Every day our lives are made more convenient by the latest innovations in our digital world. We can watch videos, bank and shop all from the comfort of our own homes and on myriad devices within arm’s reach. However, the shift to the digital-first mentality has also left many of us exposed to fraudulent attacks. With so many of our identity records and security credentials available on the dark web, fraudsters can use our information to impersonate actual identities or create synthetic identities that inflict financial and reputational harm.
Businesses across the globe have committed significant resources to thwart and mitigate potential fraudulent behavior. Last year, half of businesses globally reported an increase in fraud management budgets. Fast forward a year, and the investment has led 95 percent of businesses to be highly confident in their ability to identify and re-recognize legitimate customers at every interaction, according to Experian’s 2020 Global Identity and Fraud Report.
"Fortunately, the ability to establish and confirm identity has evolved beyond personally identifiable information, and new capabilities can help businesses accurately identify customers and potential customers"
Despite increased budgets and confidence, 57 percent of businesses still report higher losses associated with account opening and account takeover fraud—a 12 percent increase over the past two years. With so many resources dedicated toward fraud management, businesses should see fraud losses trend the opposite direction.
It begs the question, are businesses investing in the right tools and resources?
Many businesses solely rely on security credentials and traditional credit-based identity measures, however many advanced fraud attack measures, such as synthetic identity fraud, are designed to circumvent these security protocols. Add to that there are billions of stolen identity records and compromised security credentials available on the dark web, and fraudsters can seamlessly access legitimate accounts and information.
Fortunately, the ability to establish and confirm identity has evolved beyond personally identifiable information, and new capabilities can help businesses accurately identify customers and potential customers. For example, innovative technology, such as biometrics and device intelligence, provide an additional layer of authentication to help mitigate fraudulent behavior. Additionally, advanced analytics, like artificial intelligence and machine learning can help businesses assess vast amounts of data quickly and enable better identity recognition,re-recognition and risk evaluation across the customer journey. According to the report, 86 percent of businesses across the globe consider analytics to be a strategic priority and more than half hope to invest in artificial intelligence.
A significant percentage of the population has also become accustomed to more advanced identity measures. Based on the findings from the report, 81 percent of consumers across the globe view physical biometrics as the most secure form of identity verification.
However, advanced data and analytics should not be viewed as a sole means of identity verification. Businesses need to use a combination of identity management strategies to accurately identify individuals.
With so much of our lives overly dependent on the digital ecosystem, businesses need to find ways to protect our accounts, but also create a positive digital experience. That means recognizing legitimate customers across every facet of their journey. While a silver bullet for fraud prevention and identity management does not exist, businesses need to move beyond a sole reliance on traditional credit-based measure and leverage traditional and alternative data, advanced analytics and innovative technologies. The further in front businesses can stay ahead of fraud schemes, the more likely they will be able to minimize losses and protect their customers.