Merging Online & Offline Identity Intelligence to Reduce Customer Friction
Posted September 27, 2018
A mounting number of studies suggest that if you aren’t delivering a lightning-fast customer experience across every channel, you may already be shedding customers—or may be soon.
But there are also signs that providing the swift, secure experiences customers crave may take a new approach to user verification that merges online and offline identities in order to make fast, accurate trust decisions at the point of each transaction.
Take a new, cross-industry study in the UK that finds up to 77% of consumers are getting fed up with “unnecessary” identity verification procedures like “endless” security questions. According to HBR, nearly half of consumers will abandon a transaction after just 10-seconds of added friction. Of course, customers expect transactions to be secure, too. They just don’t want to be inconvenienced by the security.
In the on-demand economy, it seems, “fraud-free and friction-less” are the new customer loyalty. And if you can’t deliver, those customers won’t blink twice about jumping ship for a business that can—to the tune of an estimated $1.6 trillion in lost potential revenues changing hands this year.
Unprecedented Opportunity — and Risk
Nearly all businesses face the risk of massive disruption from ambitious incumbents and new, digital-born and mobile-first rivals. In the face of increasing competition, success means being able to transact instantly and freely, safe in the knowledge that the person on the other end of a transaction is indeed who they claim to be, and not a fraudster.
The number of data breaches we now see is putting vast amounts of customer identity data on the dark web. As a result, cybercriminals are using the anonymous online sphere to launch increasingly complex attacks across different industries, different points in the customer journey, and different channels that customers use to transact.
Last year, there were more than 700 million cyberattacks worldwide seen on the ThreatMetrix Digital Identity Network. In addition, a record 2.6 billion bot attacks were detected in just the first half of 2018.
In some industries, 1 in 10 new account openings is fraudulent. And those call centers? Over 60% of fraud losses from account takeover attacks occur through this channel.
Bottom line: Businesses face an increasingly hostile threat landscape.
Which means meeting competing priorities—from delivering slick user experiences, to expanding into global markets, to protecting against cyberattacks—can only be done safely and swiftly when you have a complete, 360-degree understanding of who you are transacting with, anywhere, anytime, and via any channel.
Organizations are striving for a better way of verifying the true identity of users and assessing the risk they represent. Machine learning and advanced behavioral analytics are helping to conduct real-time assessment of an individual’s actions across increasingly complex data sets, in order to establish normative patterns that can help them instantly detect fraud.
All models, however, are dependent on the quality, breadth and depth of data that is inputted. To assess the identity of a user in the full context of their true identity, proprietary data won’t cut it, as even the largest of organizations only see certain facets of an individual’s identity and behavior.
We have been transitioning from assessing identities purely in an offline way, for example government-issued identity documents and Social Security Numbers, towards a more digital-friendly way, that leverages device identification and online identity credentials. For organizations that are looking for the most comprehensive way to assess identity, however, the future lies in merging this digital and physical identity intelligence for the most accurate and persistent way to differentiate between customers and fraudsters.
How will this help the customer experience and drive additional revenue online? Well, by doing this in a unified way that works behind the scenes, digital businesses will be able to drastically cut the amount of step-up and out-of-band authentication required, therefore helping with the user experience. Also, by leveraging the most complete data, they will be able to ensure the most accurate assessments that avoid declined transactions, logins and account creations – which can drive true customers straight into the arms of your competitors.
The challenge for many organizations is gaining access to shared online & offline identity intelligence at global scale. Look for solutions that prioritize global networks to harness divergent and dynamic data sets that span tens of thousands of feeds from trusted sources across thousands of businesses in multiple industries worldwide.
Which options may prove especially compelling? Those that are able to instantly and anonymously analyze each individual against billions of unique identities, IP addresses, devices, email accounts, purchases and behaviors—and then cross reference it with a 100 billion different public records worldwide, including history, credit risk, physical addresses, phone numbers and more.
360 Degrees & Sunny?
Merging online and offline data may prove be the next major step change in fraud and identity management, by gaining the kind of 360-degree understanding of identity that makes the difference in delighting trusted, legitimate customers in an omni-channel world – without compromising security.
As it stands now, however, Forrester predicts 30 percent of businesses will fail to keep up with evolving customer expectations for the digital experience in 2018, resulting in a net loss of growth.
Add in the prospect of watching cyber-criminals defrauding both businesses and their customers and it’s safe to say we all have our work cut out for us.