Experience Dive, 2024)
• Unable to adapt to new market trends for stronger customer authentication, like AusPayNet’s CNP Fraud Mitigation Framework (Adyen, 2024)

Community banks, particularly those relying on traditional logins, need to modernise their authentication systems to stay competitive. They must address vulnerabilities like social engineering and Card Not Present (CNP) fraud, align with evolving fraud prevention trends, and bridge the trust gap as larger banks and fintechs adopt stronger, more secure authentication solutions.

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Market Context

myID, previously myGovID, is Australia’s secure digital ID solution, currently focused on government services. However, it’s now scaling to state and territory platforms, with the Digital ID Bill 2024 paving the way for private sector integration, including banks, telcos, and other industries. Accredited providers will earn a trust mark, signalling compliance with high standards and building trust in the market (Digital ID System, Australian Government).

Why it matters?

• Multi-Factor Authentication (MFA) reduces reliance on vulnerable passwords
• FIDO Passkeys reduce the risk of stolen credentials
• Biometrics provide fast, hassle-free access without passwords
• Blockchain ensures data integrity and tamper-proof verification

Naturally, it is easy to see that myID is evolving into a comprehensive digital identity solution in Australia. Its reach will extend beyond government use to include private services, like the upcoming social media age verification.

Early adopters of myID have an opportunity to build trust through secure authentication. Latecomers risk losing customers to competitors who offer faster and safer digital experiences.

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Value Proposition Canvas

This canvas shows how myID helps community banks enhance security, streamline experiences, and build trust, whilst addressing integration and customer adoption challenges.

Jobs:

• Verify identifies securely
• Provide seamless digital journeys, like for customer onboarding and transactions
• Prevent fraud and protect customers
• Build trust as a secure and modern bank

Gains:

• Stronger security with myID and, resultantly, reduced monetary losses from fraud
• Faster onboarding without relying on physical branch visits
• Adherence to industry best-practices and digital ID standards
• Improved reputation when it comes to security

Pains:

• Complex and potentially costly integration with myID
• Customer education and onboarding challenges (remember: it’s a paradigm shift)
• Resistance from less tech-savvy users

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Readiness Assessment

Admittedly, some community banks already have secure login systems, including basic MFA (SMS verification). However, integrating myID presents challenges, including system upgrades, accreditation readiness, and building a wider user adoption of the new digital identity standard.

Key questions:

• Are current systems compatible with myID?
• How can community banks support customers in adopting myID and embracing it as the new industry standard?

Addressing these gaps ensures smoother myID adoption amongst community banks.

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Business Model Impact

myID strengthens security by reducing fraud risks with more advanced authentication. It builds customer trust while improving digital user experiences. Equally, it has the potential to close digital gaps, where customers are otherwise forced to visit a branch office, driving digital growth in a competitive market.

Upfront investments include, as previously mentioned, system upgrades, accreditation, and customer education. 

Key metrics focus on impact: fraud prevention rates, digital conversion and drop-off rates, support requests, and security incidents related to authentication. These measure success and highlight areas for improvement.

Partnerships with government, tech providers, and industry bodies ensure smooth integration and access to best practices, positioning community banks to adopt myID securely and efficiently.

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Key Features (Phased)

• Phase 1: Build internal awareness and train teams on myID benefits and requirements
• Phase 2: Perform systems audits to assess compatibility with myID standards
• Phase 3: Pilot integration with myID APIs
• Phase 4: Accreditation readiness under the Digital ID Bill
• Phase 5: Customer rollout and targeted communications

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Risks

Whilst myID inherently boosts security, it may also introduce friction, impacting conversion rates. Key challenges include delayed readiness pertaining to community banks, complex accreditation, and customer hesitance, which can result in transaction drop-offs and lost opportunities.

Proactive regulator engagement, market awareness, phased rollouts, and clear customer education can smooth the transition. 

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Strategic Positioning Canvas

Vision

• Position community banks as secure, digital-first leaders by adopting myID to prioritise customer security and convenience.

Differentiation

• Leverage government-backed credibility to assure customers that their transactions are secure
• Simplify authentication processes and minimise friction

First-Mover Advantage

• Early adoption positions community banks as innovators, putting them on par with other banking and fintech institutions when it comes to security
• It keeps community banks ahead of slower adopters, attracting and retaining security-conscious customers in Australia

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Final Words

Balancing security and convenience is crucial. MyID enables community banks to achieve this, meeting evolving customer expectations and trends on the market as well as strengthening their competitive positioning.