A Google search for ‘anti-fraud systems’ throws up 589 of the most ‘relevant’ results. On the first page alone links range from anti-virus software to national systems used for fraud to the repor- ted number of losses by the National Fraud Authority (NFA).
Typing in ‘identity verification service’ and I get a similar number of results- anything from two factor authentication to device finger- printing to credit referencing agencies.
Scary stuff…. and I don’t just mean the amount of fraud reported by the NFA.
What isn’t helping is the seemingly endless and apparently inter- changeable terminology: one person’s ‘identity’ or ‘fraud’” isn’t the same as another’s. Maybe it’s about time we created our very own dictionary? Identipedia?
As an industry, we are so focused on making things sound sexy but we have forgotten we are supposed to make it clear to cus- tomers how to make a purchasing decision.
From a merchant’s perspective, wading through the plethora of systems and trying to understand what is beyond the sales pitch can be difficult and confusing. In some cases this has dire consequences.
I recently saw a client who had not reviewed their systems for a number of years. Upon analysis they found that with the “silver bullet” system they had in place, 83% of fraud cases passed straight through their identity checks. But didn’t someone say that identity systems stopped fraud!?
So what do we know?
I’m a big advocate for keeping things simple. So whilst we’re all swimming in a sea of acronyms we should also never lose sight of the basics.
There is a balance with all of these systems (whatever we decide to call them) and the loss verses optimisation curve is the way in which businesses should measure what is the right approach for them. Getting good customers over the line with a good customer experience whilst preventing risk is key.
Internalising the following ideas and tactics into your decision- making process will make it easier when choosing the right identity system for you.
Define your requirements – An ex-military friend of mine uses the following saying: “Time spent in resonance is seldom wasted”. Never a truer word has been spoken in relation to purchasing decisions with these types of technology.
Organisations should spend time clearly defining their business requirements, needs, and strategy before buying any technology. Systems can increase efficiency but only when used correctly and in the right process. Technology should only be considered once the customer journey and experience has been defined and business rules are created. Without this technology can work against you, making things less efficient, not more.
People and process – People and process are the under- pinning for any system. You must ensure that the technology is not expected to replace good people and process. It’s about augmentation, not replacement.
Bring fraud and marketing together – traditionally, fraud and marketing teams do not make decisions together, leading to each department buying a different point solution. Instead the two teams can work together using the same logic of identifying and preventing bad customers to enable decisions on how to identify the good ones.
Test – Never buy without completing benchmark testing making a side-by-side comparison of suppliers. The type of fraud your organisation is experiencing or your customer demographics may be similar to another company but it will not be exactly the same. Spend some time designing the test around the outcomes you are looking to prove. Supplier test data typically should only be used for technical integration testing, not to assess if the system prevents fraud or can be used for identity proofing.
Keep it simple – A well-implemented, simple system that can be tailored will deliver ten times the value of a poorly implemented, off-the-shelf system. It is possible that re-visiting and optimising an existing system can also deliver value and may not require additional integration work.
Change will happen – Flexibility is critical since things will always change. It tends to follow a pattern similar to this: 1. Fraud threats change, 2. Business needs change, 3. Regulatory needs change, 4. Customer behaviour changes , 5. Technology changes
So we need technology that is flexible, on-demand to deal with such change and provided by suppliers that adapt to the market. In addition to adaptive technology, we need to be making systematic reviews of any changes. There also needs to be some level of tailoring to people, process and technology to ensure continuous optimisation. That way, we get more of the good customers and less of the bad ones…
As an industry, we are starting to recognise the issues that merchants might be having in understanding the market. Clarity is one such issue. Recent initiatives like the launching of The Open Identity Exchange’s OiXnet aim to provide clarity for the identity market though an online registry.
And others are doing their bit too. The MRC continues to ensure that presentations at its events are driven by the merchant, giving real life practical examples rather than just a sales pitch.
Despite complications there is a huge opportunity for merchants in getting this right. Combining classic theories like Moore’s Law with trends such as big data, social and mobile means that the acceleration of innovation is beyond what we have ever experienced before.
The market has to move towards increased customer centricity. Simply because unless customers get a good on-boarding experience they will go elsewhere.
For merchants that can manage their risk effectively and create a great experience, these profitable customers are there on the table for the taking.