Building Trusted Digital Identities in Financial Services

Good stuff from BioCatch out of their India operation, highlighting their very important work. Key points - 55% of all bank fraud cases are tied to third-party account takeovers - Third-party account takeover fraud represents a bigger slice of the fraud pie of the country than social engineering scams - Every device found to participate in mule activity in India logged into an average of 35 accounts each I would be surprised if these trends differed dramatically in other regions. Not mentioned in the article but critical to understand from an identity management/fraud perspective is that generally, as a result of the Aadhaar program, to open a bank account in India, a person needs to verify themselves against the national registry. So there is no KYC problem at account opening. THE PROBLEM COMES AFTER. Fraudsters exploit weak authentication methods. Most banks still rely on passwords, tokens, SMS, OTP to enable user access after the account is established. These methods are so easily circumvented. This is what drives the account takeover fraud. These statistics point exactly to why we started Anonybit. - You can have the best KYC/AML/onboarding solution, but the fraudsters get to work after. - Fraud and risk detection technologies can tell you that there is a potential problem but they can never tell you who the real person behind a session is. - A device is not an identity. A device does not tell you who is transacting and whether they are authorized or on a blocklist. Only biometrics can link a person to their identity. Deploying biometrics raises data protection concerns. If we address the privacy issues and deploy biometrics safely, we can solve the account takeover problem. The biometrics should be threaded across the user journey from onboarding to authentication in a session/transaction and for account recovery. This is what we enable. This is the future of identity management. #innovation #decentralization #digitalidentity #identitymanagement #kyc #amlcompliance #digitalonboarding #aadhaar #banking #india #fraudprevention #authentication #passwordlessauthentication #biometricsecurity #biometrics #behavioralbiometrics #privacymatters https://lnkd.in/ezZxfAG5

After 25 years focused on the problem of identity in financial services, this is my framework for solving inclusivity in ID verification for onboarding: 🔹 Acquire alternative data sets; credit alone is by default non-inclusive 🔹 Task data scientists to test each data set and see which ones give you lift in good approvals (drop others) 🔹 Use feedback data to make your models smarter (I.E. - Block bad actors, and when you make a mistake, find out why the model said yes to a bad actor, then fix it) 🔹 If you’re a Financial Institution or a large enterprise with multiple channels, standardize on vendors.  You should have ONE view of identity and ONE view of authentication across your organization. 🔹 The 4 pillars of identity are knowing everything you can about People, Accounts, Transactions and Devices.  Never rely on just one as absolute. The larger the dataset, and the longer the tenure, the greater the competitive moat. The 100X multiplier - sync that data across companies so learning in one place can be applied to the next. #banking #fraud #identity #fintech

What are the premier technologies for online identity authentication and why are they better? Most online customer authentication solutions today are probabilistic. I.E. - I have a 90% confidence level that this is Adam, based on everything I know about him and how closely that matches to how he is showing up in my on-boarding flow and usage data. This kills the customer experience for people like me running on Linux and VPN where I trip every risk flag. Probabilistic authentication technologies are getting better but not foolproof by any means. Their limitation is the inherent trade-off between security and convenience. While they do catch many bad actors, they also frustrate legitimate users with false positives and unnecessary friction. Zero trust identity verification - a digital signature key that can only be done by the person holding the credential - is the stronger standard. Digital signatures create stronger customer authentication because: They are deterministic, not probabilistic. With a valid signature, there is no doubt about the user's identity, eliminating the need for guesswork and risk scoring. They are tamper-proof. Any alteration to the data or signature will be immediately detectable, preventing fraud and unauthorized access. They offer greater privacy. Unlike knowledge-based questions or other factors used in probabilistic methods, digital signatures don't reveal any personal information about the user. While digital signatures might require an initial setup step, the benefits in terms of security, convenience, and privacy far outweigh the minor inconvenience. It's time for online platforms to move beyond probabilistic authentication and embrace zero trust principles for a more secure and seamless user experience.

As many fintech players are aware – especially those with digital wallet functionality like digital banks and iGaming companies – ID and documentation verification (IDV) is an absolute must for your business and further, it’s required by regulators. That being said, it’s not a bulletproof solution for protecting your transactions and can introduce undesirable costs, with providers charging up to $1 USD per check, and adding friction to onboarding experiences that can frustrate or deter your customers. Fraudsters can easily buy stolen IDs, often acquired through fake job postings and other phishing methods or deploy deepfake solutions to bypass ID and documentation verification measures. Another issue centers around business accounts being sold as money mule accounts. Since business accounts tend to remain under the radar for longer, and can easily be created through forged formation documentation, fraudsters can leverage these accounts for the explicit purpose of connecting them to crypto exchanges to easily launder earnings from scams and cash out funds effortlessly. The unexpected twist here is that most bank drops accept funds under any name, which means fraudsters only have to change the name and unique IBAN before they can use the account for another scam. Both telegram groups and fraud forums are full of pre-created accounts, providing instant access to bank drops without the hassle of passing KYC to receive or transfer funds. Implementing a comprehensive anti-fraud solution is essential to protect transactions and strengthen ID and documentation verification processes. By retrieving thousands of data points to determine the risk level of an account in combination with monitoring behaviors along transaction points –  logins, deposits, withdrawals – a fraud protection solution can use machine learning and velocity rules to detect and stop suspicious activity. Good fraud prevention solutions should stop fraud earlier in the customer journey AND have the ability to reduce your IDV costs. Reducing the cost of fraud and the losses from fraud’s impact has been top of mind for many executives I speak with. I’d love to hear your point of view on how you plan to mitigate such costs for 2024 – share your thoughts below! 👇 #fraudprevention #costoffraud #idfraud #idvchecks #fakeaccounts

𝗘𝗺𝗯𝗿𝗮𝗰𝗶𝗻𝗴 𝘁𝗵𝗲 𝗙𝘂𝘁𝘂𝗿𝗲: 𝗛𝗼𝘄 𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗜𝗱𝗲𝗻𝘁𝗶𝘁𝘆 𝗶𝘀 𝗦𝗵𝗮𝗽𝗶𝗻𝗴 𝗕𝗮𝗻𝗸𝗶𝗻𝗴 & 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 💳🌐 In today's dynamic financial landscape, the role of digital identity is paramount. It is the linchpin for secure and convenient access to many financial services, fundamentally transforming how we engage with money. Digital identity solutions have redefined security standards and introduced a new level of accessibility and efficiency to the industry. 👉 But, only when implemented appropriately. Leveraging cutting-edge technologies like biometrics and multi-factor authentication, financial institutions can safeguard user data with unprecedented security, bolstering trust in digital banking. Looking forward, the need for decentralized identity in banking and finance becomes increasingly apparent. With its immutable ledger and cryptographic principles, blockchain technology is poised to empower individuals to take control of their digital identities securely. By decentralizing trust and reducing reliance on central authorities, decentralized identity solutions offer a promising pathway toward a more transparent, secure, and user-centric financial ecosystem. 💡💰 Digital identity is not just a tool—it's a gateway to a future where security, accessibility, and empowerment converge in banking and finance. As we navigate this transformative landscape, embracing decentralized identity is crucial to a more inclusive and innovative financial world. #DigitalIdentity #Banking #Blockchain