Digital Identity Crisis Forces Lenders to Find New Ways to Stop Fraudsters at the Virtual Front Door

That old saying in business holds true in the digital age.

As Neuro-ID CEO Jack Alton told Karen Webster, there’s only one chance to make a first impression.

For merchants and brands doing more business online, that first impression comes at the point of onboarding, where consumers confront data-field and document-upload requests and one-time passwords. It’s a clunky first meeting at best, a friction-filled disaster at worst, enough to send would-be consumers away from their digital shopping carts.

For the companies themselves, the point of onboarding is critical too. Identity screening at scale, with robust risk controls in place, helps let good customers in and keeps fraudsters out. That’s the way it should work, anyway.

But by relying on static data, on the information that gets collected when the consumer hits the submit button, all manner of companies are finding that their fraud screening efforts fall short of the mark — and customer experience suffers too.

“We’re in the midst of a digital identity crisis,” Alton said.

Recent headlines bear this out. PayPal has said that it found, and then shut down, 4.5 million illicit accounts. In another example, car rental companies stopped accepting Chime as a payment option due to fraud.

The cost of acquiring customers has doubled in the past year, he said, as false positives mount, as firms must resort to manual screening, and the historical data that consumers use is already floating around on the dark web (giving fraudsters plenty of ingredients to cook up synthetic identities).

“The risk models and engines attached to the onboarding process are not suitable today,” Alton said.

And since many companies allow (and are mandated to allow) tracking opt-outs, it’s hard to glean insight into how individuals are engaging with sites or apps once they are onboarded.

Pivoting from post-submit data and examining pre-submit behavior — including the manner in which a customer has entered their personal identifiable information (PII) — can help battle the bots and the scams, and also improve the customer journey through a customer’s lifecycle, Alton said.

He said the company’s recently debuted ID Crowd Alert and ID Orchestrator products can help firms gain visibility into crowd-level behaviors as they seek to balance security and customer experience — right before a high-friction verification event, what happened during that event and what happens ever after.

“You eliminate the ‘Coke/Pepsi’ and AB testing that’s always going on,” he said of product development, “and can understand and route customers down the right path.”

The bar so far is fairly low, he noted. Nine out of 10 consumers report frustration jumping through online hoops (including one-time passwords and other attributes of EMV 3.0 and PSD2) and being misidentified as fraudsters.

Neuro-ID’s intent is to leverage that pre-submit behavior to screen identities, to offer up a “first look” that may help companies decide whether they need to step up verification.

With pre-submit data, being able to recapture all the taps, the types, the swipes, gives nonverbal cues that can be used to monitor crowds — and to see if there are changes in the risk profiles of that very same crowd that is massing on a merchant’s site.

“Instead of just reacting to fraud events or bot attacks, you’re getting a real-time view into that risk — and you can figure out how not to negatively impact good customers, while zeroing in on the fraud that you couldn’t see previously,” Alton said.

The data is dynamic and so are the results of pre-submit behavior, he said. At a high level, identity screening will want to take a new glance at consumers every time they come into a new session because their credit risk and fraud profile can change over time.

Beyond the confines of creating digital accounts, client firms are deploying the pre-submit tech deeper through the customer journey, finding and addressing the trouble spots where customers abandon their interactions or their shopping carts, he said.

“We’re giving the brand the ability to understand their customers better, while not collecting PII,” he said.

Along the way, he said, single-digit percentage conversion rates can be pushed higher, as companies get better insight into how consumers are interacting with their brands, rather than just guessing about what to do. Large publicly traded brands have been able to reduce fraud by as much as 35%, while doubling conversion rates.

“This delivers value not just to the company’s fraud and risk leaders but delivers value straight through to the chief digital office, heads of product and even the CEO,” he said.