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Quick Q&A on identity fraud

Jan 14, 2021 / Digital Banking / Technology

Kimberly White, senior director of market planning, fraud and identity, develops the strategy and guides product planning and the roadmap for fraud solutions at LexisNexis Risk Solutions. The Atlanta-based organization harnesses data and advanced analytics to provide insights that help financial services organizations, other businesses and government agencies reduce risk and improve decisions.

What are the latest fraud trends you’re seeing since the pandemic?

The threat landscape is ever changing. Through customer advisory board meetings and business reviews that we’ve had, identity fraud continues to be the top challenge across all industries voiced by customers within our networks. At the height of the shutdowns, we saw a 22 percent increase in applicants with thin-sourced profiles for verification. This indicated a growing need for alternative data and additional insights to maintain effective fraud, verification and credit assessments. We also saw higher fraud and credit-risk levels among banking applicants as digital transactions increased.

How will the traditional fraud prevention tools morph to address the challenges of 2021?

Verification tools built on older rules and patterns may be letting in more fraud than normal. Adding some sort of fraud-analytic tool is important. Using fraud analytics with real-time signals that can help detect application velocities and other anomalies will be essential in 2021. Typically, you might see fraud start at a telecommunications company, then it finds a way to defraud financial institutions. Organizations should focus on gaining a cross-industry view of fraud, and it’s important to incorporate third-party tools to provide a deeper dive on the identity to see if there’s any anomalies.

Why does digital onboarding present such a challenge to banks and credit unions?

It’s a challenging environment as fraudsters become more sophisticated. They are getting full identity profiles to look like an individual. Traditional identity verification tools verify the identity, but they overlook real fraud signals. Fraudsters are taking advantage of new channels as more transactions go digital. That’s especially true during the pandemic when manual review cues piled up. Synthetic identities continue to look more like real identities. Fraud rings grow more sophisticated, hiding behind shared addresses, phones and emails. These examples show that fraudsters are continuing to circumvent existing risk prevention strategies.

Bank consumers want a frictionless experience, but that could potentially expose them and financial institutions to fraud. How do you strike the right balance?

It’s about understanding risk throughout the customer journey. Too many times we see banks provide a one-size-fits-all approach or take the same approach to every channel in every customer touchpoint. Fraud analytics provides that tool to understand the fraud risk of that transaction to apply the right amount of friction if needed. It’s about providing that optimal risk-to-friction point and using fraud analytics to understand what authentication options may be needed.

How can decision analytics fight fraud?

A comprehensive decision analytics solution to fight fraud incorporated through the customer journey to assess identity risk is key. Fraud analytics should look at cross-industry application insights and the ability to look deeper at an identity with a solution that provides the breadth and depth to understand any anomalies. Using fraud analytics that uses a set of signals can be somewhat effective. But combining cross-industry application insights with a deeper look at identity creates a significant, predictable power to understand identity-fraud risk.

Sponsored content by LexisNexis Risk Solutions. Kimberly White can be reached at [email protected].

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