Five factors driving investment in IDV
For billions of individuals around the world, digital identity became critical in 2020. As a result, the global identity verification market, which was already growing rapidly to support the digitization of a whole host of industries, is now booming.
With vast numbers of people forced online to access healthcare and financial services, purchase groceries and consume entertainment, the ability to verify and protect digital identity has become central to everyone’s ability to survive and function during the pandemic. And while businesses and consumers have moved from digital-first to digital-only almost overnight – and coped amazingly well considering the fluctuation in regulations, restrictions and circumstance – it has not been without challenge.
Social distancing and imposed lockdowns have created the perfect storm for cybercriminals. Hackers prey on sites and services with weak — or worse, negligible — authentication protocols. At the other end of the spectrum, over one billion people globally lack a legal form of identification, preventing them from accessing even basic financial services and partaking in a myriad of other important activities while being confined indoors.
This is set against a societal trend of the consumerization of service. Thanks largely to Amazon Prime, consumers expect rapid, seamless service at the click of a button. It has posed a tricky dilemma to businesses: in the race to create more personalized and meaningful brand interactions for customers, they must collect—and secure—more data than ever but this must not impact the experience. It has thrust identity verification (IDV) to the fore, driven largely by five main factors:
Customer experience and loyalty
It’s no secret that today’s consumer expects a quality, frictionless experience. Not only have organizations realized the tie between customer experience and revenue, but data shows that customers are willing to pay more for a better experience, and that experience often trumps both price and product.
Then consider the more than 70 million digitally-savvy millennials who have grown up with internet access and who expect near-immediate response times. For businesses, providing the customer experience that clients demand while ensuring security is all about balancing an acceptable level of risk with the right amount of friction (this is also known as risk-based approach).
Organizations that previously didn’t need or didn’t choose to digitize their offerings are now having to rush through transformation programs in weeks instead of months and years. It’s been the only way for them to survive but, of course, this creates risk. Think about the millions of people that are now using digital services for the first time, whether that’s shopping for groceries, banking and paying bills or accessing online healthcare services.
Many of them are the most vulnerable in society, from previously marginalized groups who weren’t online for many different reasons. It means that businesses across all sectors have had to improve the speed and simplicity of the onboarding process to adapt accordingly.
Identity verification and security
Security remains a macro challenge that is relevant to all sectors, but especially to the banking and financial services industries. As banks shut down their branches, investors flocked online to digital platforms and consumers became reliant on the fluid movement of digital funds, the need for best-in-breed identity verification (IDV) security has become critical.
In recent years, fraudulent digital financial transactions in Europe amounted to €1.8 billion per year. In the UK, digital payments and remote banking fraud reached a total of £152.9 million in 2018. It has resulted in banks and other financial service providers using biometric technologies like selfies for the remote identification of their customers. Though, as organizations adopt digital transformation and biometric technology, it reinforces the need for stringent IDV to keep pace with innovation.
More and more businesses are embracing the concept of remote work. Studies show that the number of people working from home has risen by approximately 91% over the last 10 years. Remote working means that employees will use different servers to access and share data from the organization. In such an environment, IDV is critical.
In order to support this sudden shift to remote working, massively accelerated by the COVID-19 pandemic, organizations are increasingly using identity verification and authentication, such as H&R Block verifying customers for tax returns, and government services needing to verify lawyers and notaries. Because remote working forces employees to store their business information on their devices, anyone can (in theory) get the gadget and log into the organization’s network. IDV is a massive barrier and deterrent here and, as remote working will become more commonplace after the pandemic, the need for robust IDV and authentication will remain.
The COVID-19 pandemic will have a long-lasting impact on our habits, and many experts believe that the current pandemic may not be the last. A long-term contingency plan is a prudent investment so that next time, businesses can be ready in a way they were not this past year.
For example, two major organizations in the UK – the Passport Office and the Driver and Vehicle Licensing Agency – are still advising customers of significant delays in issuing new ID or renewing existing documents due to reduced capacity during the lockdown and the resulting backlog of applications. Firms that are required to verify the identity of their customers and perform due diligence are reporting that this is impacting on their business. They are unable to onboard new customers or conduct significant transactions on behalf of existing ones on the basis of ID that is close to or past its expiry date.
A root of trust
In today’s digital economy, every outcome depends on privacy and identity as a point of trust, a perimeter of security, an enabler of relationship management, and a means of service personalization. That applies equality to consumers and businesses that transact online. Organizations need to be looking to reap the benefits of security and long-term customer value without incurring many of the technology, operational, regulatory, and security risks that can come with trying to use a solution that is not fit for purpose.
Digital transformation has accelerated dramatically as a result of the COVID-19 pandemic. Across all sectors, businesses that already had security measures that included identification, authentication and verification in place have been able to thrive while others are playing catch-up. The shift towards identity verification as a key strategic driver for organizations is not simply a temporary trend but an important, ongoing factor for ensuring long-term success.