Use Case Spotlight: Regional Credit Union Uses Acuant to Stop Synthetic ID Fraud

A recent study from a regional Credit Union stated that over the course of a few months, Acuant had saved hundreds of hours in employee time and tens of thousands of dollars in losses.

This credit union, which serves more than 400 employer groups, was being targeted by fraudsters with synthetic IDs – fake identities that have some characteristics of real individuals, making them harder to detect. Realizing the high potential for losses due to this kind of fraud, the credit union decided to invest in new document authentication and identity verification solutions designed to detect fake documents and false IDs.

After conducting due diligence and evaluating multiple vendors, the credit union selected Acuant and its award-winning AssureID™ to validate new customers and protect against identity theft and fraud. AssureID authenticates identity documents with patented technology that extracts biometric and alphanumeric data and applies 50+ forensic document-specific tests in less than 5 seconds. It supports identity documents including but not limited to driver’s licenses, passports and visas from over 196 countries and all 50 U.S. states. Working in real time, AssureID eliminates manual screening errors, speeds up the document inspection process and significantly reducing employee training, operating costs and customer inconvenience.

In one specific instance, a fraudster opened an account and applied for a $40,000 auto loan with fake credentials, answering all knowledge-based authentication questions correctly and presenting a convincing synthetic identity document. Once he received the check, the fraudster presented the check for cash at a different branch, posing as the seller. Only when he attempted this scam a second time for $25,000 did an eagle-eyed loan officer spot the identical photo and brought in authorities who were able to arrest the man.

When the credit union began evaluating Acuant solutions, it provided the synthetic ID used by the fraudster to test the system. Acuant AssureID flagged the ID as fake. The credit union’s CIO studied the impact of this single fraudulent transaction and found that not only would they lose $40,000 in the original loan, it would cost them a minimum of 90 hours in employee productivity – another $4,500 in soft costs. Those lost hours include filing police reports in multiple jurisdictions, completing a Suspicious Activity Report (SAR) and employee training. Furthermore, the credit union believed that they were being targeted for additional synthetic ID fraud by a criminal ring; this was not an isolated incident.

McKinsey claims synthetic ID fraud is the fastest-growing type of financial crime in the U.S. and it costs lenders more than $6 billion annually, with the average loss estimated at $10,000 per account.

The CIO also determined that the return on investment for Acuant in the first year would be greater than 400% – and they would be better equipped to stop identity fraud at the initial account opening stage.

Banking is based on trusted transactions – knowing that both parties are who they claim to be –  to keep fraudsters at bay, financial institutions need to invest in automated tools, backed by AI technology, that continue to adapt to new methods of fraud. With Acuant, this credit union is now able to determine the difference between bad actors and real customers looking to open accounts, at the same time providing legitimate customers a positive experience. The value Acuant provides to financial institutions can be measured in time saved, losses avoided and sheer piece of mind

For financial institutions considering ways to improve their identity proofing and new account onboarding process, visit Acuant’s solution page or schedule a demo.

 

 

Meet Acuant and IdentityMind at Booth 4527 at Money 2020 USA

Move Over Millennials, Gen Z is Banking Smarter: Why Banks and Fintechs Must be Mobile Centric to Capture the Market

It may be hard to believe but Generation Z, those born between 1996 and 2010, now hold up to $143 billion in spending power. This generation is heading off to college, getting their first job and buying their first car. As they embark on their lifelong financial journey, Gen Z is ripe opportunity for fintechs and traditional banks alike as their value is likely to increase as they age.

But first, a few data points to show how important this fresh demographic is and how different they are from their older counterparts. You can read more about the research studies at Raddon Research and the Center for Generational Kinetics. Gen Z has strong views, habits and preferences that researchers theorize were impacted by the Great Recession and reflect a sharp contrast to Millennials. Data shows they are hardworking, debt averse, frugal and already saving for retirement. 77% of Gen Z are already working in some capacity and 38% plan to work through college.

Additionally, two-thirds of Gen Z members already have a bank account. While nearly 50% have relationships with the largest banks, it isn’t out of loyalty but a powerful preference for technology and convenience. At the same time, the fintechs are making moves specifically targeted this technology savvy and savings driven generation. New options from heavyweights like Amazon, Walmart and American Express as well as startups like Current, Greenlight and MoneyLion are using technology and convenience to acquire young customers.

Let’s understand that Generation Z isn’t just technology-driven, they are immersed in it. From their earliest days, Gen Z has been connected to the internet with access to apps and their social circles via mobile devices. They aren’t using desktop computers to conduct their daily online activities. Research shows that 95% of Gen Z have a smartphone and they are on them constantly – 65% say they are on their smartphones after midnight a few times a week, or more. Gen Z is already embracing “cashless” using mobile payment apps like Venmo and Zelle, and they are saving at a higher rate than Millennials did. Studies show that Gen Z is using mobile apps to help them save and sharing those activities with friends.

Gen Z is also less likely than previous generations to open an account where Mom and Dad bank. Instead, Gen Z is mobile-first and more likely to ask friends for recommendations on where they bank. This generation represents a huge opportunity for customer acquisition, but if banks want to appeal to this tech savvy and mobile centric generation- they need to adapt and evolve quickly.

Arguably, the first area to focus on is the process of opening and onboarding a new mobile banking relationship. This is usually a challenge for most financial institutions but it will be important to make this process intuitive and as frictionless as possible. Sadly, two-thirds of those who try to open and onboard online are unable to complete their applications and barely half are able to successfully fund their account. To capture Generation Z and the potential revenue stream, banks will need to do better.

Three ways Acuant makes mobile onboarding easy for consumers while managing risk and reducing fraud for banks:

Auto-Fill: The process to open an account starts with an app or mobile web page and a simple “Open an Account” button. But once you have them engaged, don’t ask Gen Z to fill in page after page of tedious information – that experience is likely to end in abandonment. Instead, banks can keep it simple with image capture. Applicants can use their smartphone to easily capture a quality picture of their ID. Acuant IDscan® uses the image of any government-issued identity document to accurately auto-fill forms in seconds, streamlining and modernizing the workflow for new customers. Identity card information is processed securely in the cloud and collected for KYC compliance. Proprietary technology allows for the best image capture which means ID images are clear and easily read- preventing user and machine reading errors.

Document Authentication: It is also important to verify that the ID is authentic. With a quality image of the ID, Acuant AssureID extracts biometric and alphanumeric data to authenticate it by applying 50+ forensic document specific tests and utilizing the industry’s largest document library – all in seconds. IDscan capture means you pass more valid IDs that might fail due to user error in cropping/lighting, poor image, worn, faded or damaged IDs. Recently Acuant was named a Bronze winner by the American Business Awards (The Stevies) for AssureID’s use of machine learning to protect against identity fraud.

Identity Proofing & Verification: Banks must also verify that the person behind the screen is the same person in the ID. That’s where Acuant Face™ software comes in. Using powerful biometric facial recognition, Acuant Face offers three classes of facial match and liveness tests in seconds using only a quick selfie from the customer. Liveness detection ensures the genuine physical presence of the individual and thwarts deep fakes and presentation attacks such as image spoofing. Facial recognition also offers a much more customer friendly and low friction option to logging into apps, verifying transactions and other ongoing workflows.

In Gartner’s latest Hype Cycle for Cloud Security, 2019, analysts Jonathan Care and Akif Khan mentioned that “identity proofing and corroboration services are used to prevent new account and transaction fraud, comply with various regulations and prevent account takeover, as well as other use cases. It is applicable to any remote interaction channel including contact centers, web or mobile web interactions and mobile app-based interactions. These services establish confidence that a claimed identity exists and that the person claiming the identity is that person. Most commonly used at new account creation to detect the use of stolen or synthetic identities, they can also be employed to elevate trust during an authentication event or during a high-risk activity.” Acuant was included as sample vendor for Identity Proofing and Corroboration in that report.

While traditional banks have been focused on offering mobile services to existing customers – such as check deposit or bill payment – the new battleground will be a fully digital process from onboarding to funding to daily transactions. Gen Z will expect simple, smooth, customer friendly banking apps.

When it comes to targeting Millennials and/or Gen Z –  Acuant helps banks and fintechs increase conversion rates, enhance security, prevent fraud and meet KYC regulations.

 

Finance White Paper

Improving Identity Verification Solutions in Financial Services

Despite advances in technology, such as the spread of credit cards with microchips, in 2016 more than 15 million Americans lost $16 billion as a result of identity theft.

Financial services is an area where identity verification is crucial. Financial institutions must ensure that customers are who they claim to be, but they also do not want to make the verification process very difficult and annoying for customers. Mistakenly giving a malicious actor access to a user’s bank account could result in devastating consequences. But what are customers willing to do and what should they do in order to have security? We know that today, answering a few questions and providing a password is easily hacked by sophisticated fraudsters.

Fortunately, there are a number of solutions to protect customers from fraud that are also user-friendly and fast.

Onboarding and New Account Creation

Bringing new customers on board needs to be quick and easy, but also secure in order to protect both institutions and customers. When a new bank account is opened, it’s the institution’s responsibility to verify the identity of the user. The bank must first verify that the given name and Social Security number match a real person, typically by contacting one of the three major credit bureaus. Next, the bank must verify that applicants are who they claim to be by asking questions about their personal history, such as cities or streets where the applicant has lived in the past.

Financial institutions in the U.S. also need to comply with applicable security regulations when opening new accounts. “Know Your Customer” (KYC) is a policy for businesses who need to verify the identity of their clients in order to prevent crimes such as fraud, identity theft, and money laundering. KYC programs begin by collecting and verifying information about customers and checking them against a list of known criminals. Higher-risk customers have additional information collected, and their activity is monitored for potential red flags.

All of these processes can be streamlined and automated by the intake and authentication of data from a government issued ID, like a driver’s license. Authentication solutions that scan an ID, on a desktop or mobile device, can verify a credential in seconds to validate it. This then allows the institution to match the verified credential to the person. You may do this visually at a bank, or through a mobile facial recognition app that will match the photo on the ID to a selfie taken.

Mobile Banking

Mobile banking is a trend that is set for explosive growth in the years to come. In 2015, KPMG estimated that the number of mobile banking users would double in the next 4 years to 1.8 billion people.

This rapid growth of mobile banking makes the identity verification process even more important. Traditionally, mobile banking customers have logged onto their accounts using a username and password. In the event that they forget this information, customers need to provide data such as their Social Security number or credit card, or answer “out-of-wallet” security questions.

However, in recent years, banks have explored alternate security measures, such as biometric security. For example, many banking apps now make use of fingerprint and facial recognition technologies. In addition, some financial institutions allow users to verify their identity using their voice when they call the company’s phone number.

It is possible today to open an account and conduct all your banking without ever stepping foot in a bank, but you want to make sure that your financial institution is taking proper security measures and all the better if they are fast and easy for customers!

 

Identity Fraud Prevention in Today’s Digital Economy

With cyber criminals becoming increasingly sophisticated and hackers making headlines regularly, it is imperative that businesses employ advanced security technology. Identity proofing is a term for identity verification that is being adopted by analysts such as Gartner. From Gartner’s study1:

Identity proofing, a process that demonstrates with sufficient confidence that the user is who he claims he is, helps to establish and maintain trust in the identity throughout the relationship.

Identity Proofing Process

Collecting and verifying information about a person, provides businesses with another layer of assurance. Financial institutions can use identity proofing to prevent financial fraud and money laundering, while ecommerce companies can rely on it to combat card-not-present fraud. And with today’s technology, businesses can ensure that their processes are user-friendly, adopting technology that users are familiar with (i.e. fingerprints and selfies for facial recognition).

According to research by Aite Group, card-not-present (CNP) fraud in the U.S. is expected to reach $7.2 billion per year by 2020. Government agencies need sophisticated identity proofing for security clearances. Identity proofing also helps organizations in the healthcare industry prevent HIPAA violations. As identity fraud becomes a concern across industries, identity proofing solutions are needed to establish trust in digital relationships.

Organizations that need to proof identities are turning to third-parties to build solutions. According to the Gartner study1, third-party solutions have come up with various options for companies to use to verify identities, including:

  1. Knowledge-based verification: In this approach, the user is asked a series of questions that they would need to know the answer to in order to confirm their identity. Examples of these questions include past mailing addresses, mortgage amounts, and lender names. Knowledge-based questions aren’t entirely secure, though, since the answers to these questions can be obtained through a hack. Back in 2015, scammers were able to steal tax refunds by figuring out the answers to these questions.

 

  1. Secondary passwords: ID proofing services can issue temporary one-time-use passwords to verify identities. Users are sent a one-time password via an “address,” like a home address or email address. They then have to enter the one-time password to verify their identities. Organizations may ask users to bind themselves to an identity associated with a known trusted online account, like their social media accounts. The risk with these other accounts is that social media profiles and email addresses can be hacked.

 

  1. Biometrics: In countries with fingerprint registries, organizations can require fingerprint scans to verify identities. However, some users may take issue with this method if they are concerned about privacy. Organizations can also use voice recognition and facial recognition to verify identities, although facial characteristics change throughout life. As biometric technology becomes more commonplace in the business environment and more accepted by consumers, industries can leverage it to ensure stronger identity security.

Proofing identities in other countries can be challenging since different countries use varying forms of government-issued IDs. According to the Gartner report1, some of the problems global companies can run into are:

  1. Social Security Numbers Create Vulnerabilities: In the U.S., citizens are often identified by their Social Security Numbers, but this method of identification doesn’t translate over into countries. Some countries also do not have official national IDs. Instead, these countries will issue out IDs for specific purposes like access to healthcare or tax collection, which may not be considered sufficient for identity proofing.

 

  1. Different Global Standards: Privacy and data protection legislation vary between countries, which limits the information identity proofing services can capture, gather, and store. This legislation can even block companies from sharing data across borders.

 

  1. Technology Verifications Often Falls Short: Technology limitations and regulations can prevent identity proofing providers from being able to conveniently verify information against government lists like registries of births, marriages, and legal permits.

Although fraud is an increasing concern for global companies, the good news is that options for solutions are also increasing with a wide range of identity proofing services that can be adjusted to fit different industries.

 

1Source Gartner Identity Proofing Is the Cornerstone of Trust in a Digital Relationship, October 2016

Identity Fraud Threat Looms Large: Solutions for Banking Industry

“I can tell you with 100% conviction that identity proofing is the biggest fraud problem out there,” said Avivah Litan, a vice president at the research and advisory firm Gartner. “Fraud has become an identity problem.”

Identity theft has been a hot topic for years. We all likely know someone who has been a victim in some capacity. There are many industries affected by identity fraud, and one that is growing at an alarming rate: Banking. According to a Javelin Strategy & Research report, fake accounts (checking, credit card, loan, etc.) opened with stolen or made-up identities has more than doubled in 2015 adding up to 1.5 million stolen identities.

Federal regulations require financial institutions to know and verify the identity of their customers. Criminals and fraudsters use sophisticated fake IDs with stolen identities to apply for credit, cash fake checks, launder money and access funds that do not belong to them. Only by exploring the latest security solutions and continually evolving with emerging threats can institutions hope to reduce the damage perpetrated by the latest band of identity thieves. This means employing the latest technology and providing layers of security checks.

Banks and other financial institutions are adopting Acuant’s AssureID technology as a way to augment and improve traditional ID verification activities in order to be compliant and reduce fraud. They recognize AssureID as an efficient, comprehensive and trusted identity authentication solution.

While certain staple methods such as Knowledge Based Questions (KBA) are still widely employed and offered in our solutions, it is clear that this is not likely to be the way of the future. Not only are methods such as this easy to breach, they also irritate customers who have to remember questions and answers from multiple sites. It is important that solutions, such as AssureID, have layers, provide value and are easy to implement while ensuring a pleasant customer experience.

AssureID applies forensic document-specific tests to automatically verify and authenticate IDs such as passports, driver’s licenses, visas, military IDs and many others used around the world. It authenticates using key forensic tests that are the most accurate in the industry and we also have the industry’s largest document library.

AssureID verifies the authenticity of a document by performing multiple tests on scanned document images from one or more available light sources, such as visible, near-infrared, and ultraviolet. A wide range of authentication techniques are used for each supported document. Many supported documents are authenticated using 20 – 30 or more unique security tests.

Further, Acuant’s new facial recognition technology, Facial Recognition Match, is a person authentication solution for mobile devices based on biometric face recognition. It captures face biometrics on the mobile device and matches it to the face picture on the driver’s license/ID or passport. The process is simple, done in real time and processed within seconds.

Solutions from range from desktop ID scanners to customized equipment that can be integrated into kiosks, ATMs and auto-service applications, as well as mobile and cloud based solutions.

Contact us today to learn more.

Consumers Prefer Self-Service Kiosks at Banks

There are various reasons consumers like kiosks when performing banking transactions, learn why statistics seem to be in favor of kiosk technology.

Mercator Advisory Group’s customer insight report revealed that even though American consumers typically prefer to deposit their checks with bank tellers, they’re increasingly using self-service methods to deposit their checks. The advisory group surveyed over 3,000 American customers over the course of a year, and found that consumers who don’t like using mobile and online banking prefer to use self-service kiosks at physical branch locations. Studies also show that customers increasingly prefer using self-service kiosks at their banks because of the time it saves.

According to a study by Source Technologies, self-service retail banking kiosks can offer significant improvements to physical branch locations. Usually it takes customers 9 minutes to get an official check from a bank teller. When banks provide self-service kiosks for their customers to use, the time it takes to get an official check gets cut down to 40 seconds. Customers can get their checks 13.5 times faster with a self-service kiosk.

Self-service kiosks in banks help tellers offer better customer service since they’re not focused on helping customers with routine transactions. Bank employees can answer complex financial questions for customers who need in-depth information, and they can also tell their customers about additional services that their bank has to offer. According to Source Technologies, a bank in Connecticut used self-service kiosks to handle 40% of customer transactions, leaving employees free to work on more complex tasks. A credit union in North Carolina decreased bank teller costs by 40% when it made self-service kiosks available to its customers.

The Source Technologies study also found that although online banking has reduced foot traffic in retail branch locations, millennials prefer to visit banks to get more detailed information from employees. The study revealed that out of the people who visited a physical branch location last year, 72% were millennials. Also, 54% of millennials prefer to visit banks when they need more in-depth information from employees regarding their banking needs. Typically millennials prefer to conduct routine transactions themselves, and like to use self-service kiosks when available, but they also like to have an employee nearby to help if needed, or to provide more detailed information.
With self-service kiosks, customers can spend less time at the bank. Instead of waiting in line for a teller, customers can scan their IDs and bank cards before completing a routine transaction at a self-service kiosk, and be out the door in seconds. Banks can also use self-service kiosks to quickly help their customers sign up for different promotions and offers. Customers might be hesitant to sign up for a promotion because they’re short on time, and don’t want to fill out any routine forms. With an ID scanner at a self-service kiosk, customers can get the routine paperwork out of the way in seconds. Bank employees will also know that they don’t have to worry about fraud, since their customer’s ID was verified and authenticated. Self-service kiosks can reduce the amount of time customers spend at banks, and free up time for bank employees.