Businesses are facing ever-increasing risks of fraud and cybercrime. Every day brings more reports of security breaches and compromised customer data. Cybercriminals are clever and quick to find new ways to steal customers’ and employees’ personally identifiable information, which can be used to commit fraudulent activities ranging from spamming to accessing online accounts to extortion.
Cybercrime schemes surface so quickly that detecting and mitigating cybersecurity risks can feel like an endless game of whack-a-mole. Not surprisingly, in recent years, tackling shifting fraud tactics has been identified as the top challenge for leaders in risk, fraud, compliance, product and operations departments. Yet in an era where customer experience has become a differentiating factor for brands, leaders also are concerned that customers will balk at having to use cumbersome identity verification processes. A consumer survey conducted by IDology, found that, when opening an account online, consumers valued security (88%) and ease (72%), and almost one-third said they abandoned sign-up processes that were too difficult or took too long, according to Christina Luttrell, SVP of Operations for IDology, a leader in multilayered identity verification and fraud prevention.
Antifraud practitioners have taken note, as the results of the IDology Sixth Annual Fraud Report revealed. “For the first time since the inception of the report six years ago, balancing consumer friction with fraud prevention is the No. 1 challenge companies are facing for fraud prevention, surpassing shifting tactics being used by fraudsters, which, until 2018, was the dilemma of greatest concern,” Luttrell says. “This year, two-thirds of the respondents say that the balancing act is the biggest challenge in their industry, up from 40% last year.
“Companies know consumer experience is paramount, as consumers have higher expectations for speed, ease and security for transactions. At the same time, the number of data breaches and the quantity of personal information on the dark web continue to grow,” Luttrell adds. “These two conditions are compelling companies to take a strategic and more sophisticated approach to digital identity verification with the competitive end goal of delivering a frictionless customer experience, effectively deterring fraud and ultimately cultivating long-term customer trust and loyalty.”
The IDology report suggests that, instead of balancing friction and prevention across the board, businesses should think about how to adapt the verification process on a per-customer basis by considering: “What is the right amount of friction for this specific person, and when is the right time to introduce it? Implementing a multilayered identity verification solution, which examines an assortment of attributes and can dynamically make decisions based on a variety of parameters is the most effective way to ensure customers only experience friction when necessary while still maintaining strong security. It also positions organizations to be ready for tomorrow’s customers, economy and fraud trends.”
Coming up in Part 2: A look at the top internal cybersecurity risk—human error.