The core concept of identity verification (sometimes referred to as identity proofing) seems simple: to validate and uniquely distinguish identities of legitimate consumers. But you must also prevent fraudsters from creating account credentials, transacting or gaining access to unauthorised accounts. And once the seemingly simple aspect ends, the balancing act of delivering the modern, friction-right experience consumers demand while mitigating fraud risk begins.
Data breaches have grown in size and scope, and the vectors of attack have evolved as fraudsters obtain near-perfect information. In early April, a well-known airline experienced a highly sophisticated cyberattack which affected approximately 9 million customers and resulted in 2,208 customers having their credit and debit card details accessed.*Twitter also fell afoul of cybercrime in July, when 130 accounts were targeted in a major cyber attack on celebrity accounts. The security breach saw accounts including those of Barack Obama, Elon Musk, Kanye West and Bill Gates tweet a Bitcoin scam to millions of followers.**
At the same time, consumer adoption of transacting within digital channels has risen steadily — research from the UK’s online retail association, IMGR, shows online retail sales growth was up a staggering +23.8% year-on-year (YoY) in April.*** The COVID-19 outbreak has contributed to unprecedented demand on digital channels, challenging late adopter organisations to respond reactively.
It’s true that many companies weren’t well prepared to confront issues created by these new realities. As new threats emerge, organisations have deployed a patchwork of often disconnected solutions and processes, which rely solely on traditional data sources and methods, forcing a trade-off between customer experience and fraud prevention.
Nearly every company has taken measures to assure some level of certainty of who they’re doing business with, driven in part by regulations such as Know Your Customer (KYC). Others have been hesitant to go beyond minimum compliance requirements, since acquiring a customer is challenging enough without adding friction to the fraud prevention process. Some organisations are even willing to accept some level of fraud, choosing to simply write it off as the cost of doing business.
Combatting today’s evolving threats, while being ready for the unexpected, is no longer a choice — it’s a necessity. This is a complex challenge that can be solved, but it requires a holistic solution to do so effectively. Gartner recommends in their recent report — Predicts 2020: Identity and Access Management - that organisations take a multi-faceted approach which includes:
Fortunately, it’s possible to deliver positive customer experiences without having to compromise security. Find out how document verification and facial biometrics solutions can add value to your identity verification and authentication processes and how digital intelligence is transforming online customer interactions in our recent blog. Alternatively, our mini paper — Achieve Fraud Protection and Positive Customer Experiences — reveals ways to optimise fraud solutions across the customer journey.
*BBC News. 2020. Easyjet Admits Data Of Nine Million Hacked. [online] Available at: https://www.bbc.co.uk/news/technology-52722626
**Imrg.org. 2020. Online Retail Sales Soar To Ten-Year High As COVID-19 Redefines Shopping Behaviours - IMRG. [online] Available at: https://www.imrg.org/media-and-comment/press-releases/online-retail-sales-soar-to-ten-year-high-as-covid-19-redefines-shopping-behaviours