Beyond Biometrics: Three Ways We Make Sure It’s Your Customer

The new rules of authentication demand multiple methods, which we provide in our latest solutions

by Liz Lasher

November 25, 2019

With people spending more and more time on their mobile phones — an average of three hours and 15 minutes on their phones every day, with the top 20% of smartphone users spending upwards of four and a half hours — “everything mobile” is driving digital transformation. Unfortunately, new fraud opportunities have come along for the ride. While consumers demand their banks protect them from fraud, enhanced protection must be delivered with a customer experience that is fast, easy and consistent.

This is why FICO has invested in innovations in biometrics and behavioral authentication, combined with machine learning analytics, that can create trust in digital identities while streamlining complex onboarding, fraud and compliance processes. You can read the product announcement here, but read on to learn why we launched FICO® Identity Proofing and FICO® Authentication Suite.

“Vanilla” Biometrics Aren’t Strong Enough

Biometric data — such as your face, voice, retinal scan, or fingerprint — has been in use for several years as an identity credential. But biometric data can be dangerously vulnerable to theft and reassignment. At the same time, biometrics are static attributes that cannot be changed, and thus are a core component of effective authentication, which is composed of three elements: what you have, what you know and what you are. When used in conjunction with additional attributes, biometrics add an extremely powerful layer of protection.

Biometrics are only one element of identity proofing — the digital process of onboarding customers without requiring face-to-face verification. It’s all about establishing trust in a digital identity and starts with what you have: you take a photo of your government-issued ID (e.g., a passport or license from anywhere in the world), and then take a selfie. Our solution, FICO Identity Proofing, then corroborates the information between those two inputs, to verify your identity and establish your digital identity.

When you’re taking a photo of your ID, FICO Identity Proofing analyzes elements of that ID to establish its legitimacy. These elements include the ID’s hologram, and an optical character read (OCR) of the text and machine-readable zones such as a QR code. At the same time, the solution extracts a picture of you from the photo on the ID.

When you take a selfie, the software then executes sophisticated machine learning algorithms to detect “liveness” (i.e., the selfie is of a live person) and confirms that the ID has not been spoofed. The selfie also proves that you have possession of the ID card.

Fingerprints Don’t Prove Who You Are

For the three categories of authentication — what you have (possession), what you know (knowledge) and what you are (inherence) — the most common biometric used is the fingerprint. While the fingerprint might seem to be an inherence factor, it turns out more than one person can register fingerprints on a phone, so, in this instance, they became a possession factor. Specifically, the fingerprint really doesn’t capture who you are if you’re dependent on the device and don’t have independent biometrics; it becomes an element of what you have.

What you are can also be established by user behavior and device telemetry. FICO Authentication Suite includes behavioral authentication capabilities. These factors non-intrusively examine user patterns, such as keystroke analysis of the way you enter your password, geolocation, and other behaviors around your device such as which browser you prefer. These patterns create a signature, something unique to you.

Voice Authentication Is Effective and Frictionless

Back to biometrics, FICO’s voice signature capabilities allow you to enroll in online and mobile banking by saying a short phrase, such as “Love my kids,” three times while taking a selfie. By having the factor be specific to your banking app (rather than your device), you establish a mechanism to prove inherence.

Voice biometrics provide a fast, easy way to create a more frictionless, seamless experience for the consumer. They can be used to log into the banking app and verify high-risk transactions involving large dollar amounts, wires or other unusual characteristics.

A Strong Complement to Other FICO Solutions

Together, FICO Identity Proofing and FICO Authentication Suite provide a platform to establish and sustain trust in the digital identity, offering easy-to-use, integrated security across the customer lifecycle.

FICO Identity Proofing and FICO Authentication Suite are strong complements to other FICO solutions that are used to manage risk and optimize customer interactions. For example, clients using FICO® Falcon Fraud Manager will be particularly interested in understanding the options these new solutions will provide, and why our new capabilities are strong additions to the flexible, AI-empowered capabilities of FICO® Falcon X.

To learn more about how FICO Identity Proofing and FICO Authentication Suite are being used to create truly seamless digital onboarding experience, read my new Hot Topic Q&A, “Beyond Biometrics: Identity Proofing, Authentication and the Customer Experience.”

Follow me on Twitter @LizFightsFraud.

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FICO® Score High Achievers: Is Age the Only Factor?

FICO’s latest research on <a href="http://www.fico.com/en/blogs/risk-compliance/us-credit-quality-rising-the-beat-goes-on/" target="_blank">national FICO® Score distribution</a> shows that US credit quality continues to trend upwards, with an increasing number of consumers scoring in the highest scores ranges. Given that, we decided it was time to refresh our study on “<a href="http://www.fico.com/en/blogs/risk-compliance/infographic-what-does-a-high-credit-scorer-look-like/" target="_blank">FICO® Score high achievers</a>,” where we examine the credit behavioural profiles of consumers with higher credit scores. As expected, our latest study showed that older people generally have higher scores, as has been the case in our <a href="http://www.fico.com/en/blogs/risk-compliance/age-before-beauty-credit-worthiness-before-youth/" target="_blank">past research</a>. This is largely because they have trade lines that have been open longer, which leads to higher scores (assuming the trade lines are in good standing and all other things equal). The most credit savvy among you will remember that length of credit history accounts for roughly 15% of the overall <a href="http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx" target="_blank">FICO® Score calculation</a>. But for younger consumers, it isn’t too helpful to say, “just wait until you are 50 years old, and that will fix things!” Thus, I decided to dive deeper with our analysis, including looking at the credit behavioural characteristics of younger consumers with high FICO® Scores. In this analysis, I looked at credit characteristics for the two highest score bands, 750-799 and 800-850, which have about 16% and 23% of the population, respectively. I further broke this down by looking at the characteristics of the youngest 15% in each group, which occurs at age 29 for the 750-799 group and 43 for the 800-850. We used FICO® Score 9 for our analysis, and examined typical variables of the categories that go into the make-up of the score. <a href="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png"><img class="alignnone size-full wp-image-29367" src="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png" alt="fico-score-high-achiever-table" width="715" height="747" /></a> Since there’s a lot to dissect in this chart, I’ll highlight a few findings that struck me: <ul> <li>Credit history. Higher scores are undoubtedly associated with a longer time on file. What’s striking is the higher average time on file for the 800+ group, both overall and for revolving accounts (the most common trade line). Clearly, it helps to start credit use early in life – but that’s not the sole determining factor for high scoring. The younger cohorts in both the 800+ and 750-799 groups have time on file medians significantly less than their older counterparts.</li> <li>New credit. High credit scorers do, in fact, pursue new credit. We see little variation in months since last trade line opening and last inquiry among all groups observed.</li> <li>Pay on time. As you might expect, the further in the past the delinquency, the higher the score – and that’s if a delinquency ever happened. 95% of the 800+ people and 72% of the 750-799 group have never been delinquent, which is a striking contrast to the 57% for the total population. The percentages for the younger groups are even higher, especially so for the 750-799ers. Collection items are also scarce for these high scorers. While 23% of the national population have collection items greater than $99, the figures are only 0.5% for the 800+ group and 3% for the 750-799 group. It is clear that, in conjunction with starting a credit file early, paying on time is a key trait of the FICO® Score high achiever.</li> <li>Balance and utilization. Finally, we look at how credit is being used, focusing on revolving product use. (Since most people only have one mortgage or one auto loan, variation in instalment product figures is minimal and driven by payment history, which is near perfect for high scorers, as we’ve seen.) FICO® Score high achievers tend to have more open revolving accounts. While the % active trades and utilization are generally lower, by no means do high scorers avoid the use of credit products. What drives the difference here is the amount of available revolving credit utilized. The 800+ group is roughly 1/4 of the national median, both in total and on their highest utilized card; they also have lower balances and more cards. The 750-799 group is more active and higher utilized, but still only at 2/3 of the national figures. The young 750-799 group compensate with lower revolving balances and, as a result, lower utilization, which is in line with what we see for the 800+ group.</li> <li>Benchmarks. I’d like to point out that while this study provides good benchmarks of the typical credit traits of the FICO® Score high achiever, individual credit profiles will vary widely. And keep in mind that when we sort groups of consumers as a whole by different behaviours, some results may look superficially odd. For example, the 800+ band has a longer median average open account time (128 months) than average revolving months on file (140 months).</li> </ul> So, what do we conclude? A huge takeaway is that high scorers don’t have too much in the way of serious delinquencies and negative public record data. In most respects, the young 800+ people are like their peer group. They really only differ markedly in their shorter credit history and higher non-mortgage balance, both of which are a function of life stage. Our results show that you don’t have to be a credit product hermit; these high scorers have more credit cards. The takeaway is to start credit activity early and maintain well-managed and moderate usage. In many ways, the young 750-799 people are more interesting because their age profile is much younger. Their credit characteristics differ more from their peer group, particularly in terms of length of credit history. They compensate by having almost pristine credit records and lower balances. Ultimately, 39% of US consumers are FICO® Score high achievers, which they accomplish by following common-sense credit practices. It ain’t rocket science!

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