Digital identity: the future of securing finances

Published On : 10/07/2022

By Philipp Pointner, Chief of Digital Identity at Jumio

Recent research by UK Finance found that victims lost £1.3bn in 2021 amid a surge in online fraud. Moreover, losses from unauthorised fraud, where the transaction is carried out by a cybercriminal who has gained access to the victim’s personal information, accounted for £730.4m. Unfortunately, this shows no sign of abating as varying types of fraud are expected to rise with scammers taking full advantage of the ongoing cost-of-living crisis.

One type of fraud that can be tackled easily, however, is identity-related fraud – the exact type that cost the UK more than £700m last year. The key to this is embracing digital identity technology – something the UK government recently announced it would be harnessing to help tackle the “record high” levels of fraud in the UK. Put simply, digital identity technology can help to ensure those accessing funds, making transactions or taking out loans are authorised to do so.

Consumers are wising up to the need for robust verification measures too. Our recent survey found that 78% of UK consumers think it’s important to use a digital identity to prove who they say they are when using a financial service online. What’s more, over half (57%) say they would be more likely to engage with an online financial services provider if it had robust identity verification measures, like this, in place.

Putting customer experience at the heart of identity verification

Financial services companies typically treat every customer as a potential threat and implement lengthy verification processes to ensure low risk. As a result, consumers often grapple with clunky authentication processes. This often leads to them abandoning the process entirely and drop-off rates can be as high as 75% during the sign-up process if the customer experiences too much friction.

With digital identities, customer onboarding is faster and more convenient. The customer just needs to take a photo of their physical ID and a selfie when they go through an online onboarding journey for the first time. Both are then checked for authenticity and compared quickly, thanks to AI, and it can then be determined as to whether the two match and the person is who they claim to be. What’s more, customers can securely store their personal information in their digital identity on their mobile phone and have it available whenever and wherever they need it, reducing the time spent on future verification to mere seconds.

Whilst financial services are at the beginning of the journey of embracing digital identities for verification, the reality is that consumers are already growing accustomed to them. Our research revealed that half of Brits (50%) constantly or often have to use their digital identity to access their online accounts and verify their identity as a result of the pandemic, and with the UK government moving toward the use of digital identities to tackle fraud, this is the most logical step for financial institutions.

Enhance the power of digital identity with biometrics

Biometric technologies can significantly enhance security measures without adding unnecessary friction to the process. For example, facial recognition with liveness detection can prevent spoofing attacks. Going one step further, adding an independent, app-based biometric allows for easy two-factor authentication, whilst simultaneously ensuring users continue having access to their accounts – even if they lose or switch their device.

For financial services, coupling digital identity solutions with biometric verification is crucial in protecting customer information through accurately verifying user identity. The majority of UK adults (71%) say that they feel comfortable using biometric identity verification to use online financial services, from their fingerprint (52%) to their face verification (36%), making it clear there is a gap in the market for more up-to-date verification measures. In fact, consumers say they’d be happy to use biometric identity verification when carrying out a range of financial actions, from bank transfers to setting up direct debits, verifying purchases, and more. A third of consumers would even be happy to do this every time they log into their account.

Combining biometric technologies with digital identity verification ensures customers are protected on all fronts. Financial organisations leveraging this as part of their identity checks can benefit from remote identification and verification, removing the need for human intervention and in turn reducing costs, providing an entirely self-service user journey and a fast, seamless and convenient experience.

Get ahead with digital identity

With digital fraud continuing to accelerate, it’s crucial that financial services businesses get ahead of the curve and start, or continue, to embrace digital identities to protect their customers from such risks. While two-thirds of consumers believe their bank has done more to protect them against fraud and online identity theft since the pandemic, only a third (34%) say this is as a result of implementing more online identity checks. It’s time for financial institutions to change this by tapping into the growing appetite for digital identity in order to remain competitive, but crucially, tackling identity-related fraud head on.

Jessica Weisman-Pitts

Jesse Pitts has been with the Global Banking & Finance Review since 2016, serving in various capacities, including Graphic Designer, Content Publisher, and Editorial Assistant. As the sole graphic designer for the company, Jesse plays a crucial role in shaping the visual identity of Global Banking & Finance Review. Additionally, Jesse manages the publishing of content across multiple platforms, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.