2020’s business imperative goes way beyond providing a secure platform. It means delivering a service that is simple to access, easy to use for customers and protected from cyber-risks. In the financial services sector alone, the percentage of banking products consumers can open through digital channels has jumped from 43 per cent to 76 per cent since 2018 – and about 90 per cent of these can be opened from mobile devices. Not only do businesses want assurance of who is who on their platforms, consumers and users are increasingly asking the same of their providers.
The requirement to prove who a user is in the digital world is essential for access to an ever-expanding online universe. For businesses, how they ask for and verify proof of identity from current and potential customers is also a key factor in determining their ongoing success.
Yet many of the identity verification solutions being used are becoming increasingly antiquated. As businesses expand their footprint across the digital world, it’s important to realise the days aren’t the same as they are on Planet Earth. Today’s state-of-the-art, intuitive user-experience is tomorrow’s dusty relic. Modern bandits are using advanced technology to break traditional digital security in ways we haven’t even heard of yet. Industry experts continue to sound the alarm that knowledge based answers (KBAs), two-factor authentication (2FA), and password logins are not secure, after hackers in 2019 exposed an estimated six billion records. What’s more, false identity theft claims are skyrocketing – there was a 400 per cent increase in reported credit washing at large lenders between 2018 and 2019. It seems like our digital planet has entered the fraud age.
This is a pivot point. Both conceptually and practically, fraud and risk management relating to identity on “Planet Digital” will be far different in the years ahead. Let’s bring this into a simplistic real-world example of how a person’s identity plays an integral part in onboarding, and how it’s changing in real time…
Opening an account at a bank in 2020 vs. 2000
The year is 2000. The physical world. We walk into a local bank’s branch, complete the paperwork, present our identification along with the required cash and wait for the cashier to validate our authenticity. After hand cramps from signing dozens of documents, some friendly smiles, and couple of banalities, it likely took an hour to wrap up – not including travel. Enough time to download most of our emails from a dial-up connection… as long as they don’t have any pictures.
The year is 2020. The digital world. We grab the supercomputer from our pocket, open it with a fingerprint, and locate our bank’s mobile app in the organised folder that houses a dozen other fintech services. We want a new savings account, so we e-sign the necessary documents with the flick of a finger, and take a picture of a cheque that’s deposited immediately to fund it. It takes roughly 15 minutes, and our money is loaded into our mobile wallet. The only people we talked to during this process were friends on WhatsApp we’re planning to meet at the pub later tonight.
Therein lies the risk with the ongoing shift to a digital-only world. Though we’ve glossed over many nuances of risk and fraud management roadblocks for the year 2020 example such as peer-to-peer transfer limits or cheque/deposit holding times, at the very least there’s an identity touchpoint during the onboarding stage in the year 2000 – we were talking to a person (the cashier or bank manager) in the physical world, and given them an identity document to prove we’re real. Enterprises that want to grow on the digital frontier need a process to verify identities on their platform – and they need it before tomorrow.
The digital frontier is still risky, but there’s opportunity to unlock
Technology innovation is relentless in the digital age. While it’s incredible to daydream about where businesses will be a year from now, Moore’s Law doesn’t just apply to the good guys. As businesses innovate, fraudsters innovate faster. The thought can be particularly scary – especially when there’s significant investments at stake.
Though it’s hard to have 100 per cent assurance that a digital platform will be entirely risk free, it’s still possible to fight fraud while growing digital channels and onboarding good customers. An identity verification solution can be a useful tool that provides certainty in the uncertain world by accounting for three important aspects digital companies are trying to balance today: risk assurance, customer’s expectations for convenience, and spoof-proof technology.
Risk assurance will largely depend on the industry and organisation’s tolerance. Banks and consumer companies want to onboard a lot of customers quickly, but each has different regulations they must adhere to. Irrespective of whether a company has KYC compliance prerogatives or wants to ensure bots don’t get onto your platform, identity verification technology can be scaled to provide comprehensive oversight in heavily regulated industries, to peace of mind for businesses who simply want to know their customers are real.
Customers expect the convenience digital platforms provide, but don’t mind security measures when they’re natural. And as more people want to maintain control of their personal identifying information, they’ll look for businesses that take extra care and precautions to identify all people on their platforms. Adding in an identity verification solution can satisfy both customer ‘s needs – tell customers you need a picture of the driver’s licence that technology can quickly verify, and they’ll feel comfortable using your platform because you take security seriously.
Many industries today use identity verification tools to onboard customers in mobile apps, hire rideshare drivers, or conduct online and app-based money transfers. But fraud advancements ranging from deepfakes to traditional fraud such as forged documents helps a fraudster skirt through identity checkpoints in both the real and digital worlds. However, new identity verification solutions with features such as “liveness detection” and artificial intelligence document review can prevent a fraudster from circumventing new and old roadblocks.
The year is 2020. The shift to a digital planet is already in motion, and it’s not stopping. Traditional methods of face-to-face identity verification that companies used yesterday to mitigate risk are virtually impractical today – customers aren’t going to start an application on their computer only to be told they need to travel to a physical location to confirm they’re real. And with each passing day in the digital world, sophisticated fraudsters are finding more ways to steal money and identities.
Both consumers and businesses face risks by not using an identity verification solution in the digital world. Businesses embracing the shift to digital-only channels should want to know the people on their platform are real. Consumers want to use platforms that balance both convenience and security. As economies, consumer habits and digital channels change, it’s important to find a solution that helps you onboard good customers and explore the digital world with certainty.
By Joe Bloemendaal, Head of Strategy, Mitek Systems
Find out more at miteksystems.com
Frankonfraud, Welcome to the Age of Fraud December 2, 2019. www.frankonfraud.com/fraud-trends/welcome-to-the-age-of-fraud-top-10-predictions-for-2020/
Mitek, The Future of Identity, July 2019. www.miteksystems.com/files/docs/future-of-identity-whitepaper.pdf