Scams- particularly, identity theft- is one of the greatest scams plaguing the United Kingdom financial institutions. When you examine that scams cost the United Kingdom financial institutions an expected £1.3 billion and that a new incident of financial scams was reported every 20 seconds in 2020, the sheer range of the challenge becomes transparent.
Frequently continuous data breaches are making scams easier to perform than ever before. The rise in digital and mobile banking has developed new channels for fraudsters to infiltrate and for financial institutions to safeguard. Worryingly, monetary institutions and the banking sector are still depending on old approaches to identity verification which are easily not up to mark in today’s threat landscape.
So, what’s the answer, and how can companies ultimately get the upper hand when identity theft occurs?
ID verification: The perfect storm
Identity theft is increasingly being run by the expedited adoption of online banking and transactions. The quicker the payments, the quicker the scams. The digital channels have become an especially top target for fraudsters, with circumstances of online banking fraud rising 30% from 2019-2020.
Identity theft reveals colossal amounts of personally identifiable information across the platform and is the main contributor to identity scams. With the kind of information in hand, it’s simply honest for fraudsters to cross-check breached information to perpetrate account takeover scams and new identity theft. As the threat panorama makes everything simpler for fraudsters, financial institutions are being occupied by identity scams, as they have extended reliance on legacy, online id verification, and latent credit agency information to verify the identity of a user. The risk? If stolen, then it’s all too simple for fraudsters to infiltrate accounts or implement malicious activities, and once information is out in the wild, there’s no limiting its spread.
What’s more, as financial institutions more shift to online channels to adequately serve their users, this develops more problems in authenticating identities efficiently.
These determinants develop a perfect storm of identity theft to take place as fraudsters have a wealth of personally identifiable information at their fingertips to fight weak identity authentication procedures. While 3rd-party data breaches may be outside of their control, financial institutions can no longer depend on latent KBA for identity verification.
A recent wave of ID Verification Services
The outcomes of identity theft protection vulnerability should make financial institutions take a significant look at their legitimacy to verify identification procedures. Where do they begin, what are they assumed to do?
By uniting conventional identity verification techniques with advanced risk analytics, powered by artificial intelligence and ML, the banking sector can achieve context-aware IDV. This includes a variety of identity checks, involving no-time account checking, identity document capture, biometric verification. For instance, taking a front picture to match with an identity document and geolocation device. This aspect allows companies to analyze and examine several pieces of data from various sources and across different online channels, whether digitally, smartphone or both, to make safety decisions in no-time, based on the total risk correlated with a new client. This, in turn, reduces a bank’s risk of scams in opening a new account.
Fewer Scams, Quick development
The advantages of modern identity verification go beyond reducing identity scams. It also plays a significant part in providing the banking sector with the ability to completely digitize its services to better assist users and drive top-line revenue development.
Users are demanding more from their financial institutions. They require a completely digital and smooth user experience that is readily available on smartphone devices and online. Opening a new account that acquires a user to personally visit a bank branch to authenticate their identity in an individual is not only inaccessible but adds extra time and manual layers to the identity verification process that can quickly annoy users to the extent where they will ignore the procedure altogether and go to the different banking sector.
If financial institutions provide several online identity checks that efficiently authenticate a user’s identity remotely, without affecting protection, then this will assist increase pass rates, increase the user experience, and reduce application abandonment percentages. This allows the banking sector to offer an easy, modern account opening experience that assists to quickly get new users, engage with loyal users and encourage services growth, all while reducing the vulnerability of scams.