All industries go through a period of evolution where several service providers crowd into a space, offering a slew of options geared toward making enterprise workflows and back-end processes easier.
Robert Prigge, CEO of Jumio, told PYMNTS that the compliance and fraud management industries are ripe for a shakeout — and that using multiple vendors, rather than a sole provider or platform to manage compliance efforts, can actually increase security risks.
“Everyone used to focus on verifying who someone said they were, and now they need to verify who they really are,” Prigge emphasized.
The conversation came against a backdrop where, Prigge noted, 75% of organizations will leverage a single vendor for identity verification capabilities and connections — an increase from fewer than 15% in 2020. But currently, he said, the market is characterized by scores of providers across “an extraordinarily fragmented” landscape, albeit one that is rapidly consolidating.
The evolution of the know-your-customer (KYC) market has been one where different providers have focused on different niches, such as ID verification or checking data, like addresses, against databases. Other solutions focus on matching people against sanctions lists.
See also: Jumio Intros No-Code Orchestration Layer for KYX Platform
Prigge explained that enterprises have had no choice but to cobble together their own lines of defense against fraudsters by employing a range of providers’ offerings. From a technology point of view, maintaining all of those systems is akin to untangling a mass of spaghetti, he added. Ideally, the tech stack should be as logically layered as lasagna.
But recently, providers like Jumio have started to offer what is, in effect, a one-stop platform with a complete set of KYC functionalities, he said.
Catching More Fraud
Enterprises need to be better at stopping fraud, and Prigge said that the only way to do this is to look at multiple signals.
“When you use different vendors to look at your ID document and look at their phone number, IP address or other things, it’s very hard to see the forest for the trees,” he said.
A single platform can connect the dots between far-flung data points in a way that multiple systems can’t, Prigge explained. It can more easily pinpoint signals that uncover suspicious activity, such as a person saying they live in California when their IP address shows they’re located in China. Working with a single vendor delivers operational benefits, as well.
“Dealing with so many different people means many different contracts, and the need to make sure that each vendor stays compliant — and then enterprises have to integrate with each of them,” said Prigge.
Limiting operational frictions will improve the customer and user experience, he noted.
“The capital that’s being deployed is supporting the vendors instead of making a better experience for the customer,” he said.
In the worst-case scenario, this can cause incalculable damage to a company’s brand when fraudsters exploit gaps in its cobbled-together defenses.
“There’s such brand risk now that even a few cases can do enormous damage to people,” Prigge said. “And so now, people are really taking this area seriously.”
Moving ahead, Prigge sees the entire compliance and KYC industry consolidating into a handful of platforms.
“We’re definitely not there, but in this marketplace, there are going to be a Coke and a Pepsi,” he predicted. “We’re the Coke — and we’ll see which competitor will be the Pepsi.”
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