November 21, 2017
Money 20/20 Insights for 2017 Planning
Posted November 7, 2016
The fourth annual Money 20/20 conference billed itself as the “world’s largest payments & financial services innovation event.” It certainly was very well attended, with an abundance of informative sessions and ample vendor representation on the exhibitor floor. I was personally struck by pervasiveness of the themes of digital identity and customer experience through virtually all discussions.
After attending a major industry event, it’s instructive to consider the key common themes and takeaways gleaned from countless sessions and discussions, as well as the general makeup of attendees and vendors represented. While I certainly have my point of view, my position with a technology vendor sometimes renders my viewpoint as biased (I shudder at the thought!). Therefore, rather than share my point of view, I refer the reader to a recent blog by Julie Conroy, Research Director for Aite Group’s Retail Banking practice.
In her blog Key Takeaways From Money 20/20 2016, Julie highlights the 11 most significant takeaways garnered from the five Aite analysts who attended the conference. I was pleasantly surprised to see that Aite’s takeaways not only aligned with my own assessment, but over half the points aligned closely to the strategy and direction we’re taking here at ThreatMetrix. The six takeaways I’m referring to are:
Continued sublimation of payments: Payments are only the enablers of commerce, and merchants only care about payments when they enhance or at least don’t diminish the customer experience.
While I believe fraud prevention practitioners are more aligned with this position than ever, we must remain diligent in deploying fraud prevention methods that are as invisible and friction-free as possible. For example, while smartphone-based biometrics are touted as reducing friction; passive, context-based primary authentication eliminates friction. Biometric authentication should only be invoked when needed (which echoes the position a Wells Fargo executive shared in one of the sessions).
Machine-learning and artificial intelligence (AI) analytics: “Machine learning” and “AI” were two of the buzziest words at the event, with many vendors touting their use of advanced analytics for fraud detection and marketing use cases. The application of these terms, however, seemed to be quite broad, indicating the need for better definition of these segments.
This observation is spot on. Machine learning can be used to analyze a broad set of problems, from optimizing ice cream recipes to recommending purchases. Stand-alone vendors should have a deep understanding of your industry and circumstance. I find that many fraud detection vendors claim to use machine learning to optimize their back-end detection algorithms. You can’t see the algorithms or how they were derived, you just have to trust them. Conversely, ThreatMetrix offers a clear-box approach to almost everything we do, so our customers can openly see and adjust virtually all the rules and models used by our analytics engine.
The morphing of “identity” The entire concept of identity needs to be rethought, and in a big way. Most of us have lived with a certain concept of identity for decades, but the entire concept needs to change, especially given that the personally identifiable information that has traditionally constituted identity is wholly compromised by cybercriminals. As an industry and society, we are very early in the process.
ThreatMetrix is actually branded as “The Digital Identity Company” (and we’ve trademarked the phrase!). Using anonymized, global shared intelligence ThreatMetrix creates a user’s unique digital identity – or digital persona – by analyzing the intricate connections of almost 2 billion transactions we process each and every month, and with nearly 95% certainty. We have rethought the concept of digital identity and bring it to life every moment of every day for our broad, global customer base.
Cross-border e-commerce: Cross-border e-commerce is growing, and the demand is certainly there. That said, it’s still a very complicated thing to do. A lot of companies are positioning themselves to support the explosive growth in the space.
Interestingly, the ability to accurately identify a digital identity across the globe is critical to the success of cross-border e-commerce. Cross-border transactions are growing in prevalence; almost 1 in 5 transactions in the ThreatMetrix network are now cross-border, indicating the importance of businesses using more than legacy rules to accept or reject global transactions.
Biometrics is beginning to make headway in both retail and commercial banking. There were several biometrics vendors at the event that are currently in discussions with large banks to enhance their authentication capabilities for corporate mobile banking, and Wells Fargo’s Secil Watson talked to a packed house about the successful use of biometrics in the bank’s commercial online channel.
I’m excited that it seems we’ve finally reached the turning point for smartphone-based biometrics. One important point made by Well’s Fargo’s executive is that biometric authentication should be plugged into the institution’s fraud/risk analytics engine and invoked only when necessary. Many low-risk sessions emanating from recognized, trusted devices do not require biometric authentication interdiction. And remember, biometric authentication results are probabilistic, not deterministic. It’s not perfect and results need to be analyzed in context.
Open APIs: These are top of mind for many vendors and large global banks alike.
While this was the final takeaway with the shortest description, open APIs are a fundamental game-changer in the fraud prevention market. The proliferation of technologies and data sources in fraud detection and prevention has rendered most platforms rigid. Organizations cannot adequately adjust their fraud platforms to react to changes in the threat landscape or take advantage of new technologies and data sources nimbly and economically. The concept of an intelligent integration hub that intelligently manages technologies and feeds from multiple sources is enabled by open APIs. Look for more usage of integration hubs for general fraud protection, new account origination and authentication orchestration in 2017.
Given the tone and content of Money 20/20, along with insights from the Aite Group team, we’re more excited than ever going into 2017. We anticipate lots of positive changes and look forward to working with the world’s leading organizations to make the cyber and mobile world safer, enabling consumers and business to take advantage of all the digital world has to offer.