March 27, 2019
Rewarding Customers Based on Digital Identity Trust
Posted November 13, 2018
It may be time to start thinking of digital identity as far more than just a powerful approach to authentication and verification aimed at preventing fraud.
When it comes to the customer experience (CX), it may also be the key to winning big in a marketplace that grows more global, and more competitive, by the day. In fact, the same technologies so fundamental to cybersecurity are quickly becoming central to boosting growth and customer loyalty.
Today, it’s no secret that companies in every industry are facing an onslaught of cybercrime—to the tune of 760 million cyberattacks worldwide per year, according the ThreatMetrix Cybercrime Report data.
But far too often, the technologies used to derail cyber-thieves are often criticized for their negative impact on the customer experience. After all, 54% of consumers ages 25 to 34 say they care more about speed than about data security.
That’s not quite the full truth, of course. Today’s digital-savvy customer really expects it all—speed, convenience and security. Security is now an assumption—and you’d better deliver it, or else.
With this in mind, Forrester Research recently asked a decidedly unconventional question: What if security investments directly enhance customer experiences and drive growth instead?
Welcome to the Now Economy
The fact is, customers around the world want what they want, when, where and how they want it.
That means all those mobile services and omni-channel experiences you’ve been rolling out need to deliver a personalized experience with speed, convenience and consistency at every touchpoint, or customers are going to bail. Up to 50% of consumers will ditch a transaction after even just 10 seconds of friction.
The problem: Far too many businesses are unable to recognize a returning customer, let alone provide a personalized, secure and friction-free experience. At the same time, it’s now distressingly easy for criminals to use stolen identity credentials to take over customer accounts, make illegal purchases, take out fraudulent loans and more. This year, the price tag may run as high as $3.6 trillion in business losses worldwide.
So it’s little wonder why fraud and security teams face more pressure than ever to scrutinize every customer and transaction, at every step of the customer journey.
A growing body of evidence suggests that modern, digital identity-based authentication systems are able to solve both of those issues—plus a whole lot more.
Digital Identity: Ditching the Customer Disconnect
Today’s digital identity-based user verification and assessment solutions combine device, location, identity and threat intelligence with powerful machine learning and advanced behavioral analytics to enable businesses to instantly recognize and reward customers with a streamlined user experience across every channel, online and off.
Fraudsters and bots are automatically blocked. The vast majority of transactions are authenticated in a way that is completely invisible to the user. And friction-causing step-ups such as two-factor authentication (2FA) can be reserved for the small percentage of transactions that may require a little extra scrutiny.
The impact can be profound. Chargebacks, false declines and fraud losses go down. Customer satisfaction and loyalty go up. It’s the embodiment of speed, security, convenience and consistency. And it’s also just the beginning of what’s possible.
Less Risk, More Reward
In Forrester’s view, smart organizations are starting to see security not merely as a cost center, but also as way to generate new business growth in an era when the company with the best CX wins.
Think about it. Security and fraud teams need to seamlessly resolve identities across every touchpoint in real time. But that same capability can help digital businesses reward customers in new ways—up and above a fast, friendly CX.
Here at ThreatMetrix, we have the concept of a ‘Confidence Score’ and a ‘Trust Score’ which are assigned to digital IDs that are transacting on our global network. This means that we provide organizations with an assessment of not only how confident we are that a user is genuine – as opposed to a fraudster using stolen or synthesized credentials- but we also look at the reputational integrity of that digital identity. Based on historical behavior from that digital identity, we can rank the associated level of trust (from very low to very high), which provides additional context when assessing transactions.
When there is a high degree of certainty that it is a true identity, and that identity is showing trustworthy activity, then this provides the organization they are doing business an opportunity to reward these customers and offer an exceptional customer experience. A great example is for online lenders who can offer instant decisioning on loans of greater values when they trust who they are doing business with.
Key to this is the ability to access real-time identity and transaction data with the scale and quality of data sources needed to achieve high customer recognition rates and make instant, accurate and consistent trust decisions.
Tough Work, Big Payoff
Keeping up with customer expectations can be hard to do. According to Forrester’s new Customer Experience Index, for instance, this is the third year in a row that not a single U.S. business has emerged as a CX leader—and falling behind can result in a net loss of growth. Meanwhile, only 10% are expected to crack the code in transforming cybersecurity into a CX enhancement this year.
The payoff may be huge for those that succeed. According to Bain & Company, businesses that excel in CX grow revenues 4% to 8% above the average for their market by attracting new customers, earning stronger customer loyalty and boosting lifetime values.
There are plenty of other reasons to work toward joining those ranks. Chief among them: the estimated $1.6 trillion that will change hands over the next 12 months as customers defect from companies unable to deliver the CX they want—and give their business to those that can.
Indeed, it seems “customer rewards” is a two-way street.