What are the top identity trends?
Imagine going to the airport, getting to security, and not having to pull out your driver’s license. This isn’t some elite travel perk; it’s a likely future with the ever-increasing rollout of digital identities. The world of digital identities is a complicated challenge involving identity theft, fraud, and data breaches. It also poses several unique regulatory challenges that are vital to understand for both personal and business digital existence. The solution to these challenges is being aware of trends surrounding digital identities and understanding what methods can be used to make them more manageable.
Increasing data regulations
As legislative bodies play catch-up with the lightning-fast advances in digital identity practices, we see numerous changes to the already complex landscape of digital identity regulations. There has been a sea of change in understanding who is responsible for authorized push payment fraud; liability is poised to shift from the consumer over to the financial institution to make that consumer “whole again.” This is especially pertinent for consumer scam losses such as zelle fraud. Today, consumers shoulder most of the financial burden from romance, imposter, and other social engineering scams. Their originating banks – generally on the hook for fraud liability – are not fully responsible when account holders willingly send money to a fraudster in a receiving bank.
However, this is rapidly changing. Since June 2022 a string of U.S. Senators and regulators like the Consumer Financial Protection Bureau (CFPB) have been pushing to move the losses linked to payment scams away from consumers and onto banks and fintechs that hold the receiving depository account in a transaction. This potential shift in liability will most likely cover all payment types, including ACH, wire transfer, check, ATM crypto transfers, and P2P payments, among others.
The landscape of regulations is becoming increasingly complex, with stringent requirements designed to protect sensitive consumer information. Key regulatory frameworks and standards in the US include:
While these regulations are critical for protecting sensitive data and preventing fraud, many companies struggle to meet the requirements without negatively impacting the user experience.
Mounting tension between user experience and stringent verification requirements
High-friction user experiences can harm organizations as they risk losing valuable customers. This is particularly evident in the realm of user identity verification, where the initial encounter with a customer is often the first interaction they have with an organization. Cumbersome or time-consuming verification processes can lead to frustration and abandonment, potentially deterring otherwise satisfied customers. However, high friction is desirable for malicious users as it acts as a deterrent, making it more challenging for them to engage in fraudulent activities and protecting the security and integrity of online platforms.
The solution to balancing these competing needs lies in progressive onboarding. Progressive onboarding enables companies to provide the appropriate level of friction for individual consumers based on the level of risk indicated in that interaction. This approach measures risk progressively during the early steps of the customer journey and allows organizations to apply different assessment levels as consumers advance in their activity and corresponding risk potential. Not every user requires a complicated identity check at first touch, so this risk-based approach helps organizations enhance customer experience throughout their journey and ultimately build trusted online customer relationships.
Artificial Intelligence (AI) and biometric verification methods to bolster precision and security
Artificial Intelligence (AI) and biometric verification methods represent a dynamic partnership in the realm of digital security, working in unison to enhance precision and fortify data protection. This modern approach vastly improves security and simplifies the user experience. By harnessing the power of biometrics, such as fingerprint and facial recognition, the barriers for potential fraudsters are significantly raised, making it far more challenging for them to pilfer sensitive information.
Real-time fraud detection, achieved through the fusion of AI algorithms and multi-modal biometrics, enables rapid identification and response to suspicious activities, effectively reducing false positives and ensuring that legitimate users face minimal disruption. However, it’s essential to acknowledge potential challenges and ethical concerns, such as the responsible handling of biometric data and the risk of biases in AI systems, which necessitate careful consideration in deploying these technologies. For example, DocV has a rigorous data protection and retention policy with bias and disparate testing and analysis on regular cadence to ensure fairness and compliance in our AI systems and models.
Generative AI is a trending global topic across several industries. When leveraged by bad actors, generative AI can be used to write malware, produce phishing campaigns, forge identities, and produce deep fakes to commit fraud and financial crimes. The rise of malicious large language models (LLMs) including WormGPT and FraudGPT fuel this trend, making identity fraud protection more critical than ever.
Socure uses generative AI to elevate compliance and fraud detection capabilities. This use of generative AI is effectively leveraged in Socure’s DocV solution. Using generative AI and modern machine learning technology to extract and verify the legitimacy of a document and connected selfie, DocV ties together the user’s document and selfie with the larger Socure identity graph.
Socure’s identity fraud detection and prevention software leverages an advanced ML model with the most extensive identity graph and set of performance feedback data in the industry. Socure enhances the customer experience for legitimate users by maintaining a high capture rate and low false positive rate, effectively thwarting fraudulent activity. For example, Socure reduces manual review and customer friction by 80%, combined with a 13x reduction in false positives.
Evolving technologies to support digital identity
Many new technologies are emerging to support and enhance how individuals prove themselves digitally. One of the most exciting trends in digital identity is the adoption of digital driver’s licenses. This technology leverages the ubiquity of smartphones to enable individuals to carry their driver’s license in a digital format securely bound to their mobile device. This not only provides added convenience but also offers a more secure and tamper-resistant method of identity verification.
Blockchain technology and self-sovereign identity (SSI) redefine how personal information is managed and verified. Blockchain’s decentralized and immutable nature makes it a promising platform for storing and verifying identity information securely. SSI takes this concept further by enabling individuals to control their identity information, allowing for greater privacy and reduced reliance on central authorities.
The digital ID wallet is another innovative concept that brings all these technologies together. It acts as a secure, portable repository for various forms of identification, such as driver’s licenses, passports, and payment cards. It’s a consolidated approach that simplifies identity verification processes for both individuals and organizations.
Ultimately, these identity trends and advancements will streamline and enhance how we leverage our identities. And while they promise improved security, privacy, and convenience in the digital world, we know that bad actors will always try to find ways around these security features. That’s why it’s so important to adopt solutions like Socure’s offerings and pay close attention to security and regulatory compliance. These issues will require careful consideration and solution as they continue to evolve.
Explore our exclusive whitepaper on the Top Compliance Trends.
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