“How would you like to pay? Faster payment? Card? Paypal?”
“Sterling? Euros? Dollars?”
Whatever the payment means and whatever the denomination, there is increasingly one common acceptance requirement — one common currency, if you will — for payments: authentication. Acceptance depends on authentication of the channel, the device used where appropriate, and the customer.
In a world with rampant identity compromise, assurance and defenses need to be smarter and more agile to both outwit the criminals and to truly “know” the customer. Failure to do so leads to fraud exposure, or inappropriate controls and blocks, or (worse) both.
I’m discussing this issue at the Fraud Conference held in London today and tomorrow, sponsored by FICO. In particular, I’m exploring the dichotomy between security and accessibility; the convergence between form factors; and the increasing proliferation of multiple digital identities (or “digentities”) where consumers often (mis)represent themselves, selectively assembling the persona they want to portray, yet inadvertently revealing their true character through actions and events that they cannot hide.
How many social network pictures are of someone or something other than the person? How many dating site profiles contain exaggerations or misrepresentations of characteristics (height, weight, attractiveness, financial independence, character, etc.)? How many customers are happy to hold multiple accounts and not see them all connected together?
On the one hand, financial services providers see the ability to access, sort and apply relevance to Big Data as a natural next step in industry sophistication, but on the other we have the practical challenge of both covert and overt customer misdirection. And yet the customer is also demanding the industry do a better job at authentication: Research shows that 40% of all cardholders globally who experience a fraud event go on to either close the account or just stop using the card.
In short, the best defense is through the customer themselves: driving better education and awareness, and helping improve the chance of effective and accurate authentication. Measures should include taking an enterprise-wide view – not some monolithic system replacement, nor some piecemeal development of peripheral defenses by channel, but connecting and leveraging defenses through a modular, component-driven approach with customer-level data at its core.
After all, if you are shopping in a high street or mall and have forgotten your wallet or purse, it does not matter that you have the means to pay held somewhere, no retailer is going to let you take goods or services without some form of currency. The same holds true, increasingly, in remote channels — if you can’t be authenticated, you can’t transact. That’s why authentication truly is the new currency.