As the online ecosystem continues to grow, digital identity offers new opportunities for consumers and businesses alike. While digital identity has become a catalyst for change across many industries, the rapid advancement of technology has put pressure on regulation and policy development and presented new opportunities for fraudsters to thrive.
This month, the financial world will travel to Amsterdam for Money20/20 Europe. The topic of digital identity will capture the attention of attendees as organisations seek to understand what digital identity means for them and how it will shape their industries. In this blog, we explore some of the key issues and trends shaping digital identity ahead of Money20/20.
Fostering innovation in Banking
The integration of digital identity in the banking industry has unlocked boundless potential for enhancing financial services and fostering innovation. Banks are keenly aware that many of their challenges stem from account opening processes and effective customer verification. In the United Kingdom alone, nearly 25 per cent of all financial applications are abandoned due to registration difficulties. To address these issues, digital identity has emerged as a powerful solution, streamlining customer authentication by eliminating the manual processing of documents and in-person verification. By adding a layer of trust to online transactions, digital identity offers an improved customer experience.
Nevertheless, managing multiple digital identity credentials poses its own set of challenges, similar to handling other personally identifiable information. In response, digital identity wallets have gained traction recently as they enable users to store a range of verified attributes securely. At Money20/20 Europe, we anticipate the banking sector to be eager to discover how digital identity can allow them to expand beyond traditional banking services and deliver an enhanced customer experience.
Keeping pace with regulatory and policy changes
With each passing day, more and more consumers turn to the online world for their shopping needs. In the US alone, e-commerce sales reached a staggering $870 billion in 2021, showing a remarkable 50.5% increase compared to 2019. This shift has fuelled a skyrocketing demand for digital identity solutions as customers and businesses seek secure and efficient ways to interact and transact.
However, as digital identity becomes more sophisticated and convenient, fraudsters are quick to recognise the potential for criminal activities. Meanwhile, the fast evolution of technology has left governments racing to regulate industries retrospectively rather than in tandem with technological developments. As a result, a collaborative approach between businesses, governments and regulatory bodies is required to ensure industries and consumers can continue to reap the benefits of digital identity while providing a safe and secure environment. This year at Money20/20, we expect discussions to explore how a proactive and collaborative approach could be utilised to create robust frameworks that maximise the advantages of digital identity while effectively protecting consumers.
Combatting rising fraud
Identity theft can take various forms due to the ever-increasing sophistication of fraud. With an abundance of personal data available online, crimes involving the theft and misuse of personally identifiable information (PII) have become rampant.
The rise of ‘friendly fraud’, sometimes called ‘first-party fraud’ or ‘chargeback fraud’, is of particular concern for financial institutions. This type of fraud involves legitimate customers claiming they don’t recognise or didn’t make a card purchase in the hope that their issuer will chargeback the purchase. For financial institutions, tools such as the Know Your Customer (KYC) process can help to combat friendly fraud by recognising when a customer exhibits suspicious patterns and monitoring whether a customer has been a repeat offender.
As digital identity becomes even more ingrained in our daily lives, businesses are recognising that a coordinated approach is needed to address the escalating threat of fraud. As a result, Money20/20 attendees can expect to discover innovative identity solutions on the show floor that tackle the root causes of fraud.
Digital identity has become a central pillar shaping the financial landscape. Its integration with banking has unlocked limitless possibilities for improving financial services and fostering innovation. Digital identity streamlines authentication, eliminates friction points, and adds trust to online transactions. However, rapid technological advancements require proactive regulation to combat fraud risks. Collaboration between businesses and regulatory bodies is essential to protect consumers and combat identity theft. By embracing digital identity as a catalyst for change, businesses can revolutionise and reshape industries.
Are you attending Money20/20 Europe? Let’s connect!
Data Zoo enables fintech companies around the world to build modern customer verification experiences. Whether you’re a startup expanding globally or an enterprise verifying millions of global customers, Data Zoo makes it easy to simplify integration, scale global operations and keep customer data safe.
Data Zoo will be at stand E80 at Money20/20 Europe from 6-8th June 2023, where we will showcase how our modern identity verification solutions help fintechs break free from legacy providers.