Organizations have long followed a variety of risk management practices in order to keep costs down, protect their business from fraud and maintain compliance with an assortment of different rules & regulations including CIP (Customer Identification Program) and Know Your Customer (KYC) rules.
With the advance of technology giving businesses the ability to complete an increasing amount of transactions in a customer-not-present environment (i.e. online or through a call center), it has become very important for businesses, and Risk Managers in particular, to turn to identity verification practices to mitigate risk by ensuring customers are who they say they are.
So, how do Risk Managers utilize identity verification? A third party research organization recently conducted a survey of our trusted and valued customer base. When asked, the Risk Managers responded that they use identity verification in the following ways:
As a whole, organizations surveyed appeared to have a similar response:
Those companies that successfully implemented identity verification solutions saw the following results:
Other benefits companies realized were an increase in revenue, lower processing and business costs, high locate and approval rates of individuals, lower underwriting costs and the ability to measure and share performance with the team.
From this survey, Risk Managers seem to rely on identity verification solutions largely when it comes to improving compliance and lowering costs and the risk associated with fraudulent transactions. However, it is imperative for Risk Managers to mitigate risk with a holistic point of view – ensuring the organization maintains and/or improves customer experience and drives increased revenue. One approach is Dynamic Knowledge Based Authentication (KBA), a simple, non-intrusive way to test an identity without alienating customers and without putting their identity at risk. This tactic is based on out-of-wallet questions that businesses use to establish trust with their customers and then maintain that trust throughout the entire customer lifecycle. Risk managers use these multiple choice, out-of-wallet questions differently depending on their business needs – some, as a primary means of identity verification and others as a step-up authentication method in certain high-risk situations. The key is to find a solution that is fully customizable with the flexibility to make on-going changes based on shifting business priorities and risks.
Here is what a few Risk Managers had to say when asked about IDology’s identity verification platform: