Tom Donlea, VP of Business Development and Partnerships at Ekata, recently wrote an article for Bankless Times evaluating how lenders will meet identity verification challenges in 2018. The article acknowledges that while a few high profile data breaches dominated the headlines, there were thousands of smaller-scale breaches, spanning across various industries, that received very little attention. All these breaches increases the amount of personal data and the likelihood of fake identity creation or hijacked identities.
So how will online banks and lenders respond to the changing identity verification landscape? Here are some of Tom’s predictions for 2018:
Movement away from the social security number (SSN)
Previous data breaches have dramatically decreased the validity of SSN, weakening it as a personal identification attribute. Financial institutions must start moving away from social security numbers in identity verification and will need additional identity data that can replace this.
Big data and machine learning will be more central to identity verification
There are a number of non-personally identifiable (non-PII) data elements that are difficult to fake, such as the age of an email address or the proximity of an IP address to the user’s mailing address. By combining this data, these elements become much more powerful and can help analyze transactions quickly. These linkages occur real-time, which is essential for the fast-paced online lending industry where consumers expect approvals in minutes.
Larger online lenders will bring more of their fraud-fighting efforts in-house
Instead of solely relying on rules-only third-party platforms, lenders will begin to develop their own dynamic hybrid platforms that combine rules and custom models, giving them the ability to respond to the ever-changing tactics of fraudsters.
Online financial institutions will start incorporating blockchain
Cryptocurrencies like Bitcoin no longer require a financial institution to be the middleman. Thus making blockchain seemingly more secure and potentially a better way to provide a universal digital identity system that is more fraud-proof. In 2018, expect to see banks, lenders and payment providers looking at blockchain more seriously and possibly adopting it for certain high-value transactions.
2018 will bring heightened challenges to identity verification and data breaches are not expected to slow (and may only worsen). Online lenders will need to implement new tools and technologies in order to stay ahead of the fraudsters. Learn how Ekata’s Identity Check API is leveraged in online lending models and rules-based systems for identity verification.