Digitizing the customer experience is a major challenge for financial organizations. Luckily, innovative solutions are bringing easier and faster access to financial service companies. Banking customers who were previously reluctant to adopt digital practices, such as senior citizens, have even gotten into the habit of doing their business online, including their loan applications.
Of course, most loan applications are still processed in person, and that is where most fraudulent theft occurs. However, as the digitalization of business grows, it is becoming essential to address the new risks that come along with that digitalization.
We must adapt more and more to the digital use of identity documents instead of physical copies in person. Businesses and governments alike are facing challenges in identifying fraud in this new online environment.
In this regard, fraudulent documents open avenues for serious organized crime. Consequently, money laundering, terrorist financing, and failing to identify fraudulent documents in both real and online scenarios pose a threat to the global economy.
COVID-19 was directly responsible for the rise in identity fraud as many companies were forced to move to online business overnight.
Identity verification leverages established government databases to confirm the identity of individuals. The process extracts data from a person's provided document (e.g., ID number or facial biometrics) and compares it with verified data (e.g., government databases such as passports, driver's licenses, and others) to verify that this person is really who they say they are.
In this identity verification zone, we enter a very robust stage of fraud detection, where mechanisms search multiple systems to see if the information a person provides is correct. The tools make comparisons across multiple systems to check whether personal data such as email, phone, home address, and business address are authentic.
Identity verification tools today include:
Fraudsters will also employ various tactics throughout the customer lifecycle in an attempt to gain access to accounts through fake account recovery requests. Using weak identity verifications patched with vulnerable authentication processes exposes your business to fraud, kills conversion, and leads to frustration for you and your customers. Businesses need to have robust authentication methods to ensure the legitimacy of account owners.
For lending institutions, it is impossible to overlook this process. While necessary, these solutions cover only one stage of fraud to which fraudsters have already adapted, leaving companies unprepared. Traditional methods can stop up to 90% of fraud.
To combat the remaining 10%, companies need to invest in models with explainable artificial intelligence based on behavior analysis. Keep the amount of work for low-risk loans to a minimum to save time and money. Learn more about Bleckwen's AI approach to optimizing your loan processes with low friction and time.
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