The digital revolution has enhanced how we shop, pay our
phone bill or purchase a home. But it comes with a downside: people’s personally
identifiable information (PII) is increasingly being compromised in data
breaches then used by criminals to take over accounts or to make new, fake
ones.

Part of the problem is that it’s harder to verify the
identity of a user online, in a faceless environment. In an online setting, a criminal
armed with the right login information can appear to be a legitimate user.

This makes identification and authentication crucial
components of any company’s fraud protection efforts. In order to avoid
fraudulent interactions, companies need to verify that the consumer is who
they’re supposed to be.

To learn about the state of fraud, the importance of identification and authentication, and what solutions exist to help companies stay ahead of the fraudsters, PaymentsJournal sat down with David Barnhardt, Chief Experience Officer at GIACT. Joining us in the conversation was Tim Sloane, VP of Payments Innovation at Mercator Advisory Group.

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Identification &
Authentication in the digital world

As more interactions shift from the physical space into the
cyber one, financial institutions are moving quickly to find solutions to
verify the identity of consumers. A common practice is for consumers to create
an account then use that account as a means of verifying themselves in an
interaction. However, creating an online identity that can be verified
“requires a range of high-tech capabilities,” explained Sloane.

For example, Sloane noted, a successful identification
solution needs to be able to determine if the accountholder is still alive,
rather than it being someone else using the deceased person’s account. An
effective solution also requires the ability to utilize behavioral biometrics
generated by the user using the mobile app or website. You then need risk
policies to understand if an individual qualifies as high-risk or not.

Sloane pointed out that the exact configuration of
technologies varies by use case, as different processes exist for creating a
healthcare account versus a bank account, for example. In any case, a large
amount of PII data is being generated and stored, meaning that proper security
measures need to be put in place. If a company fails to secure the PII, it may
face fines and substantial reputational harm.