Security & Fraud

Onboarding New Customers Without The Fraud Risk

Offering online services comes with the challenge of ensuring one’s customers are precisely who they say they are. The process of verifying and validating individuals’ identities can be risky business for FinTech companies, which is why IdentityMind is focused on bringing in the right customers — and shutting the fraudsters out.


Offering online services comes with the challenge of ensuring one's customers are precisely who they say they are. The process of verifying and validating individuals’ identities can be risky business for FinTech companies, which is why IdentityMind is focused on bringing in the right customers — and shutting the fraudsters out.

Tech-savvy FinTech alternatives are not just disrupting the banking market — they are dominating it. As more consumers turn to FinTech services and offerings to improve their financial wellbeing, fraudsters are also eager to turn their attention to the rapidly growing industry.

“The rapid adoption of new technologies and business models has created a need for far more innovative risk management solutions — solutions that are prepared to proactively combat abuse, rather than chase it from behind,” Garrett Gafke, President and CEO of IdentityMind, told PYMNTS earlier this year.

The accelerated growth of FinTech in recent years has left many companies unprepared for the myriad challenges that come with supporting online services, in particular the process of verifying customers. With sophisticated fraudsters at the ready to take advantage of unsuspecting FinTech firms, ensuring that only legitimate customers and businesses are brought on board is crucial.

Unfortunately, many companies are attempting to bring customer onboarding best practices from the offline world into the digital landscape.

So, what will it take to overcome that challenge?

With its newly launched ONBOARD initiative, IdentityMind Global is delivering a set of programs designed to combine ID verification and fraud prevention services with an operational framework that allows FinTech companies to more accurately verify and validate new customers.

Creating onboarding best practices that effectively and successfully work in the online world is critical. At the end of the day, the goal for any FinTech firm is to bring more good customers on board in the fastest, most effective way possible.

The idea is to help companies safely expand their online services without the risk of also expanding their vulnerabilities to fraudsters and fraud losses.

ONBOARD incorporates multiple data sources from across the financial environment to determine and identify prospective accounts using IdentityMind Global’s proprietary eDNA (Electronic DNA) technology. This identification verification uses more than 30 different parameters, ranging from the user’s address and identity to data only the applicant can provide, along with information from IdentityMind Global’s own integrated third-party data and technology providers.

The eDNA database relies on the “old” identity information linked to physical documents, such as SSNs or credit scores, but also integrates newer forms of identity verification that rely on new technology, such as social media or carrier/mobile data. This helps to fill the gap between verification information relevant in the traditional financial ecosystem and what is most useful in today’s world of digital commerce.

By incorporating a flexible onboarding process, ONBOARD also allows FinTech firms to expedite the application process for trusted customers or even request additional information from accounts that may possess a high-risk profile, IdentityMind Global confirmed. Making the onboarding process more adaptable can help to ensure more good customers are being validated and more fraudulent account originators are rejected.

But account origination protection is only half the battle; once those “right” customers are verified, FinTechs still have to ensure they are prepared to track and monitor those accounts over time.

ONBOARD supports a compliance network that enables FinTech companies to stay ahead of regulations with a proactive program. Anti-money laundering transaction monitoring is used to analyze and record all transfers and payments, while ensuring the appropriate policies are applied to identify and report any suspicious activity that arises. Sanction screenings are also used to compare users and entities against regulatory databases to ensure screening processes are up to date, which IdentityMind Global said can help reduce false positives. The compliance framework also utilizes geofencing technology to block users from restricted states or countries based on information from mobile devices, a business or home, or even IP geolocation.

Simplifying account protections and compliance is top of mind for FinTech companies attempting to navigate the complicated landscape of online services, and using the power of verifying digital identities may be the right place to start.

“We view identities as a rich description of transactional attributes, the strength of the attributes’ relationship and their behavior. With this approach, we’ve been able to develop a digital identity trust model that provides our clients with an accurate risk evaluation for dealing with a digital identity,” Gafke explained.

“This makes it easy to recognize stolen identities, cards and repeated bad actors. But also — and perhaps more importantly — to recognize trusted customers and correct information. It’s an all-around more reliable and accurate approach, because it’s built for the way commerce works today.”



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.