Investment in digital identity needs to be focused on ensuring truly trusted solutions that standout in a saturated U.S. and global market.
The evidence is clear that financial criminals are too investing in more sophisticated means of hacking and stealing identities to compete directly with these technologies.
IdentityWeek.net deconstructs the main points in a commissioned report provided by OliverWyman to tap the potential of digital security.
The most common weaknesses in banking identity management are the consumer-facing vetting processes – identity proofing and KYC which occurs when onboarding a new customer- and the failure to stop crime at the first opportunity when an individual submits login information.
The U.S. market is also oversaturated with digital identity solutions that promise security and seamlessness – an early insight in the report shares the lack of careful authentication barriers before a hacker can transact a payment.
Insight 1.0 – The first verification wall when accessing a bank account is too easily overcome by criminals
“The digital identity landscape is evolving fast; Financial Services institutions need to understand the ecosystem to reap its benefits”, the report reveals.
“The best way to combat synthetic identities is by strengthening up-front verification of credentials when a customer first tries to open an account”.
The stages of authentication are outlined in report, starting with onboarding, customers’ verifying their identity and banks issuing digital credentials, which should be followed by frequent authentication requests to identify genuine account holders.
Finally, the transaction is performed after further authorisation and monitoring.
Insight 2.0 – Market saturation
One striking advancement in hackers’ techniques is demonstrated by the “Fraud Classifier” model, developed by the The Federal Reserve Bank of Boston, which how bad actors intent on compromising security will inject themselves into the financial system and thorough verification processes to commit fraud.
The vibrant and competitive landscape, where digital ID providers rank at different levels of competency for inoperability, performance, integrity and privacy, creates a commercial competitiveness instead of offering fewer solutions that perform better for security and user experience.
This provides a hinderance to ultimately defeating criminals that commit fraud, leaving the U.S. digital identity ecosystem in a “state of flux”.
This view is echoed in the report, stating:
“Faster payments, the different roles played by both the U.S. government and private sector, evolution in underlying technologies, and competitive dynamics in the vendor landscape are all impacting the ecosystem”.
Regulators and any bank looking to retain satisfied customers and upgrade safety for the use experience, must first reflect on broader trends including overwhelming market competition and how they may reconfigure the ecosystem and vendors to have long-term relevance.
Insight 3.0 – Government and partners shaping the landscape
“One of the aspects that makes digital identity such a complex topic is the influence of government and quasi-government organizations on the market”.
“A number of forces are shaping the landscape, and this paper helps banks identify those influences in order to design a solution that will remain relevant over time”.
