January 10, 2019
Disruption and Other Threats to Business Growth in 2018
Posted February 5, 2018
If there were still any doubts that 2018 would be a year of disruption in even the most insulated of industries, they were long gone before January was even over.
Suddenly, there are at least three not-so-hidden reasons why the difference between this year’s leaders and laggards—as well as disruptors and the disrupted—may very well come down to digital identity.
1. Disruptors on the Move
In January, the U.S. health insurance industry was rocked by the biggest sign yet that it may (literally) get Amazoned—disrupted by tech-savvy new players. In this case, it’s a triumvirate—Amazon, JPMorgan Chase and Berkshire Hathaway—which have announced plans to form an independent healthcare company for their combined 1 million employees nationwide.
Among the driving factors: Spiraling health care costs and the tangled web of internal and consumer-facing insurance processes.
It’s still unclear what this new entity will do exactly. But according to the companies, it would be “free from profit-making incentives and constraints.” And according to JPMorgan Chase CEO Jamie Dimon, the effort may eventually expand to benefit all Americans.
So, how do you spell “wake-up call”? Given Amazon’s reach, its digital-first efficiencies and the role it plays in everyday consumers’ lives, it’s no wonder stocks for several insurers were buffeted in the immediate aftermath of the announcement.
But while this category in particular is in the throes of early digital transformation, what’s true here is relevant in every industry – deploying digital identity solutions may help businesses more easily recognize returning customers and streamline the entire digital experience.
2. Cybercriminals on the Sly
The surge in new challengers will only accelerate in coming months—creating obstacles to growth on two fronts.
Take financial services, for instance. According to new research from Bain & Company and eMarketer, nearly three-quarters of consumers ages 18 to 34 say they’re willing to buy financial products from emerging fintechs and Internet giants instead of from their primary bank.
But the key barometer for making that decision ultimately comes down to trust. When asked about which companies they most trust with their assets, consumers expressed the most confidence in their existing institution, with banks in general coming in second.
But tech players, such as PayPal and (yes) Amazon, come up an uncomfortably close third and fourth. Clearly, innovation and trust are critically important to playing offense and defense this year. But, those same digital innovations that organizations are rolling out to engage today’s want-it-now consumer can also make them vulnerable to cyberattacks.
According to data from the Cybercrime Report 2017, attacks aimed at taking over a user’s banking, retail or other accounts increased 170 percent in just the past 12 months, and now take place every 10 seconds. Meanwhile, between 2015 and 2017, more than 83 million fraudulent accounts were opened using stolen identity data lost through corporate data breaches.
Unfortunately, organizations seeking to protect themselves from this growing onslaught can become over-reliant on another hidden growth killer: two-factor authentication (2FA) and other forms of out-of-band authentication. The problem here is added friction due to a poor customer experience. This year alone, the cost of even 10 seconds of friction could translate into $1.6 trillion in lost revenue.
To short circuit fraud and friction, look for organizations to prioritize digital identity solutions that can recognize the 92 percent of all transactions that are legitimate, block the 2 percent known to be fraudulent, and reserve 2FA and other steps-ups for only that 6 percent of questionable transactions.
3. RATs on the Attack
Even with solutions designed to properly verify the identities of the people and devices businesses transact with online, digital businesses can still be put at risk.
How? Through malware and other hidden threats that can enable criminals to inject themselves into an active user session or instigate them on their own, taking over an account, applying for fraudulent loans, making illegal payments and more.
The past 12 months saw a surge in attacks using NjRat, Netwire, Bancos and other remote access Trojans (RATs), which can be secretly installed on user devices through phishing/smishing attacks or through Man-in-the-Middle browser attacks. These hidden disruptors can hijack active sessions once a user has accessed an account, or even steal login credentials to access accounts on their own.
In 2018, concerns are growing over the rise of Polymorphism-as-a-Service—services that enable even tech-illiterate outlaws to launch ransomware, Trojans and other weapons that are polymorphic, or can constantly change their identifiable features to evade detection.
This may help explain why many businesses ultimately select digital identity solutions that include robust, real-time threat detection capabilities that can sniff out these threats, even when the user and device are both legit. There’s a great explanation of how this works in The Definitive Guide to Digital Identity.
2018: A Year of Reckoning?
According to Forrester Research, up to 20 percent of companies will fail to act fast enough to these and other threats, putting themselves at risk of facing “a year of reckoning.”
What’s more, only 10 percent will recognize that identity-centric security investments directly enhance customer experiences and drive growth.
Which means the moves by Amazon and associates in health insurance and the shifts in consumer attitudes and expectations across every industry may just be the tip of the iceberg. What comes next is anyone’s guess.
Be sure to check out The Definitive Guide to Digital Identity, an online resource designed to further the understanding of digital identity and how it can help businesses grow profitably and securely in 2018.