Why an orchestrated digital identity strategy is vital for financial organisations in fighting fraud

Published On : 10/26/2021

By Bala Kumar, Chief Product Officer, Jumio

New reports call Britain the bank scam capital of the world with enormous amounts of money being laundered every year. In fact, a British record of £754 million was stolen in the first six months of this year, an increase of 30% from the same period in 2020. This represents a per capita fraud rate of three times that of the U.S. in 2020.

The situation in the UK is so worrying that The Royal United Services Institute (RUSI) has now declared identity fraud, a key component of money laundering, a national security threat. With huge amounts of data available on the dark web due to how much of our lives is now recorded online, this threat is only growing too. The UK’s internet use doubled in 2020 due to the pandemic with increased use of online banking, healthcare apps, gaming websites and streaming platforms.

In order to reduce the risk, companies must ensure that an online user is who they say they are. This is true for all businesses, but especially true for organisations dealing with high-risk transactions and data, such as financial institutions. With the news that police are only charging one fraudster in 1,000 and new technology making fraud even more targeted, prevention is undeniably more effective than the cure when it comes to fighting fraud. And, when it comes to online fraud, traditional methods of identification are no longer good enough. Instead, organisations must put in place a holistic and orchestrated way of mapping customer identities.

Prioritising trust

Essential to achieving this is investment in technologies that use document-based identity verification to check users are who they say they are. All that is required is the user upload a picture of their government-issued ID (e.g., driver’s license) and a corroborating selfie, from which a biometric template is created. The selfie is compared to the photo on the ID to reliably establish the user’s identity. This is a far better approach than traditional methods of data-based identity verification such as security questions involving your mother’s maiden name or the name of your childhood pet. These types of methods are fundamentally less secure as a fraudster could easily obtain the answers to these questions on social media or the dark web. Luckily, this way of identifying users is becoming less common and according to Gartner, by 2022 80% of organisations will actually be using document-centric identity proofing as part of their onboarding workflows, around 30% more than today.

Document-centric identity verification can continually verify users to provide even more identity assurance, which is particularly important in higher-risk scenarios. On logging in, all a user must do is upload a fresh selfie, which generates a new biometric template to be compared to the one created in onboarding. This then unlocks the user’s digital identity in seconds and allows for continuous and easy authentication. Businesses can be confident that all users are who they say on an ongoing basis and that their data is secure.  

Weaving trust into the entire process

It is not enough to establish trust just at the start of the process. Organisations must take a holistic approach via an end-to-end identity verification platform that can monitor multiple jurisdictions and fraud signals when required. This will help to maintain compliance and onboard customers faster while creating a more accurate and complete picture of customers and behaviour. Additionally, this allows organisations to meet evolving complexities surrounding the online economy and digital onboarding with a continually adapting solution.  

This will vary depending on the sector in which an organisation operates. But, for financial services organisations, they will not only benefit from ongoing authentication solutions to stamp out account take over (ATO) fraud, but will gain access to greater benefits such as automated database pings, including government watchlists and PEPs and sanctions to help identify fraud and anti-money laundering (AML) risks faster.

Streamlining identity orchestration

Currently, many organisations are relying on multiple identity-proofing methods at once from multiple different vendors which makes orchestrating different capabilities a challenge. To ensure that these workflows are streamlined, identity orchestration enables organisations to orchestrate the controls and assurances needed to know and trust their end users, all with a single vendor.

Identity orchestration has the added benefit of allowing organisations to have real-time evaluations of different workflows and vendors which allows companies to see what is needed to achieve their identity proofing objectives. According to Gartner, by 2023, 75% of organisations will be using a single vendor with strong identity orchestration capabilities and connections to many other third parties for identity proofing and affirmation, which is an increase from fewer than 15% today.

Fraud is a growing threat to the UK public and economy with increased data available and more advanced ways for fraudsters to access it. However, companies still have time to protect themselves and their customers. By implementing careful and orchestrated onboarding and KYC processes, financial institutions in particular can realise their full potential in the online world without the threat of fraud and cybercrime.

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.