In September 2018, the European Central Bank (ECB) issued a report stating that the total value of fraudulent transactions conducted using cards issued within the single European payments area (Sepa) amounted to €1.8 billion in 2016. Some 73 per cent of the value of this card fraud resulted from ‘card not present’ (CNP) transitions.
What’s more, incidences of account takeover fraud tripled worldwide in 2018, with losses reaching US $5.1 billion – and more customers than ever before were victims of identity fraud.
In Ireland alone, overall fraud and financial crime had grown almost a fifth in a year, according to recent CSO figures.
It’s a headache for banks, a worry for consumers and a nightmare for retailers. So what is the answer? Mitek says that online identity management is the future.
“For retailers struggling in a difficult climate, keeping on top of the latest innovations in identity management will be crucial in the fight for survival,” said Rene Hendrikse, vice-president and managing director of EMEA for Mitek.
In previous decades, identity management required in-person verification. In recent years, though, this has given way increasingly to digital identity management. As shopping and banking began to move online, knowledge-based authentication, such as the use of security questions, came to the fore.
Today, more advanced techniques are possible including, thanks to the supercomputer we now all carry in our pocket, photographic facial recognition.
“Our advanced digital identity-verification technology enables customers to submit photos of identity documents alongside a selfie to prove their identity in a digital transaction,” said Hendrikse.
Mitek uses advanced artificial intelligence (AI) and machine learning (ML) tools to analyse various features of the identity document instantly to determine its authenticity and if it has been forged or tampered with.
“A second layer of identity verification then uses sophisticated biometric face comparison algorithms to automatically compare the portrait extracted from the identity document with a selfie – proving that the person submitting the ID is its rightful owner,” he said.
Hendrikse said that by combining identity document authentication with biometric face comparison you end up with the digital equivalent of displaying an identity document, such as a passport or driving licence, in a human-to-human interaction.
“Companies can corroborate this two-factor identity verification with other factors of identity verification including geolocation, network data from mobile phones, and device reputation data to take this identity assurance to the next level.”
Many customers, once thought to be resistant to the perceived hassle, are now supportive.
“Despite increased friction in online transactions and onboarding, customers welcome it,” said Hendrikse.
“Two-thirds of consumers surveyed by Experian said they feel protected by security protocols online, and 27 per cent have abandoned a transaction due to a lack of security.”
Hendrikse said, however, that there could be a potential stumbling block with millennial consumers.
“Some 42 per cent of millennials said security hurdles put them off conducting transactions online,” he said.
Smoothing the process must be central, then.
Mitek’s technology can also be used in-store as part of ‘assisted service’.
“Here, a retail assistant is armed with a tablet or mobile device to verify customers’ ID documents digitally, as well as to pre-fill their data easily into forms for in-store credit, to onboard them into loyalty programmes, and to ensure that a customer’s personal data is being accurately captured without any ‘mis-keys’,” he said.
Mitek works with retailers and card issuers at enterprise level, but also enables retail in other forms. For example, Flexi-Fi is using Mitek technology to enable its customers to apply for credit, which can then be used at many leading retailers, said Hendrikse.
“The technology helps protect Flexi-Fi customers from identity fraud losses and fight against account takeovers and ensures Flexi-Fi’s retailer partners are GDPR-compliant and operating cost effectively. Our technology helps retailers secure their customers’ data and dramatically improve the customer journey thanks to simple, on-the-go digital onboarding – and this in turn enables the new world of one-click retail.”