As we turn the page on 2020, many organizations are planning for the new year and assessing current tools and strategies, especially in digital channels, to mitigate risk against an ever-increasing threat landscape. Through customer advisory board meetings and business reviews, customers voiced that identity fraud continues to be a top challenge across all industries. We see this same trend when we look at the data. According to our latest LexisNexis® Risk Solutions 2020 True Cost of Fraud™ Study: Financial Services & Lending1, a report that surveys 500 risk and fraud executives, the cost of fraud pre-COVID-19 among U.S. financial services and lending firms rose 12.8% over the previous reporting period, which covered the first halves of 2018 and 2019 respectively. In addition, LexisNexis Risk Solutions has seen an increase in new digital users beginning in March 2020 as many consumers who previously transacted in branches moved online. This digital migration carries with it new threats as new consumers to the digital landscape may be at higher risk to phishing and social engineering targets. Identity-based fraud remains a top contributor to fraud losses, while identity verification remains a top challenge with online and mobile channel transactions.
Fighting Fraud with a Partial View of Identity
With increasingly complex fraud schemes and the acceleration of businesses moving transactions to the digital channel, enterprises are fighting fraud with traditional analytical solutions that only provide a partial view of identity. Risk signals that expose fraudsters are increasingly being spread out through different solutions. Fraudsters may hide risk in digital signals, physical identity elements, contact information, or biometrics the more ways an enterprise has to confirm an individual across the customer journey the more confident they can be in that interaction. It’s important to look at identity with a more unified and broader lens that can provide unique insights from different perspectives. The most effective fraud analytics solution assesses customer identity risk at any point in the customer journey. These solutions are looking at both the breadth and depth of the identity elements presented, suspicious lack of verification and real-time signals of transaction velocity of an identity, cross-industry fraud behavior and identity consistency across transactions. To assess risk with multiple fraud behaviors, a one-dimensional fraud solution won’t give you the entire picture.
A Precise View of Customer Identity Risk
The idea of bringing a broader lens to assess identity and fraud risk is what led LexisNexis® Risk Solutions to purchase ID Analytics®. ID Analytics is known in the marketplace as a leader in fraud management and credit risk, utilizing the cross-industry application insights from the Inquiry Identity Network they are able to understand both the identity and recognize abnormal patterns in the identities behavior. LexisNexis Risk Solutions is a fraud and identity management leader, driven by insights from the depth and breadth of billions of identity records within the Customer Network making them the experts on the identity’s consistency allowing for high-risk changes to the core identity to be flagged as high risk or uncertain. On the surface, it may seem that LexisNexis Risk Solutions and ID Analytics would overlap in their understanding of fraud from both the core identity and behavior standpoint along with a strong understanding of what is normal or what is considered fraudulent behavior, but in reality, organizations gain benefits by combining these types of assets. Although these perspectives are independently effective, combined together these assets have significant predictable power in identifying fraud risk that can help enterprises better mitigate fraud risk.
Broaden the Lens, Sharpen the Focus
Organizations need to assess their current fraud prevention strategies to ensure that they’re sharpening their focus on customer identity risk. It’s more important than ever to have a comprehensive view of a consumer’s identity at the point of application especially as we continue to see shifts to digital onboarding and account opening. It’s time to broaden your lens and stop fighting fraud with a partial and one-dimensional view of identity. By implementing a solution that gives you a holistic view of identity, you’ll be able to limit losses, preserve the customer experience and enable growth.
To learn how LexisNexis Risk Solutions is helping leading organizations improve their fraud prevention strategy, visit risk.lexisnexis.com/products/lexisnexis-fraud-intelligence
1. Internal Study: https://risk.lexisnexis.com/insights-resources/research/true-cost-of-fraud-study-financial-services-and-lending-edition