There are many factors influencing the need for stronger identity proofing solutions in 2020, but fraud prevention and compliance are two of the leading drivers. A significant increase in digital transactions has created an environment for fraudsters to hide their activities within millions of transactions occurring every day. A report by Experian in 2019 found that 55% of businesses reported an increase in loss online related to fraud in 2018, predominantly around account origination and account takeover attacks. The Association of Certified Fraud Examiners reported that organizations lose approximately 5% of their annual revenues to fraud. Collectively, this is trillions of dollars lost worldwide.
Financial institutions are required to comply with KYC regulations, but the process of verifying customer identities has become more challenging in the advent of bots and synthetic IDs. At the same time, organizations need to balance risk controls with user experience. Being too heavy handed on authentication often introduces unwanted friction into the process and results in fewer customers, while easing back can lead to higher losses.
Organizations are finding that they must use advanced technology to win the fight against fraud. Fortunately, new technology offerings are making it easier than ever before for organizations to achieve that perfect balance between frictionless customer experience and strong risk controls. The technology that analysts are buzzing about is identity and orchestration hubs.
Hubs enable organizations to connect to one vendor via API or on-premises integration, then access multiple point solutions for detection or authentication. Hub solutions are also capable of integrating and orchestrating the detection inputs and subsequent stepped-up authentication via a sophisticated risk engine.
Gartner reported that “by 2023, identity corroboration hubs will displace existing authentication platforms in more than 50 percent of large and global enterprises.
Gartner also states that there is a growing trend toward orchestrating identity proofing, fraud detection and orthodox credential-based methods that are traditionally used to provide confidence in the identity of returning customers.
An identity corroboration hub provides the ability to build and manage one true digital identity. This means that you have established a verified identity via a trust anchor, tied it to a person, and now have access to a trusted identity platform that continuously authenticates this identity through real-time monitoring.
The corroboration hub offers tracking and analysis of true identities linking their connections and their activities in real time, while protecting their privacy. This allows for true identity verification at any point in time, to pinpoint fraud, and also determine when and how to verify an identity, expanding the scope of identity proofing. Identity corroboration hubs prevent new account and transaction fraud, account takeovers, identifying the use of stolen or synthetic identities, and enable compliance with regulations such as KYC.
In its report “Fraud, Authentication, and Orchestration Hubs: A Path to Greater Agility,” Aite Group states that 36% of financial institutions surveyed have already implemented a hub and 45% indicate that they are likely or very likely to implement a hub in the next one to two years.
Acuant is pleased to offer this technology within our award-winning Trusted Identity Platform powered by IdentityMind. IdentityMind creates and analyzes digital identities for KYC, fraud prevention, transaction monitoring, sanctions screening and more. Through a single API, IdentityMind connects organizations with an ecosystem of 20+ partners of data and technology. Read the AITE report to see why IdentityMind ranks at the top and makes a best in class solution combined with Acuant.