How Next-Gen Digital Identity Verification & Authentication Disrupts the Fraudster, Delights the Consumer
This article was originally published on Forbes.com on Dec. 18, 2017.
In the digital world, how do you really know if it is your customer or a fraudster on the other end? The nature of the relationship is anonymous until proven otherwise. We can feel this from the friction introduced when applying for a service or product in the digital channel. The deal is simple, give me something about you that I can trust, and then I will provide you with what you want.
Yet, this isn’t as simple as it seems. Here is partial list of methods used today:
• Full or partial numbers of a consumer’s Social Security Number (SSN).
• A combination of SSN with an address, or phone number.
• A combination of both SSN and Knowledge Based Authentication (KBA), which is essentially a quiz about what only you should know, like the color of your first car.
The problem, however, is that you are not the only one that knows this information.
If you search news headlines on any given day, chances are you’ll find a story on a cyber incident, where a company had its funds stolen over the Internet. There are other stories about cyber intrusions, where customer information was stolen, like name, address, phone number, and SSN. More recently, the very institutions that hold KBA-related information, have also reported a breach.
Reading between the lines, it is clear that cyber incidents involving customer information matter more to the successful fraudster. Why? The financial loss is only an outcome of innovative methods used by a new breed of digital fraudsters who seek to impersonate your customers. After all, you do know who your customers are, don’t you? Digital fraudsters are banking on it.
This ongoing struggle between institutions and digital fraudsters using your customers’ information continues to escalate with unintended consequences. Companies have implemented the following:
• More KBA questions, much to the dismay of real consumers, who frequently forget the answers and simply abandon the online interaction.
• SMS text messaging with a special code to confirm the consumer, even though it is well known, SMS messages are inherently insecure and are often intercepted by fraudsters.
• Other businesses have given up the SSN altogether and assigned new identity numbers, only to discover that consumers have promptly forgotten it and have to revert back to the SSN.
Clearly doing more of the same and expecting a different result has only created more friction for consumers. With more friction comes customer defection and loss of business to those digital businesses who know how to disrupt the digital fraudster.
Disruption is about knowing the rules of the game and rewriting them. The reason why the digital fraudster is so successful is that they know what companies are doing to verify and authenticate the consumer. They also exploit the fact that the consumer is the weakest link from a security perspective and their identity information is the key to unlocking an online service or product. Knowing this, consider these disruptive questions about digital identity:
• What if there is a way of knowing in real time, before authentication or an online transaction, that a digital identity can be verified as a consumer or fraudster?
• What if there is a way of understanding consumer identifiers, digital attributes and information that constantly corroborates, appends and verifies the data?
• What if there was a 360-degree view of the consumer that analyzes linkages between name, mobile phone, physical address, e-mail and other attributes?
Asking these questions will clearly be disruptive to opportunistic fraudsters who rely on static identity information. Think of all of the use-cases and business benefits from dynamic identity verification and authentication in the following settings:
• Online Account Opening
• Automated Form Filling
• Request for Products or Services
• Password Resets
• Purchasing Products or Services
• Initiate or Approve Transactions
These are just a few examples of how a frictionless customer experience can be attained, creating transformational change. So, do you want to deliver customer delight or customer defection? Customer loyalty or customer distrust? Prevent fraud without friction or friction that the fraudster can take advantage of?
The answer of course is the positive, and the key to success is disrupting current practices with next-generation digital identity verification and authentication.