A very complex topic that is driving the future of payments and financial services is that of authenticating the consumer. All participants within the payment chain, from the merchant to the service provider to processor and finally to the bank, have a vested interest in ensuring that the customer initiating the transaction is the lawful user.
However, the objective of establishing the identity in an accurate manner, with little friction towards the customer, at a reasonably low price for the merchant, has proven to be an incredibly tricky endeavor.
Adding another layer to the complexity and the headaches, thieves have become more sophisticated in their cyber crime exploits. Through countless data breaches and phishing scams, these cyber criminals have managed to amass a multitude of credential information.
PINs were historically used as a sure-fire way to authenticate, however, that has been superceded by newer methods such as facial recognition, fingerprint ID, and other biometric techniques.
Ken Allen, Senior Vice President of Operations at Socure, suggests that businesses should consider taking a “layered approach” to consumer authentication. Specifically, using social media accounts, emails, and even biometrics.
According to Allen, behaviors and social interactions are becoming the consumer’s identity, their fingerprints, and their biometrics. Even with all this revealing information, the next great challenge is “connecting all the dots” in a meaningful way, especially in this rapidly moving digital ecosystem. Customer interaction habits change fast, leaving FIs and merchants scrambling to make accurate decisions.
Without question, consumers want their purchasing experience to be personalized, yet secure. They also expect fast approval and no friction. When everything is expected to happen in real time, it does not leave a lot of time to make a good decision, complicating matters even more.
According to Socure’s research, there are four pillars to build a strategy around.
These are:
- Consumer data: Biometrics, phone/email, name/address/ SSN
- Behavior: Digital, credit/click-based, in-person
- Device: Tokenized (loT, cloud), web/mobile, POS
- Payment: Digital wallets, card/bank, cash
The aforementioned pillars are essentially, what Allen describes, is what “defines us as individuals.”
Behavior is rapidly becoming one of the strongest methods to predict real identity. Once enough verification is done in the form of looking at their data, their associated device, and a myriad of other details, you can then have a better way to connect these dots, make the associations and discover any abnormal behavior.
This is why merchants and FIs cannot focus efforts on only one pillar. There is no magic solution to this complicated problem. That is why businesses have to take on a multi-layered approach. The depth of the layer and which framework one focuses on is completely determined by the business. Grouping them together will demonstrate whether or not they interact well, if not, they can be taken apart.
Looking ahead
As indicated above, the multi-layered digital authentication approach remains as the most reliable and effective means to establish legal identity and deterring cybercriminals and fraudsters.