Identity verification has come a long way in the last five years. Even before the pandemic made digital identity verification a critical element of commerce, 86% of businesses saw it as a strategic differentiator. Its value has also increased in the mind of the consumer. Seventy-seven percent of Americans report that having an unauthorized account opened in their name would impact their likelihood to patronize or do business with that company. Furthermore, consumers who don’t trust the digital identity verification process are more likely to use guest checkout (54%) and less likely to keep a payment card on file (43%), thereby creating a drag on profits while compromising the end-user experience.
At the same time, the push to locate and approve new customers without friction, deter fraud, and streamline the customer journey, especially for those who are newly digitized, requires businesses to execute numerous complex processes. Fortunately, innovation has led to significant advances in identity verification solutions and the technology behind them.
Finding the right solution in a crowded marketplace and separating truth from buzz can be a challenge so let’s look at some of the “must-have” features needed for truly effective identity verification solutions.
Counter to the many benefits of utilizing ML are risks in its propensity for bias, lack of data transparency and absence of governance. While machines are great at detecting trends that have already been identified as suspicious, a critical blind spot is their inability to detect novel forms of fraud. Thus, a provider that layers human fraud expertise onto machine learning is critical.
An effective identity verification solution should provide a continuous data feedback loop to help businesses understand and explain to regulators and customers why decisions were made. This is nearly impossible to do with a system that relies on “black box” algorithms. With data transparency and actionable scoring intelligence, businesses can explain to regulators and consumers why certain decisions were made, better assess risk and fine-tune identity verification processes to best fit their industry and business needs.
For the first time in IDology’s annual Fraud Report, digital identity verification became the most daunting challenge to fraud deterrence across industries in 2021. Today, identity verification is an opportunity for businesses to set themselves apart from competitors. Locating and approving more legitimate customers without friction boosts revenue while offering a smooth, seamless onboarding user experience. It also allows businesses to develop competitive differentiators. Nonetheless, yesterday’s online processes and technology can’t be expected to satisfy today’s consumers.
For more information on a modern, comprehensive and multi-layered verification approach that balances customer security with friction download our 8th Annual Fraud Report.