Having the right verification tools is extremely important to any establishment, whether small or large businesses or agencies or the state itself. Identity verification tools can safeguard both the establishment and the customers from identity fraud that results in heavy losses. Here’s a recent example: millions of dollars were lost due to the lack of a robust verification process in the German state of North Rhine-Westphalia, which had failed to put in place a citizen verification procedure and allowed fraudsters to steal between an estimated €31.5 million to €100 million.
Overall, the growth in digital adoption has created a strong relationship between identity, fraud prevention, and customer experience. With the increase in the number of businesses undergoing digital transformation, expectations from consumers have reached even higher levels. This includes the need for unique, convenient, and secure experiences.
At a basic level, customers demand convenience through processes that are smooth with no interruptions. And every time a company provides this to its customers, it adds to the overall convenience quotient in the customer journey. Irrespective of what industry a business belongs to, businesses have created working groups and strategies that focus on enhancing the overall convenience quotient for customers. One way to do this is by reducing the number of clicks required by a customer to get through a transaction successfully. It has been proven that a lesser number of clicks is directly proportional to higher conversion, which is a result of a higher convenience quotient.
However, in doing so, businesses tend to lose sight of security and risk tools as they slow up the overall process and work in the background. The importance of security and risk tools is that they allow only verified customers on the platform and ensure that no information is leaked into the wrong hands. If not done right, it could result in a catastrophic impact on both customers and business.
The general method of identity verification fraud can be divided into two major parts. The first part is where fraudsters install malware on users' devices to steal identity credentials and access key information such as relatives' names, addresses, and passcodes. The second part is entering directly through stolen credentials or resetting the password, bypassing identity verification service to execute fraudulent transactions.
According to a Javelin Strategy and Research study, the combined fraud losses in 2020 amounted to $56 billion, out of which identity fraud scams accounted for $43 billion. This trend can also be seen in Germany, where there has been an increase in computer crimes over the last few years, resulting in verification fraud. The German police define computer crime as falsification of legally relevant data, alteration of data & data sabotage, data espionage & interception of data, and handling stolen data. The number of computer crimes in Germany has been increasing year on year; in 2020, Germany had 130,611 cases of computer crimes, 7,605 offenses more than 2019, and a 20.6% increase from 2017.
The above numbers validate that German businesses need to secure their customers against fraudulent transactions by strengthening transaction-level security using robust verification methods. The fraud impacts the victims by putting them at risk of having their accounts drained or having vital information taken hostage. Likewise, businesses that fail to install a robust identity verification process are subject to reputational damage due to lost funds or risk losing users to more secure competitors.
Although multi-factor authentication using SMS- and voice-based one-time passcodes (OTPs) has been implemented by most businesses, the level of complexities has increased. Thus, to stay ahead of the fraudsters, businesses also need a higher level of sophisticated technologies such as mobile intelligence to safeguard them and their customers from identity fraud and not slow down the experience for legit customers.
The German government has created a cybersecurity agency with initial funding of $415 million to protect the country’s cybersecurity and provide incentives and funds for basic security functions certified by the state for the citizens. However, no agency, company, or task force can stop all the malpractices by hackers in the world that result in stolen identities. Hence, the burden of safeguarding every customer’s important asset falls in the hand of the business. To protect the business and the customer’s assets, a strong verification process is required that allows only the right customers to enter.
One way businesses can deploy a robust verification process is by using a mobile phone, which has become an integral part of any consumer. A mobile phone number is often a reliable person identifier as most consumers have had their phone number for many years. When authenticating a consumer using their phone, it is vital to not only associate that phone number to the consumer but also to assess whether a bad actor may have taken over the phone number. Prove’s Phone-Centric Identity™ is one tool that businesses can deploy to ensure that only the right customers enter while the fake ones are left out.
Phone-Centric Identity utilizes the mobile device as a “what you have” factor that companies can use to deterministically say whether they are interacting with their customer or not. The phone-centric identity also uses behavioral and phone intelligence signals to measure a phone number’s fraud risk and identity confidence in real-time. Apart from the obvious advantages of significantly reducing identity theft, advanced solutions in identity proofing and authentication deliver several revenues and operational upsides such as better consumer experience, enhanced exception management, and lower cost of fraud management.
Want to learn more about Prove’s phone intelligence-powered solutions in Germany? Click here.
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