Behavior as a tool in identity proofing reduces risk and improves experience

San Francisco, CA, March 26, 2017:  As more and more consumers shift from physical to digital channels for financial transactions, identity proofing for the channel, product, customer and threat environment is absolutely critical to attain the delicate balance between preventing fraud and providing a seamless experience that customers have come to expect. Today Javelin Strategy & Research published a new report, titled The Role of Applicant Behavior in Identity Proofing.

The report, sponsored by BioCatch, explores how inconspicuous, dynamic solutions like behavioral biometrics, have a distinct role to play in how institutions manage the growing risk of application fraud caused by the rise of stolen and synthetic identities in the online application process. With digital transformation efforts taking hold across numerous industries, the ability to open accounts online is considered a key component of the online experience.

“Digital account opening is changing the way consumers do business with financial service providers by broadening their geographic reach and lowering barriers to entry,” said Al Pascual, SVP, Research and Head of Fraud & Security at Javelin Strategy & Research. “At the same time, digital channels have exposed the vulnerabilities inherent in the traditional identity verification process, which for many institutions was designed to meet regulatory requirements – not vet applicants for fraud. These vulnerabilities contribute to record rates of identity fraud.”

The report identifies Gen Y as the leading adopters of digital account opening. More than one out of four have used the online channel to open an account in the last 12 months and nearly one in five have used the mobile channel. Unfortunately, tools like PII validation and knowledge-based authentication that are traditionally used to verify applicants’ identities can impede the acquisition of younger, thin-file consumers, while also leaving financial institutions open to greater fraud risk.

To be truly successful with acquiring customers of all age groups, businesses need to evolve from verifying identity to identity proofing.  As opposed to identity verification where the goal is to assess whether elements of personal data (PII) match a known identity, identity proofing should provide certainty that both the identity is valid and that it also belongs to the applicant.

Behavior has a role to play in identity proofing, regardless of the financial product or customer segment targeted.  Inconspicuous fraud mitigation controls are crucial in digital channels where applications are increasingly being submitted and where the fluidity of the experience matters.

Webinar: The Role of Applicant Behavior in Identity Proofing
Register here for a webinar by Al Pascual of Javelin Strategy & Research and Uri Rivner of BioCatch on April 25 on 11am PT/ 2pm ET to discuss the latest trends in identity fraud and role of applicant behavior in identity proofing.


About Javelin Strategy & Research

Javelin Strategy & Research, a Greenwich Associates LLC company, is a research-based advisory firm that helps its clients to make better-informed business decisions in a digital financial world. Our analysts offer unbiased, actionable insights and unearth opportunities that help financial institutions, government entities, payment companies, merchants, and other technology providers.

Joan Weber
Twitter: @JavelinStrategy

Tejas Puranik
Twitter: @JavelinStrategy