Jumio: 2021 Was the Year of Consolidation

Companies started stepping up their identity verification protections amid rising security threats from hackers and fraud in 2021, says Bala Kumar, chief product officer at Jumio. This year, look for them to consolidate the information they now get from multiple vendors into a single, comprehensive platform. Read his thoughts in the PYMNTS eBook, “In a Word: 50 Thought Leaders Sum Up 2021.”

We saw fraudsters become increasingly sophisticated in 2021, taking advantage of vulnerabilities and the inadequate security perimeter from remote work. As a result of these growing threats, businesses are now layering countless risk signals from multiple Know Your Customer (KYC) vendors to protect their ecosystems from being hacked into. These factors led to 2021 being the “year of consolidation” for the identity verification industry.

Organizations are now moving toward a single, comprehensive platform that consolidates these capabilities to confirm user identity and maintain compliance effectively and efficiently. It is projected that by 2023, 75% of organizations will leverage a single vendor with strong identity verification capabilities and connections instead of using various other third-party solutions for identity proofing and affirmation, an increase from fewer than 15% in 2020.

In the past, organizations used countless solutions to verify user identity, examine their identification and supporting documentation, authenticate them after every visit, ensure that they are not on any watchlists by conducting ongoing screenings, managing investigations, monitoring their transactions and reporting suspicious activity. However, this approach is not only costly and complicated, but it also cannot adequately spot financial crime and properly verify user identity. Data remains fractured across business unit silos, and valuable intelligence is not shared across customer touchpoints. 

By using multiple vendors for verification, organizations may face risks of non-compliance with regulations like KYC, anti-money laundering (AML), data privacy and the Markets in Financial Instruments Directive (MiFID). These regulations enforce enterprises to identify and report unlawful activity such as terrorist financing or money laundering to regulatory agencies. Enterprises with identity verification and transaction monitoring solutions that do not comply with regulations can lose their customers’ trust, fall victim to fraud and be charged with costly fines.

Leveraging one consolidated vendor enables enterprises to orchestrate the controls and assurances needed to know and trust their end-users, and helps them achieve high catch rates and low false positives. More importantly, it also connects related transactions, underlying attributes and risk signals to provide a holistic view of every individual and transaction at every customer touchpoint. 

Additionally, it delivers a more seamless user experience that verifies consumer or employee data, while providing enhanced authentication using a document such as a government-issued ID. There are also unified platforms that not only assess the risk of an individual, but also the devices associated with them, the IDs they furnish and their facial biometrics — all through a single application programming interface (API) layer. Given these benefits, we can expect to see even more vendor consolidation in KYC in 2022 and beyond.