Experian released its annual Global Identity & Fraud Report with findings from a survey of more than 6,500 consumers and more than 650 businesses across 13 countries. The report finds that while 95 percent of businesses are confident in their ability to identify their customers online, more than half of consumers do not feel recognized when interacting with businesses digitally.
To gain a detailed insight, Digital Journal spoke with Steve Pulley, executive vice president and general manager of Global Identity & Fraud Solutions at Experian.
Digital Journal: How confident are businesses with the technology for recognizing customers?
Steve Pulley: Some businesses, specifically in the more regulated industries such as banking, financial services, and healthcare, are very familiar and confident in the technologies used for the systems through which they engage, and recognize, consumers. Additionally, these types of businesses are more adept at using the technology that signals fraud risks. This includes personally identifiable information, physical biometrics, and behavioral biometrics.
In more traditional and less regulated industries, such as retail for example, there is a growing focus on stronger security and risk management as customer bases increasingly interact with them digitally. However, many of these businesses rely more heavily on the guidance and deployment expertise of solution vendors in the space to augment in-house expertise.
DJ: What is the response from customers? How do they feel when engaging with businesses online?
Pulley: Customers are prioritizing security first, which is the first step in the permission to continue the relationship. Of those surveyed in Experian’s Global Identity & Fraud Report, 74% of consumers said that security was their top priority. Following security is convenience, the growth accelerant to drive relationships. In fact, a total of 72% of consumers would be willing to provide more personal information for easier access to their accounts. Additionally, consumers expect businesses to personalize their experiences. This means not just to their demographic or geographic location, but themselves as individuals. At the core of this is the ability to re-recognize consumers and fully understand customer identity.
However, there is a disconnect between consumers and businesses when engaging digitally. For instance, 95% of businesses are confident in their ability to re-recognize and identify their customers. Despite business confidence being very high, more than half, or 55%, of consumers don’t feel recognized when doing business online.
DJ: Are there global differences from your survey, in relation to responses from both businesses and customers?
Pulley: We noticed several differences in businesses’, and customers’, confidence across the globe. From a business perspective, every country ranked themselves highly in their ability to recognize consumers. However, there was more divergence in consumers who feel they aren’t recognized from country to country.
For example, Japan saw some of the greatest disparity between businesses and consumers. While 88% of businesses are confident in recognizing customers, only 14% consumers feel recognized! Brazil, India and Indonesia on the other hand, had far greater alignment between businesses and consumers perception of the ability to re-recognize the consumer albeit with businesses relatively more confident than consumers in all three cases.
From region to region, the extent to which businesses are using a hybrid suite of advanced analytics tools to identify fraud varies. At the forefront of this are the US, China, and India, which all have fairly high consumer confidence in businesses’ ability to recognize them, demonstrating that this technique works.
DJ: What is the extent of businesses fraud and what are some of the main reasons for this?
Pulley: In the past twelve months, 57 percent of businesses are reporting higher losses associated with account opening and account takeover fraud. One of the reasons for this is the increase in business email compromise schemes. Fraudsters are tricking mature business leaders such as CFOs and Treasurers into making large transactions, often with information that can be found on public websites. Social media is increasingly playing a role as well as more individuals’ information is available online.
Another factor at play is while security measures are becoming more advanced, so are the fraudsters fighting them who are becoming equally adept at deploying advanced analytics and scripting automation to dupe traditional controls at scale, putting more consumers at risk.
DJ: What technologies can help to protect businesses?
Pulley: We strongly believe in the need for a layered approach to fight fraud, as there is no one size fits all technology to protect consumers. This requires both passive authentication technology, which the consumer does not feel or experience, and active authentication technology which engages the consumer to assert and prove they are who they say they are.
Passive authentication technology includes behavioral biometrics such as how quickly a person types (and indeed if that is a person or a bot providing information) and how they hold and interact with their device, device fingerprinting technology that provides a sense of unusual properties or levels of activity on the device or email and IP risk assessments.
When businesses do detect high levels of fraud risk signal, more advanced active authentication technology such as document verification, facial liveness checks or physical biometrics such as iris scans can be incorporated into the customer journey. At the center of these converging technologies sits advanced analytics to evaluate these risk signals at scale and pace, identifying both anomalies as well as familiar patterns of returning customers or put another way, recognizing the returning consumer from their digital interaction properties.
DJ: Will customers respond positively to this type of technology? Are there privacy concerns?
Pulley: Customers do respond well to these technologies as they are increasingly mainstream with service providers signaling to their customers where their data is being collected and for what purpose it is being used in order to comply with all applicable data privacy laws. Globally, 66% of consumers appreciate the value of their data to businesses. Businesses must continue to put consumer security and privacy at the forefront of all that they do in order to retain the trust of consumers with their data as well as attract new online customers who continue to search for marks of digital security before trusting online web properties.
