With fraud continuing to impact telecoms operators, financial services institutions, many other businesses and huge numbers of consumers, digital identity verification is becoming a routine part of commerce and our lives. The phone number is becoming an increasingly robust means by which digital identity can be verified.
The scale of the fraud problem is amply demonstrated by the scope of the efforts being made to prevent fraud. Juniper Research predicts that the number of digital identity verification checks will surpass 70 billion in 2024; growing 16% on the previous year’s number of 61 billion. This figure is only set to grow further by 2028 with digital identity check volumes being dominated by the Far East and China which will account for 25% of checks, western Europe, which will account for 24% of checks, and North America, which will account for 17% of checks.
Of course, as the landscape tightens against fraudsters in one region they will shift to a less-protected territory to continue their activity before taking a new approach and starting the vicious cycle all over again. Fraud is nothing new and is a routine part of modern life. Experian in its latest UK Identity and Fraud report has uncovered that 69% of organisations experienced ‘significantly’ or ‘somewhat’ higher losses from fraud in 2023 compared to 2022. This demonstrates continued momentum is with the fraudsters as highly-organised, professionally operated crime groups target customers.
That’s becoming an even greater concern for organisations such as financial services providers which suffer reputational as well as business losses when fraud occurs. Certainly, Experian’s research revealed that UK consumers feel under attack. 35% of consumer respondents cited in its report feel that they are now more of a target for fraud than they were a year ago. Identity theft is perceived to be the greatest threat.
Organisations, however, are far from unarmed when it comes to fighting back against fraud. Identity verification – which incorporates multiple techniques and technologies – works by analysing data from numerous sources, such as from online identities and cross referencing it with trusted data sources, such as the credit bureau, to gauge the likelihood that customers are who they say they are. The technologies and processes that enable effective, remote digital identity verification are many and varied, but fall into two key categories.
1.Online variants of traditional identity verification approaches
This includes the ability to check customer details, such as name, address and date of birth, against trusted data sources, for example banking records – or to verify their identity documents remotely using technologies such as artificial intelligence and machine learning.
2.Analysis of data relating to customer behaviour, devices or online footprints
The use of data analytics to understand more about the device a customer is using is becoming a popular tool for combatting fraud. The location and the IP address of the device can also be used to ensure data points are consistent with behavioural biometrics. On one level, something as basic as knowing whether a phone is present at the same location that a credit card is being billed can highlight a potential fraud but greater intelligence can be applied to know, for example, that a middle aged man is unlikely to be purchasing a teen beauty product. Other behavioural routines can also be analysed and enable an organisation to analyse how customers initiate sessions online, how they hold and use their mobile devices, or whether they have other online accounts that match their online identity information. Combining incremental inputs such as these helps build up a picture of whether an online identity is genuine or fake.
Mobile network data
An extremely valuable source of information is consumers’ mobile phone identities, which include their name, address, device details and other information that is typically associated with a phone number or contract. The global mobile identification market is expected to register a CAGR of 8.9% during the forecast period (2022-2027), reports Mordor Intelligence. During the pandemic, there was a sudden push towards digital transformation, with online marketplaces adopting digital transformation programmes to serve customers and maintain operations. The transition towards digital has led to the significant need for mobile identification.
Mobile ID largely relies on biometric technology to function. Any smartphone or tablet can be used as a multi-factor authentication device with the help of biometric software that converts cameras and microphones into biometric sensors. Mobile identity is increasingly supported by strong authentication factors, with fingerprint sensors and facial recognition becoming almost common components of modern smartphones.
The on-demand economy companies are shifting towards mobile ID scanning and verification to solve problems related to financing, licensing, compliance and the personal safety security of both employees and customers. This instant identity verification has triggered the market vendors to offer a mobile, fast and easy-to-use platform. They also feature smart/connected databases for quicker identity verification results.
Mobile identity
The ubiquity of the mobile phone makes it an ideal tool for verifying identity and Juniper Research has projected that mobile phones will become the primary source of identity for more than three billion people by 2024. Number portability now enables users to retain the same number for life and that means it is recognised as a globally cemented personal identifier.
“When it comes to verifying a digital identity, the phone number is the single most important piece of data that businesses use to verify a person or company,” says Peter Ford, the executive vice president of Information Services at iconectiv. “Phone numbers are easier to manage because the syntax of the number is consistent on a global scale. In addition, how they are managed, distributed and created is unique and comes with history and metadata that makes it a meaningful asset across every type of identity verification.”
In addition to delivering the convenience and simplicity that consumers demand, mobile phone numbers provide the reliable, verifiable data that businesses need and the global ubiquity that other identity signals cannot replicate. As such, ensuring the integrity of the phone number remains intact is of paramount importance.
“While phones were initially established to be a more efficient and accessible way to communicate, they have organically evolved as a consistent indicator used to defend and protect commerce, privacy, data and reputation globally,” adds Ford. “That is why it is of the utmost importance that the communications ecosystem bands together to create an impenetrable force to keep out bad actors, who use the reach and anonymity of hiding in a digitally connected society for their personal gain.”
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