Consumers understand that identity needs to be verified as part of any interaction with a financial system, whether due to regulatory compliance, business needs or part of the ongoing battle against fraudsters. But as Yossi Zekri, CEO of Acuant, told Karen Webster: “Consumers should be able to trust those to whom we give the keys to our identity.”
They want to know if their data is being stored, how it might be stored and what the potential risks are of opting into a service – whether they’re applying for a mortgage or opening a checking account. Consumers want a mechanism, preferably in the palm of their hand, to control how their identities are shared, and with whom.
The Value Consumers Expect
Individuals are quite willing to give out valuable information as long as it is consistent with the value they are expecting, said Zekri. To wit: A homebuyer will likely be more comfortable sharing details about their identity (and, by extension, exposing more about themselves) than someone who is buying a latte at Starbucks.
But financial institutions (FIs) have to go to some lengths to make sure individuals are comfortable sharing that data in the first place, and that it will be protected.
When it comes to interacting with FIs, said Zekri, adding layers of defense – underpinned by advanced technologies such as biometrics and anti-spoofing technologies – can help beat back waves of synthetic ID fraud and other attack vectors.
Platform models can provide all the tools needed for identity proofing – spanning KYC (know your customer), AML (anti-money laundering), compliance and fraud prevention – all in one place, which in turn lets developers assemble the building blocks of a trusted identity, right at the point of onboarding. He pointed to the recent acquisition of Hello Soda – which provides identity verification and KYC, monitoring 600 million records, including alternative data sources – to help make trusted decisions.
“Ultimately, technology is going to drive down friction, and it’s going to continue to evolve how people adapt to it and how FIs incorporate it into their solutions,” Zekri told Webster.
Mining alternative data sources, he said, can help smooth the process for individuals who want to onboard with FIs, but represent a challenge. Zekri noted that the unbanked populations of the world may not typically access traditional financial services. Instead, they rely on money orders, check cashing services or even payday loans. These are expensive options, but they require less upfront information. To get a foothold in the mainstream financial services ecosystem, said Zekri, the question remains: “How do I start my identity journey and build my financial identity?”
For the FI, the question is whether they can, or should, do business with an individual who may not have traditional identity attributes tied to their profiles.
Applying document authentication, biometric digital footprints and even social network analysis and behavior monitoring can represent the source of truth … and give rise to the “trust anchor.”
Zekri said that FIs should work to protect PII – but in the process, they must gather consent from individuals. The urgency is there, as 56 million Americans suffered from new account fraud – and 66 percent of consumers have said that FIs must do more to protect PII.
If companies don’t do all they can to protect PII – and make their efforts clear – consumers will vote with their collective feet. They’ll go where the easiest and best consumer experience lies, and where they feel safest.
Onboarding in the digital world is a balancing act of minimums: introducing a minimum of friction, while collecting the minimum amount of sensitive data on consumers in order to get them on board, opening accounts and transacting.
“After establishing the anchor, you can enhance that identity with other data, through engagements and interactions that the individual may have had with financial institutions, providing more of an opportunity to gain trust with other transactions,” Zekri said.