PYMNTS June 2021 report, The Next Wave: Business Adoption Of Digital Identity Protection, an Equifax collaboration, opens on a sobering statistic: 36 billion records were breached on social media sites alone last year. It’s a searchlight glimpse into how fraud always attends growth.
Surveying over 300 auto dealers, banks, credit unions and alternative or P2P lenders about fraud-fighting investments they still intend to make — and in what solution(s) — the new report notes that “43 percent of businesses surveyed have plans to invest in digital authentication solutions to protect themselves and their customers from … increasing threats. Interest is so strong that the vast majority — 79 percent — of businesses say they are willing to sacrifice customer growth to improve the security of their transactions, but many admit there will be growing pains associated with implementing new customer-facing technologies.”
Businesses don’t part with an ounce of growth without good reason and based on the responses of decision-makers in the listed categories, the reasoning is that spending on anti-fraud solutions now will more than compensate for any lost sales in the interim.
Fraud-Fighting Is The Consumer’s Job, Too
Companies are taking on the fraud fight and making it theirs. However, a large percentage actually feel that consumers themselves need to be more on the ball about cybertheft.
Noting that “Businesses view consumers’ lack of digital skills as a major problem they face in implementing digital verification and authentication solutions as more than 60 percent of P2P lenders have this concern,” The Next Wave: Business Adoption Of Digital Identity Protection finds that 51 percent of all businesses planning to invest in new verification solutions “believe that consumers lack the necessary digital skills to navigate these processes.”
Specifically, 58 percent of banks or credit unions report this, “and 42 percent think consumers lack the required technology to navigate these processes as well.”
Surprisingly, 62 percent of P2P lenders said their customers also lack digital verification tech.
But it’s not all an outside job. Respondents said weaknesses inside companies add to problems. “Firms also see internal difficulties with implementing identity verification and authentication improvements, especially regarding the operational challenges related to these processes.”
Additionally, 54 percent of P2P lenders “that plan to invest in the technology report this to be a problem, though only 42 percent of banks or credit unions report the same.”
Coordinating Verification With Customer-Facing Ops
Saying that “lack of coordination between fraud and risk and customer-facing operations hinders identity verification and authentication processes,” The Next Wave: Business Adoption Of Digital Identity Protection found more mature companies struggling less than others but having to overcome similar hurdles.
With fully 55 percent of businesses admitting “poor coordination between fraud and security strategies and customer-facing operations prevents identity verification and authentication processes from becoming more efficient,” the June report adds, “More mature businesses tend to have the operational experience and processes to coordinate fraud and security better with customer-facing operations,” as 45 percent of firms that have been in business for more than 30 years say their fraud and security are tightly coordinated with customer-facing operations. It falls to 21 percent of businesses “with less than 10 years of tenure.”
Moreover, 79 percent of respondents said they’d rather have digital transaction security even at the cost of new customers. “This opinion is more prevalent among businesses located in small towns and rural areas (defined as having fewer than 250,000 inhabitants) at 86 percent and in cities (defined as having between 250,000 and 1 million inhabitants) at 79 percent.”