Andrew Gowasack teamed up with serial entrepreneur and family friend, Gareth Genner, to launch Trust Stamp in 2016, after identifying the need for a solution that allows individuals to establish trust in people they interact with online, and the significance this would play in an increasingly connected world. Over the last four years, Gareth and Andrew worked to develop and commercialize solutions that address cross-industry identity needs, while anchoring in the financial services sector with proven anti-fraud and enterprise security offerings. The Trust Stamp team is excited to be part of the FIS Fintech Accelerator, in partnership with The Venture Center, as they continue innovating to address evolving needs in the Fintech space.
Digital identity tools to power financial institutions through and beyond the pandemic
By Andrew Gowasack
In 2019, over 7,000 reported security breaches exposed 15B personal records, revealing a vast array of personally identifiable information (PII) ranging from social security numbers to knowledge-based authentication (KBA) answers. These breaches fuel identity fraud, which reached $16.9B in losses in 2019. Many financial institutions recognize the need to reduce their dependence on PII that risks compromise as a lucrative target for fraudsters, but the pandemic has severely disrupted innovation roadmaps. In a short amount of time, in-person interactions have mostly gone remote and virtual, creating increased reliance on digital channels for normal identity functions, including new customer onboarding, transaction approval, and account recovery. Combined with the availability of stolen PII, this digital influx has created abundant opportunities for fraudsters to exploit antiquated identity tools. All of this is happening when people depend on access to financial services to get through incredible and widespread hardship. Still, stresses continue to mount on the financial institutions needed to make a return to normality and economic regrowth possible.
According to Javelin research, “Areas of concern range from fraudulent account openings (synthetic identities), person to person (P2P), and full takeover of all accounts, not just checking or cards but also investment accounts and other high-dollar balances.” Because every digital interaction starts with establishing the customer’s identity, it is a crucial part of a successful digital transformation.
Historically, usability and security have seemed opposed, most notably in the financial services space where onboarding new customers requires thorough regulatory compliance as the minimum for risk-management. The onboarding process is often long, confusing, and lacks live assistance, resulting in frustrated customers and abandonment. This sentiment also reigns true for current customers encouraged to set long, complex passwords as a security measure, but end up developing poor security habits like reusing passwords to offset the cognitive load that results when institutions place the burden of account protection on their customers. Continuing to rely on these inefficient and insecure methods presents three risks: loss of customers to competitors, loss of reputation, and direct financial losses to fraud. Successful identity innovation helps financial institutions seamlessly add and retain new customers while reducing fraud.
Manual and paper-intensive authentication processes are the norm for financial institutions. Active biometrics (e.g. face capture, palm capture) and passive biometrics (sometimes referred to as behavioral biometrics) can deter fraudulent bots while automating financial institutions’ processes. In situations where accounts have been erroneously flagged, replacing standard manual review processes with automated protocols to achieve higher-level assurances can accelerate the approval timeline from days to just minutes! Biometric tools provide immense security and usability benefits when combined with cutting edge proof of life and attack detection technology. There are various unique biometric features that can be used for identity, and 93% of consumers preferred them to usernames and passwords. Some biometrics can even be paired with other identity schemes e.g. facial biometrics and photo ID verification.
In our own experience, Trust Stamp has seen customers generate significant and substantial new sales revenue and hard fraud savings. Additionally, we have witnessed biometric systems act as a deterrent to would-be criminal attempts. Fraudsters prefer the path of least resistance and find an easy, familiar target in organizations that rely on outdated processes.
A second crucial feature is the secure use of biometric data for future comparison. Biometrics can be a great tool to reduce bot applications during onboarding. They are even more potent components of fraud-prevention systems when used to reauthenticate returning customers and prevent account takeover. However, biometric data is an incredibly sensitive form of PII. If lost in a breach, it cannot be reset like a username and password, so biometric vendors must have innovative data protection methods. Like long passwords that lose their security appeal when improperly managed, biometric data poses a tremendous reputational and financial risk when the proper systems are not in place.
When combined with robust data security and compliance, biometrics are powerful tools that enable you to keep fraudsters out while letting in more genuine customers. At a time when financial institutions and consumers alike are under an increasing financial strain, these improvements to security and useability can efficiently boost growth alongside customer loyalty.
The Venture Center and FIS invite you to learn more about the 2020 FIS Fintech Accelerator companies at our October 14 Demo Day. Register for Demo Day here and see product demonstrations from 10 of the most promising emerging fintech companies in the world.