The Changing Landscape of Identity Fraud
January 8, 2021
The world is changing. Advances in AI and alternative data have accelerated the adoption and use of digital technology and growing numbers of businesses are realising the necessity of, not just being online but providing a first-class digital experience.
We almost take this new world for granted; from video conferencing and saving all of our information on the cloud, to startup brands having instant access to their customers – globally, people are becoming more connected with the use of digital solutions.
This acceleration in growth has had a massive impact on the way we live our daily lives, but it’s also had an impact on how exposed our identities can be to fraudsters.
Digital identity verification
Traditionally, when performing some form of identity verification or onboarding, businesses would use methods such as proof of address or sending a copy of a passport and manual checks. These outdated processes can be time-consuming, frustrating and create a poor user experience for customers who may be likely to move to a competitor. Relying on traditional data to verify identity doesn’t just alienate the modern digital customer, it can also lead to huge demographics being unable to access the services they want.
Digitally-nimble businesses have been opening doors and services to those thin-filed customers who would typically fail frictionless onboarding. Where these customers usually have some form of identification, they often lack the documentation and credit records required by traditional institutions to assess creditworthiness and perform consumer due diligence.
This is where utilising a wider range of data sources can be used to draw insights on a consumer’s profile. Alternative data is the antithesis of traditional data in that it includes anything from mobile phone usage, monthly payments and social media activity, to biometric identities derived from iris scans, fingerprints and hand geometry.
By leveraging alternative data sources, businesses can construct a richer, contextual understanding of individual users, enabling both more accurate risk assessment and personalised customer experiences. Combined with emerging technologies like artificial intelligence and machine learning, businesses can automate manual tasks in the onboarding process, significantly reducing time and cost, and enabling previously excluded customers.
Companies are capitalising on a willingness to incorporate technology into onboarding by creating convenient, intuitive and personalised processes. Modern problems require modern solutions and as such, it is important to integrate automated processes to ensure individuals are able to make use of the services they need as quickly and efficiently as possible.
When online activity increases, so too does the risk of online fraud and fraudsters are continually developing more sophisticated ways to attack businesses and customers.
In this shifting landscape, organisations need to keep on top of their anti-fraud measures ensuring they’re up to the job of protecting their customers and deal with breaches accordingly.
Millions of people are affected by fraud every year and it is estimated that in 2019, criminals made $4.2 trillion from fraudulent activity worldwide and around half (54%) of fraudulent incidents were cyber-related.
Bank executives and experts list cybercrime as the leading risk for banks and according to Barclays Bank, there was a 66% increase in reported scams in the first six months of 2020 compared with the last six months of 2019. Fraud volumes also rose 61% between May and July 2020.
There are a number of reasons fraud has risen, the global pandemic for one but mainly:
- A greater number of mobile transactions.
- More sophisticated synthetic IDs.
- More goods and services are sold online.
- More cross-border transactions.
- More automated botnets.
These scenarios are more susceptible to online fraud and in the current economic climate, it’s never been more important to make sure your anti-fraud measures are up to scratch. More than 2 in 5 consumers worldwide have experienced a fraudulent event online, and according to PwC’s bi-annual Global Economic Crime and Fraud Survey, 47% of companies have experienced fraud in the last two years.
How we can help
Fraud is on the rise and fraudsters are getting smarter, but with the right partner and tools, you can minimise the risk of fraud to your business and customers. Identity has changed and so too should the way we tackle identity fraud.
At Acuant, we’re proud to have provided anti-fraud solutions for a number of global, high-profile clients in over 91% of the world. We’ve worked with innovative businesses that are challenging the norm and finding new ways to protect and provide value for their customers.
Prevent the risk of fraud for your customers with our suite of global identity verification solutions. Sodium, our single, universal API, enables customer verification in real-time. Utilise a single element or multiple processes – it’s entirely up to you. Learn more about how we can help to automate and simplify your verification processes to help you gain a better understanding of your customers.
Book a demo today and see for yourself how powerful our suite of solutions are.