New technologies help improve consumer identification.
By Michael Scheibach
As banks continue their digital transformation, with expanded web-based and mobile offerings, the need for improved safeguards to protect their customers’ accounts and transactions is becoming even more critical . . . and daunting.
“Financial institutions across the board are faced with several challenges, whether they are a blend of web and mobile with traditional banking processes, or are a pure web play,” says Steve Stuut, chief executive officer of Jumio, a global provider of next-generation digital ID verification solutions. “These challenges include regulatory pressures to meet compliance requirements for know your customer and anti-money laundering. Other obstacles are tied to ensuring the institution’s web and mobile businesses have the same level of security as traditional brick-and-mortar bank transactions.”
Multifactor authentication — requiring two or more independent credentials — has become an essential element for online and mobile security. The addition of such factors as one-time passwords, PINs and security questions has been effective. Yet many multifactor authentication processes are missing the mark, according to Stuut. He points out that swiping a card and entering a PIN or one-time password does not provide a level of security to validate the user; moreover, Touch ID technology does not prove identity and is limited to mobile devices — whereas mobile transactions account for just 30 percent of all e-commerce in the United States.
“At the end of the day,” says Stuut, “you need to ensure two things: First, you need to confirm that the person opening the account or making the transaction is who they say they are; and, second, you need to confirm that they have a valid ID that is, in fact, theirs. Facial recognition technology is agnostic, and NID, or network identification, capture is supported across mobile and web. This makes access much more flexible for customers.”
Jumio’s mission is not only to enable financial institutions to reduce account abandonment and customer frustration, but also to provide necessary KYC, AML, Bank Security Act and Patriot Act regulatory compliance, all while improving the customer experience. The company’s Netverify solution, for example, uses computer vision technology to validate, extract and auto-populate customer data from drivers’ licenses, passports and government-issued IDs. Document authentication takes place seamlessly in the background, thus allowing customers to conduct account origination and other transactions in real-time.
This technology helps to reduce account abandonment and improve the overall customer experience. In addition, Stuut emphasizes, banks and credit unions will recognize improved fraud protection and more secure transactions for their customers in areas such as account takeover, account re-authentication, money transfers, reduction in false positives and account administration.
Looking ahead, Stuut agrees with many others that digital will dominate all factors of our lives in the next five years, making cybersecurity even more important. Individuals will build out their digital profiles with increasingly more information that easily lends itself to fraudulent activities. Digital commerce with banks will also be commonplace and fraudsters will use these activities to their advantage.
“To combat these inherent risks,” suggests Stutt, “technology will emerge to provide higher levels of ID verification and ID proofing. By combining inferred data from companies like Equifax, with biometric authentication like facial recognition and approved forms of government-issued IDs, financial institutions will be able to more confidently prove a person is who they say they are.”
Ultimately, in Stuut’s view, these solutions will converge, providing protection for consumers and allowing them to take ownership of their security; and, at the same time, these solutions will deliver a positive user experience and meet both regulatory and business requirements.
Michael Scheibach is executive editor of BankNews.