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Posted By:  ECT News Network on 10/28/2019 in Security

The Impact of Identity Verification on Customer Trust

The Impact of Identity Verification on Customer Trust

By Christina Luttrell 

We've known for a while that mobile is changing the way consumers interact with companies and conduct business, especially as it relates to e-commerce. 

In the past, mobile devices were typically used when a consumer was researching a product before buying or opening a new account, but the final steps of these processes were done on a personal computer. Today, we know that trend has shifted: In the last 12 months, consumers opened more accounts on their mobile device than on a PC for the first time, according to data from IDology's Second Annual Consumer Digital Identity Study.

The ever-increasing number of consumers with preferences for mobile, along with growth in customer-not-present fraud and mobile device attacks, has created a perfect storm for e-commerce companies. Balancing fraud deterrence with consumer friction created by additional security measures is a challenge that needs to be resolved in order to maintain the loyalty of consumers while also managing risk and decreasing losses incurred due to fraud. 

Increased Mobile Fraud, Higher Customer Expectations

From 2017 to 2018, 63 percent of companies saw an increase in mobile fraud, according to IDology's Sixth Annual Fraud Report. Additionally, the report reveals a 167 percent increase in businesses that felt unprepared for this type of fraud. 

To further complicate this scenario, consumers clearly want security, but they also hate friction. The Second Annual Consumer Digital Identity Study revealed that 88 percent of online consumers said they highly valued a secure account opening process compared to 57 percent who valued a quick process. 

However, when asked how they felt about additional verification and security checks that slowed down an account signup or high-risk transaction, 75 percent stated they were "strongly" or "very" opposed to the interruption. 

This dichotomy can be a challenge for businesses and requires a new approach. In fact, according to the Sixth Annual Fraud Report, the No. 1 fraud prevention challenge for companies is balancing customer friction. To accomplish this, companies need to have flexible identity verification and authentication in place.

Solutions that deliver these capabilities through an innovative layered method that employs behind-the-scenes technology, consortium data, and machine learning to identify consumers with minimal friction are key for e-commerce companies that wish to deter fraud, ensure compliance, and provide a better consumer experience.  

Establishing Trust Is Key for E-Commerce

Consumers have spent the last few years watching data breach after data breach unfold on the news and, as a result, they're continuing to lose trust in businesses' ability to protect their identities. Seventy-eight percent of consumers polled in the IDology Consumer Digital Identity Study strongly agreed that it's a company's responsibility to protect their personal information -- a 16 percent increase over the previous year. 

This means that more is expected of companies and the requirements to earn the consumer's trust are going up. When surveyed about how confident they are that certain groups can protect their personal information online, consumers rated e-commerce sites the lowest -- 2.45 out of 5, with 5 indicating extreme confidence. 

This has significant implications for retailers and e-commerce companies that want to ensure their customers feel comfortable when doing business with them in order to increase their loyalty.  

One example of how we've seen trust impacting the relationship between consumers and companies is the growing importance that identity verification has with consumers.

In the IDology Consumer Digital Identity Study, more than two-thirds of consumers (71 percent) stated that knowing a financial institution was using better, more advanced identity verification methods would positively affect their decision to use that institution. This is a dramatic increase over last year, when only 56 percent of consumers felt that way.

Companies need to start approaching identity verification in a different manner. Solutions that ensure a frictionless onboarding and authentication experience while meeting compliance and providing analytics to detect fraud are best positioned to instill consumer trust, leading to enhanced customer preference, increased revenue and reduced risk. 

About the Author
Christina Luttrell  is the chief operating officer of IDology, a GBG company and leader in multilayered identity verification and fraud prevention. In her 10 years at IDology, Luttrell has significantly advanced the company's technology, forged close relationships with customers, and driven the development of technology innovations that help organizations stay ahead of constantly shifting fraud tactics without impacting the customer experience. Luttrell has been recognized as one of the Top 100 influencers in identity by One World Identity.

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