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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
As October gets underway in earnest, Finovate’s Fintech Rundown shares news of expedited payments to help those impacted by hurricane Helene, another partnership to help new Canadians secure credit, as well as a major investment in cross-border payments and a big acquisition in the fraud prevention space.
Be sure to check back all week long for more fintech news and updates!
Experian has partnered with affordability software and payments company Paylink.
Experian will leverage Paylink’s ReFi solution, which will validate and repay consumers’ outstanding debts by consolidating them into a new loan with better terms.
ReFi will allow consumers to conduct a financial reset, while offering lenders the assurance that the new loan is affordable.
Data analytics and consumer credit reporting company Experian is broadening its services this week by expanding its debt consolidation offering. The Ireland-based company is leveraging a partnership with affordability software and payments company Paylink, which will help work around affordability restrictions with debt consolidation loans.
Experian reports that the number one reason consumers search for loans on its marketplace is for debt consolidation. However, lenders are unable to directly pay off customers’ debts when they take out a debt consolidation loan. This means that, during the underwriting process, lenders need to double count both the new loan and existing debts. As a result, some consumers are unable to qualify for debt consolidation loans, since the new loan is considered ‘unaffordable.’ This can result in consumers borrowing from an unlicensed lender, loan shark, or friends and family.
“The benefit of this partnership is twofold, as the ReFi solution offers a valuable tool for lenders to expand their offerings and reach a broader customer base that may have originally been overlooked,” said Experian Consumer Services Managing Director Eduardo Castro.
In today’s partnership, Experian aims to promote financial inclusion and improve access to credit using Paylink’s ReFi tool. ReFi validates and repays consumers’ outstanding debts by consolidating them into a new loan with better terms. After validating a consumer’s card, loan, and overdraft accounts, ReFi confirms balances and settlement amounts, pays creditors, and offers evidence that the accounts are closed.
“ReFi enables a financial ‘reset,’ potentially leading to significant savings and quicker debt repayment,” said Paylink CEO Jake Ranson. “It also provides lenders with assurance that the new loan is affordable and will be used to clear previous debts, helping customers achieve their financial goals. With unparalleled access to data, analytics and market insight, Experian is singularly placed to help ReFi reach thousands more people seeking to realize the opportunities access to reasonably priced credit brings.”
Experian and Paylink are not alone in trying to help consumers struggling with debt. There are a handful of other players in fintech seeking to help consumers solve their debt burdens. Finovate alums Peach, Payitoff, and Debbie, which demoed their technologies at FinovateFall last year, each bring a fresh approach to debt management and payoff. These platforms are not just about numbers; they aim to empower consumers with tools that simplify debt repayment, offering tailored strategies to help users regain financial stability.
The battle against fraud is a never-ending one. And recent fintech news headlines have helped remind us all of how broad the frontlines are. From the challenge of AI-powered deepfakes to the sad fact that many of our own bad habits continue to keep fraudsters in business, fintechs are busy developing solutions to help us get and stay at least one step ahead of the bad guys. Here are a trio of stories highlighting the latest efforts by fintechs to combat financial crime.
Digital identity verification innovator Socure has unveiled its Selfie Reverification solution. The new capability provides a way to validate return consumers online in less than two seconds with just a selfie. The technology matches incoming selfies with previously verified ID headshots, and features a true match rate of 99.9%. Built on the company’s Document Verification (DocV) solution, Selfie Reverification also detects signs of deepfaking, and readily identifies age discrepancies between the photo and the credential.
“Identity verification isn’t a one-time event. As consumers interact with an online service over time, their risk profile can change. That’s why it’s important to determine you are still who you say you are, without going through the full verification process again,” explained Socure Chief Product and Analytics Officer Pablo Abreu.
Selfie Reverification prompts the user to take a selfie, and sends real-time feedback on positioning, angle, and lighting. Once taken, the selfie undergoes a Level 2 NIST PAD compliant liveness check to prevent spoofing, as well as Socure’s injection attack detection process which makes sure that a fraudster has not injected a false or altered credential into the session. Lastly, the selfie is compared against a set of hundreds of thousands of curated deepfake samples created by more than 20 different AI generators.
The technology leverages biometric analytics to evaluate more than 80 facial features, from eye distance and nose width to jawline contours and emotional expression, to create a facial map and ensure an accurate match. Use cases for Selfie Reverification include preventing account takeover, securing high-risk transactions, streamlining account recovery and re-verification/re-validation, and more.
Founded in 2012 and headquartered in Incline Village, Nevada, Socure most recently demoed its technology on the Finovate stage at FinovateFall 2017. Today, the company has more than 2,500 customers, including four of the top five banks, the top credit bureau, and 400+ fintechs. Businesses ranging from Capital One and SoFi to DraftKings and the State of California rely on Socure’s technology for accurate identity verification and fraud prevention. Johnny Ayers is Socure’s founder and CEO.
Digital banking solution provider Alkami has added credential stuffing protection to the challenge-response authentication process for its digital banking platform. The new functionality automatically checks for human behavior in the background, but does not require visual puzzles or any additional time spent by the user.
“This enhancement in Alkami’s platform has given us the ability to provide an additional layer of security for our account holders,” Quontic Bank SVP of Digital Banking Grace Pace said. “The secure and seamless login experience has contributed to reducing potential fraudulent activities, offering our customers greater peace of mind without added complexity.”
Credential stuffing refers to a type of cyberattack in which a hacker uses credentials obtained through data breaches or purchased from the dark web in order to attempt to access another service. A typical case of credential stuffing, for example, could involve a hacker using the credentials from a breach at a retail store to attempt to log into a bank’s website.
Credential stuffing is a common attack in part because it takes advantage of the tendency of individuals to reuse usernames and passwords. But its commonality takes nothing away from the damage these attacks do. One estimate determined that credential stuffing costs businesses $6 million a year on average, to say nothing of the negative reputational impact that often accompanies it.
The addition of credential stuffing protection is the latest example of Alkami’s layered approach to fraud detection and prevention in digital banking. “Alkami continues to evolve its platform as the security threats change for our customers, and we’re proud to integrate credential stuffing as part of our standard solution for everyone,” Alkami Director of Product Management Brad Cranford said. “Our goal is to help our customers manage security while providing the best experiences for their account holders.”
Headquartered in Plano, Texas, Alkami made its Finovate debut in 2009 as “IThryv.” Alex Shootman is CEO.
Data and technology company Experian is adding behavioral analytics to its fraud detection capabilities courtesy of a newly announced acquisition of NeuroID.
More specifically, Experian is looking to bolster its defenses against AI-generated fraud threats. With their ability to apply fraud detection strategies to key vulnerabilities such as origination and account management, insights from behavioral analytics can help mitigate fraud in real time and defend users against a range of malevolent actions including identity theft, account takeover, bot attacks, and fraud rings.
“Our acquisition of NeuroID highlights our commitment to provide our clients with world-class data, analytics, and insights to prevent fraud,” said President of Experian’s North American Identity & Fraud business, Robert Boxberger. “Together with NeuroID, we’re excited to build new blended offerings that detect risk but also empower businesses to confidently navigate the online landscape and trust in their transactions.” He added, “In today’s highly competitive and digital-first world, the use of behavioral analytics is now vital for innovating for the future of fighting fraud.”
NeuroID’s solutions are now available via CrossCore on the Experian Ascend Technology platform. The integration will enable platform users to use a single service provider to monitor and analyze real-time digital activity.
“NeuroID unlocks a new view into a user’s riskiness based on behavioral interactions,” NeuroID CEO Jack Alton said. “This view arms companies with a proactive, first line of defense to detect sophisticated fraud rings and bot attacks. By joining forces with Experian, we’re looking forward to helping companies confidently navigate this new era with solutions that enable more secure and frictionless experiences.”
A Finovate alum since 2011, Experian most recently demoed its technology at FinovateFall in New York in 2018. Headquartered in Dublin, Ireland, the company employs more than 22,000 people, including more than 9,000 technologists and product developers, working in 32 countries.
Are you an innovative fintech with new technology that’s ready for prime time? Join us in New York next month for FinovateFall and take advantage of the opportunity to showcase your solution before an audience of 2,000+ decision-makers.
We’re midway through August, and while everyone attempts to sneak in their final summer vacation days, the fintech news continues on. While we’ve seen a handful of acquisition news headlines so far this summer, I expect things to tick up slightly this fall. Stay tuned throughout the week to read the latest news this week as we post updates and evolutions.
Experian launched Cashflow Attributes, a tool to offer lenders more data about underserved consumers.
Cashflow Attributes offers lenders visibility into more than 900 consumer attributes that reflect consumers’ cashflow and affordability.
Lenders can use the insights to aid in their underwriting decisions, drive more personalized experiences, and help improve financial management tools.
Information services company ExperianunveiledCashflow Attributes yesterday, a new solution that leverages open banking to help underserved consumers access fair and affordable credit.
Cashflow Attributes uses more than 900 income, cashflow, and affordability attributes to allow lenders to integrate applicants’ banking data into the decision-making process. Experian expects the new solution will help some of the 106 million U.S. consumers who are considered credit invisible, unscoreable by conventional credit scores, or have a subprime or below credit score and are therefore unable to secure credit at mainstream rates. Credit Attributes layers traditional credit report data with cashflow insights to create a more detailed view of a consumer’s financial health and creditworthiness.
“Supporting financial inclusion and creating an equitable path to credit is ingrained in our DNA,” said Experian Financial and Marketing Services Group President Scott Brown. “We believe banking information holds untapped potential and that our new Cashflow Attributes represent an exciting step forward that can easily be integrated into lending decisions. As we look ahead, we will continue to leverage our core credit data, new data elements and our analytics expertise to unlock new opportunities for both consumers and businesses.”
To use Cashflow Attributes, lenders first provide Experian with depersonalized transaction information from their existing customers or from customers at other banks, as long as they have consumer-permissioned account access. Experian uses its categorization model to analyze and categorize the consumer transaction data and sends the lender the transaction categories and predictive attributes. Lenders can use these categories and attributes to aid in their underwriting decisions, drive more personalized experiences, and help improve financial management tools.
Founded in 1980 and originally known for its consumer credit reporting, Experian has extensive access to data and has added fraud prevention offerings, identity theft protection, credit building tools, and a loan comparison marketplace. On the commercial side, Experian provides a range of services for small businesses, including business credit reporting, marketing products and services, debt collection tools, and more. The company is headquartered in Dublin, Ireland, and is listed on the London Stock Exchange under the ticker EXPN and has a market capitalization of $39.5 billion.
Experian is launching its Mule Score, a new service to help banks identify and close down money mule accounts.
Money mule accounts are used by criminals to launder money and facilitate fraud.
According to Experian, 42% of first-party checking account fraud is mule-related.
Information services company Experian has unveiled the Experian Mule Score, a new service that will help U.K. banks identify and shutter so-called money mule accounts, or accounts that criminals use to launder money and facilitate fraud.
The “mules” are people that allow criminals to use their legitimately obtained accounts in exchange for cash. Banks can’t see where the money is coming from or being sent to. This lack of visibility makes it difficult to identify and investigate accounts being used by money mules. The issue is widespread– according to Experian, 42% of first-party checking account fraud is mule-related.
“Mule Score is the first solution of its kind, giving financial companies a comprehensive view of account activity, helping prevent them from onboarding potential mule accounts and detect already opened accounts which are suspicious,” said Experian UK&I Managing Director, Identity and Fraud Eduardo Castro.
Experian anticipates the new solution will help banks avoid onboarding suspicious accounts before they are opened, reduce fraud losses and operational costs, support at-risk consumers, and prevent fraudulent funds entering the financial system.
Experian is leveraging its bureau data, combined with account opening history and turnover activity to create the Mule Score that flags potential money mule activity. The score, which was developed by Experian DataLabs, also uses machine learning to model characteristics of more than 200,000 historical mule cases. As a result, banks can assess their accounts to easily spot suspicious activity.
“The level of fraud and financial crime in the U.K. represents a threat to financial institutions and their customers,” said Castro. “Experian, thanks to our data, analytics and technology, is uniquely placed to help. We are committed to helping eliminate financial crime and ensuring safe financial access for all.”
Originally known for its consumer credit reporting, Experian has leveraged its extensive access to data and has honed its expertise in fraud prevention technology. In 2021 alone, the Ireland-based company prevented more than $2.25 billion (£1.8 billion) in fraudulent transactions. In addition to consumer credit reporting and fraud prevention tools, the company also offers identity theft protection, credit building tools, and a loan comparison marketplace. And on the commercial side, Experian provides a range of services for small businesses, including business credit reporting, marketing products and services, debt collection tools, and more.
Global information services company Experian launched a new fraud prevention solution this week.
The new offfering is a fintech-focused version of its fraud prevention data network Hunter.
Hunter takes a collaborative approach to fraud mitigation. The technology has saved businesses more than $6.5 billion a year in fraud losses.
Experianis launching a fintech-focused version of its fraud prevention data network, Hunter, in the U.S. The technology is currently being used by more than 450 organizations in 24 different countries. Experian reports that Hunter has saved its clients more than $6.5 billion a year in fraud losses.
Hunter works by providing participants with a “line of sight” into borrower activity across the fintech industry. A collaborative data network, Hunter enables participants to share data on fraudulent activity in real-time. That data is then securely linked across the network. Participants can use the network to identify potential fraud when onboarding new customers or when verifying current customers. Experian noted that its clients have seen a 35% increase in fraud detection when participating in a Hunter network.
“Our new U.S. Hunter network will harness the power of data and analytics to address real pain points that fintechs experience in combatting fraud,” President at Experian Decision Analytics in North America Robert Boxberger said. “By taking a collaborative approach, fintechs can use this additional data to make more informed decisions that enable smart portfolio growth, improve the customer experience, and mitigate major fraud losses.”
The Hunter network will be available in the U.S. later this year, the company said.
Experian made its Finovate debut in 2012 and most recently returned to the Finovate stage for FinovateFall 2018 in New York. The company’s Hunter announcement comes just weeks after Experian unveiled a new cloud-based fraud solution powered by adaptive machine learning called Aidrian. The new offering is designed to help businesses fight fraud without negatively impacting the customer experience. Last month, Clearcover Insurance Company announced that it had launched a new embedded insurance solution courtesy of a partnership with Experian. The technology gives insurance consumers final, bindable quotes when they shop using Experian’s auto insurance comparison shopping service.
Headquarted in Dublin, Ireland, Experian was founded in 1980. Brian Cassin is CEO.
Experian announced a partnership with Envestnet | Yodlee to help lenders in Australia take advantage of open data.
The collaboration will help Experian manifest its open data strategy in the country following its application to be an Accredited Data Recipient.
Both Experian and Envestnet | Yodlee have been Finovate alums since 2012 and 2016, respectively.
Information services company Experian has picked a partner as its official Open Data API provider in Australia. The company is teaming up with data aggregation and analytics platform Envestnet | Yodlee in an alliance that will allow Experian to access data under the Consumer Data Right (CDR) from data holders including Australia’s Big Four banks and more than 70 Australian FIs.
“Open Data solutions have the capability to solve two of the biggest challenges for Australian lenders: the accuracy of data to support responsible lending and streamlining the customer experience to get a faster decision,” General Manager of Experian Digital Simone Jemmett explained. “The more consumers that opt in to share data through Open Banking, the faster it will deliver the value it has in more mature data markets spurring innovation and greater competition among lenders,” Jemmett said.
The partnership news comes in the wake of Experian’s application to the Australian Competition ad Consumer Commission (ACCC) to become an Accredited Data Recipient under the CDR back in December. This is key step in becoming a part of Australia’s open banking ecosystem, and enabling Experian to focus on delivering fast and accurate affordability assessments. By leveraging Envestnet | Yodlee’s APIs, Experian will be able to help lenders shift to an emphasis on using Open Data sources rather than the traditional credit application process that requires manual uploads and data entry, as well as other inefficient practices.
“Lending is a valuable use case for Open Data with tangible benefits for lenders and borrowers,” Envestnet | Yodlee A/NZ Country Manager Tim Poskitt said. “With Experian coming into the CDR ecosystem, Australian Open Banking is reaching a tipping point and we’re ready for adoption to accelerate in 2023.”
A Finovate alum for more than a decade, Experian made its most recent appearance on the Finovate stage at FinovateFall in 2018. More recently, the company has partnered with fellow Finovate alum Zopa, which integrated Experian Boost into its credit-decisioning process. Experian began the year teaming up with decentralized and secured lending portfolio provider Credefi, and launching a new solution called CreditLock. This new feature enables customers to lock their Experian Credit Report to defend themselves against fraud and identity theft. “Our goal is to create products that help improve people’s financial wellbeing and give them more control over their finances,” Experian Head of Product Management Jayne Sankoh-Beacom said. “With this new feature we can now give our customers that extra layer of protection against identity fraud.”
Making its most recent Finovate appearance at FinovateFall 2021, Envestnet | Yodlee finished 2022 with news of a “deeper integration” between its Redi2 BillFin client billing solution and Schwab Advisor Services. This deeper integration gives advisors on Schwab’s platform who are using BillFin to access capabilities such as flexible billing setup and standardized templates, as well as reminders and alerts. “This deeper level of integration will allow even more data to seamlessly flow back and forth between the BillFin and Schwab platforms,” Envestnet Head of Billing Technology Fermin Garcia explained.
Financial inclusion has been a rising hot topic in the past few years. Providing underserved populations with the tools they need to manage their finances and build their wealth has been a top goal across many banks and fintechs, especially those focused on credit and underwriting.
I recently had the opportunity to speak with Gregory Wright, Executive Vice President and Chief Product Officer at Experian. Wright was a keynote speaker at this year’s FinovateFall event in New York. He offered key takeaways from his keynote, discussed opportunities for banks when it comes to financial inclusion, and talked about how they can prepare and plan to scale their operations.
Key takeaways from his keynote
I talked about innovation in three parts. The first part was about innovation with purpose. I think being mission-driven and wanting to have an impact in the world helps drive not only what you want to do as a business, it helps drive growth and [has an] impact on consumers and who you serve in the communities you live in. And that also can drive employee engagement; they love to work on something that actually has meaning beyond just making money.
The second part is innovation through scale. So, think about platforms. Think about global scale, how we leverage platforms and data, and cloud computing, and modern APIs so that you can innovate faster, get products to the market faster, and really have an impact not only for your business, but for your clients.
And in the third part, we talked about innovation with analytics. We live in this new world where cloud computing, advanced APIs, and modern APIs pull data from multiple data sources. [They are] able to do that in real time with advanced analytics and automating model deployment. We can bring together things that we’ve never been able to bring together before. That enables us to do analytics and credit scoring in ways we’ve never been able to do before.
On how banks and fintechs can leverage data and technology to drive financial inclusion
So, let’s just talk for a minute about conventional credit scoring. Today, the conventional credit scores can score about 81% of the U.S. population. That’s one-fifth that are not being scored or that are credit invisible. With ExperianLift, we can score between 93% to 96% of the U.S. population. That is a step change in performance. And that’s because we use more data, better analytics, bringing it all together in a big data platform and making it live instantly for consumers. So lenders, banks, fintechs– they need to be doing that every day to score more people, drive financial inclusion, and have better business outcomes.
How do we represent consumers in their time of need? There are one-to-two million credit reports pulled every day. These are the most important financial moments in consumers’ lives. We can help represent that. And I know fintechs want to create a consumer experience that is delightful, seamless, digital, easy. And with analytics and big data platforms, they can make that happen. We can help partner with fintechs to use things like Experian Lift, or, even better, Experian Boost, where we’re allowing consumers to come in, connect their bank account, add data to their credit report in real time based on the bills they pay, and improve their credit score before they even apply for something. We’ve worked with a lot of fintechs to figure out how we not only allow consumers to contribute to their credit report and get a better outcome, but also we can help them with better analytics and scores to score more consumers and get to a better outcome. This is not only good for consumers, because they get to a better financial outcome, it’s good for them. They’re scoring more people, getting to “yes” more often, and helping build their business.
What should companies implement now to prepare for future growth?
It comes down to what they’re trying to do and how they want to grow. I really advocate for innovating with purpose. [They should think] about how they want that consumer experience to feel and what that consumer journey is. How do they make it more digital, more seamless? How do they get to “yes” more often?
And again, we’ve talked about the platform capabilities from Experian that can help them. We’ve talked about how we can go from analytics and model development all the way to production through the Ascend platform. Things that normally take nine-to-twelve months to get a new score into market, into production, through compliance, and through their IT queue suddenly, we can do that in one platform from the analytics to deployment in real time. That’s something that any lender, any bank should be doing because it’s going to help get to “yes” faster, deploy better models in real time, pull data sources from not just the credit bureau but from anywhere. That means you can drive better customer outcomes, get to “yes” more often, not add more risk, and eventually build great businesses.
Experian announced a partnership with digital identity company Prove.
The partnership will integrate up to four Prove solutions into Experian’s digital identity and fraud risk mitigation platform, CrossCore.
Experian has been a Finovate alum since 2011. Earlier this month, the company announced a collaboration with U.K.-based NewDay.
A global partnership between information services company Experian and digital identity company Prove Identity is designed to help drive financial inclusion around the world via innovations in identity verification technology. The alliance, announced this week, will help companies bring their financial services to a wider range of customers, including members of un- and underbanked communities. The partnership will also enhance access to “faster, easier, and more secure experiences” for consumers.
As part of the deal, Prove will integrate a number of solutions into Experian’s digital identity and fraud risk mitigation platform, CrossCore. The specific integrations will vary by region, but include:
Prove Pre-Fill – enables auto-fill of application forms with verified data from authoritative sources
Prove Identity – validates consumer-provided personal identity information (PII)
Trust Score – provides a real-time assessment of phone number reputation for identity verification and authentication
Mobile Auth – provides real-time authentication of a consumer’s status on a mobile network
“At Prove, we believe that all consumers should have access to the digital economy, regardless of whether you already have a credit file or not,” Prove co-founder and Chief Executive Officer Rodger Desai said. “We’re proud to be partnering with Experian, which shares our vision for a more financially inclusive digital world. Together, we are giving more companies across the globe access to advanced identity technology, such as cryptographic authentication, that they can use to verify more consumers in a quick and secure manner.”
Prove specializes in verifying identities for members of un- and underbanked communities, many of whom have little or no traditional credit history. The company’s approach to verification leverages mobile phone-centric identity tokenization and passive cryptographic authentication to ensure security and privacy across digital channels while at the same time keeping friction low. More than 1,000 enterprises use Prove’s platform, processing 20 billion customer requests a year in industries ranging from banking and lending to crypto and payments.
“The rapid surge in demand for digital services and the growth of online accounts has accelerated the need for robust, real-time identity verification solutions with the broadest coverage and greatest inclusion,” Experian SVP of Global Identity & Fraud Marika Vilen said. “Integrating Prove’s industry-leading identity solutions with CrossCore and offering them as part of the CrossCore partner program strengthens our state-of-the-art cloud platform, identity verification, and fraud defense while also enabling our customers to verify more customers.”
A Finovate alum since 2011, Experian made its most recent Finovate appearance at FinovateFall in 2018. The company’s partnership announcement with Prove comes less than a week after Experian reported that it was working with U.K.-based unsecured credit provider NewDay. That partnership is geared toward helping Experian Boost customers access a broader array of credit options.
Be sure to join Experian next month for our webinar presentation, Digital Identity: Fintech’s Key to Unlocking Growth, featuring Chief Innovation Officer for Decision Analytics Kathleen Peters.
In today’s digital-first environment, fraud threats are growing in sophistication and scope, and risks of online and financial crime have intensified. At the same time, fintechs are prioritizing growth, and need to do so in a way that is safe, secure, and keeps bad actors out.
Watch back on this Finovate webinar, with Experian Chief Innovation Officer for Decision Analytics Kathleen Peters, as she explores the meaning of digital identity, and how fintechs can leverage identity-proofing strategies to position themselves for growth without diminishing security. Learn:
The role of digital identities in advancing increased personalization, speed, and growth responsibly in fintech and financial services
How data can aid in making smart, risk-based decisions across the user journey
How to unlock financial growth opportunities by offering solutions to previously unavailable consumers due to verification constraints
In a digital world, there’s no way around digital identity. The topic touches all corners of fintech and ecommerce, and while it can create a stumbling block, leveraging consumer identity data can also hold great opportunity.
We recently spoke with Experian’s Kathleen Peters for her thoughts on digital identity and how financial services companies can use consumer data to their advantage.
Peters started her career as an engineer at Motorola and later moved into voice and messaging encryption technology. Eventually, she began working in Experian’s global fraud and identity business and now serves as the company’s Chief Innovation Officer.
The fintech industry has always struggled with digital identity. Why is digital identity so difficult to get right?
Kathleen Peters: A consumer’s identity is personal; every interaction and transaction requires their identity. Consumers expect a seamless and frictionless experience, but also rely on organizations to protect their information. The balance is crucial and challenging.
As an industry, fintech is known for creating compelling and personalized online journeys. But that experience can suffer if the fraud-prevention routines are perceived as burdensome by consumers.
Every year, Experian conducts a survey of consumers and business leaders, asking them about sentiments, trends, and other matters around fraud and identity. Year after year, the number-one consumer concern is online security. When transacting online, people want to know that their information is safe and secure. In striking a balance with consumers to instill trust, industry players need to show some sign of security that reinforces privacy.
Putting this balance into practice, if a consumer or business is performing a large online transaction, they want to see added layers of identity verification. Conversely, if they are performing a simple online purchase, industry players should not over-index with heavy-duty identity resolution (e.g., facial recognition, passcode) on low-risk, low-dollar transactions. In short, we need the right fraud‑prevention treatment for the right transaction; it is not a one-size-fits-all exercise.
It is important to know a customer’s identity for compliance reasons, but are there business use cases for this as well?
Peters: When it comes to KYC (Know Your Customer) compliance, you want to verify that you are dealing with a real person (not a made-up entity) and ensure that you are not dealing with criminals or people on watch lists. This is a basic compliance check and mitigates the risk presented by increasingly resourceful “bad actors” who have become very sophisticated in how they find and exploit vulnerabilities.
For commercial entities, especially small businesses, you want to know that they are a real business. You want to know that the principals involved in the business (the owners, board members) are not criminals or people on watch lists, or that the company itself is not somehow engaged in things that you do not want to deal with. In this sense, KYC applies to consumers and businesses alike in terms of a compliance check. There is a different level of compliance for consumers versus businesses, but the KYC concepts remain similar.
With KYC, businesses can check the box that indicates that “I am compliant.” That does not necessarily grow a bank, fintech, or online merchant’s topline revenues. Compliance is certainly a core element of identity, but so is identifying a potentially fraudulent transaction. For example, recognizing synthetic identity scams can prevent an organization from losing hundreds, if not thousands, of dollars in fraud losses.
When the concept of personalization was introduced in fintech, there was a lot of discussion of privacy concerns and fears that consumers would perceive banks’ efforts as “creepy.” Does this still exist today?
Peters: Our annual Global Identity and Fraud Report shows that people hold banks in high regard. They possess an especially strong degree of trust from consumers. Yet, unknown fintechs that may reach consumers through a banner ad or other similar means may not yet possess that same amount of trust. Building trust with consumers is critical, especially for fintechs, and it starts with transparency and reinforcing the value exchange.
What is the best way for banks and fintechs to build trust among their consumers?
Peters: Banks and fintechs need a layered approach to identity resolution that accommodates the balance between fraud detection and the online experience to build consumer trust early in their relationship. Establishing that trust should be a top priority and involves having visible means of security, being transparent about why you are collecting certain types of data, and delivering value for that data exchange (e.g., personalized offers, speed). And that value needs to be immediate and a tangible benefit, not a down-the-road promotion or assurance.
According to our Global Identity and Fraud Report, consumers are willing to give more data if they trust the entity and feel as though they are receiving value.
Once the value exchange is established, those feelings of trust and recognition lead to increased brand loyalty, a holy grail for banks and fintechs.
Given this, what are ways banks and fintechs can leverage consumer data combined with an increase in their trust to better connect with consumers?
Peters: Building relationships with consumers comes down to recognizing them, protecting their information and offering a personalized experience. Consumers want to feel confident that their online accounts are secure, and that they don’t need to jump through hoops to access the resources they need.
It comes down to identifying and understanding consumers and their needs. The best way to do that is with a lot of data. It serves as a vast resource to look at the multitude of behaviors historically and predict the next likely behaviors and intent. Predictive modeling like this can be hard to do, especially if you do not have a lot of historical data. However, with aggregated data, scores, and solutions from a provider like Experian, it can be a very powerful way to drive engagement.
For instance, if a consumer is in-market for a new credit card, banks and fintechs may want to engage their consumers with a personalized offer or increase dollar-value transactions—both ways to build trust.
