“We need to re-evaluate how we approach identity, how we think about the online account opening process, and, most importantly, trust and safety online overall.”
When those words belong to Zac Cohen, chief operating officer of global identity verification service Trulioo, speaking on the impact of the COVID-19 pandemic, it pays to take notice. Vancouver-based Trulioo has come a long way since 2011, when it set out on its mission to improve financial inclusion by ensuring everyone with a digital footprint can be verified and benefit from the online economy.
It’s now a leading player in the world of digital identity verification, counting international banks, Fortune 500 enterprises, tech giants and global companies of all sizes among those who use its solution to help meet know your customer (KYC) and anti-money laundering (AML) compliance and inform the user experience around them. Its Global Gateway is an identity marketplace of more than 400 trusted data sources and the company has invested heavily in building a low-code developer tool called EmbedID to allow its customers to easily integrate and plug into that database.
Trulioo knows that no-one can afford to stand still in this constantly evolving space. Here, Cohen discusses how the pandemic has only amplified that.
The Fintech Magazine: To set the scene, what were the challenges global businesses were facing when it came to identity, pre-COVID-19?
Zac Cohen: The challenges typically fell into three buckets for us.
Global businesses have global customer bases and each one is diverse, each has its own unique characteristics and each customer base brings a unique set of demands. So, when you think about a company that operates globally, how do you manage the onboarding programme in 30, 40 or even 100 different countries around the world, without spending huge sums on compliance, operations, personnel, and unique user experiences? Managing that diversity is one of the big challenges.
The second challenge is the regulatory landscape. If you work with customers online, you must confirm their identity, and, as a global business, you alone are responsible for designing, managing and, ultimately, adhering to the regulations within that vertical around identity verification. It’s complex and the penalties are stiff. Last year, AML fines totalled more than $8billion, globally. The volume of regulatory change has increased nearly 500 per cent, compared to 2009 levels. So it’s significant, when you think about the ramifications of that regulatory landscape and how many departments within your global business it will hit, whether it’s risk, operations, legal, customer relationships, design, security, etc.
The last thing we think about is change. We live in a dynamic, highly competitive, ripe-for-disruption type of world. So how you build your business for change, and how you react or take advantage of that change, is often the difference-maker between long-term success and failure.
TFM: So, what is the impact of the COVID-19 pandemic on these challenges?
ZC: The biggest change for identity that the virus has brought about is really its impact on the digital experience. We’ve gone from a ‘nice-to-have’ to a ‘must-have’ digital channels, simply because the physical interactions that we’re all used to are either limited, nonexistent or, frankly, from a customer experience perspective, they’re not preferred right now. And that change is a dramatic one that we believe will persist, regardless of how, as a society, we hopefully solve this virus challenge.
Increased demand and online traffic are compounding those existing challenges. When we think about regulation, you now have to recalibrate your risk models because the risks in services that you offered before, and how you evaluated that, have dramatically changed. The other thing that we’ve really noticed since COVID started is around change.
We did a recent study in which we found that 42 per cent of users will abandon the account opening process if the identity checks fail. It’s a very tight window of customer experience where they make their decisions rapidly. Also, we’ve seen fraud has increased dramatically because when online traffic increases, it also attracts individuals who are trying to take advantage of that.
TFM: What will be the long-term impact on global business?
ZC: We need to re-evaluate how we approach identity, how we think about the online account-opening process and, most importantly, trust and safety online overall. The online organisations and fintechs that have been most successful really have a strong way to look at that online identity approach and the user experience. Businesses that want to thrive in this environment need to double down on that experience and take a critical look at how their approaches are being rolled out.
First, you need to take a look at the technology partners that understand the market, speak to them, work with them, and try to take advantage of their experience. And, second, you need to take a risk-based approach with your identity solutions. That means leveraging a network that can layer different identity tools, depending on the situation or the unique experience that you’re trying to create.
TFM: Should governments or individuals be responsible for creating a digital identity network? And what form should it take?
ZC: To answer the first part of that question: it’s both and everything in between. At the end of the day, for all the players involved, the end goal is a secure scenario where you can be identified to reduce fraud, to satisfy the regulatory obligations that are in place and also to grow and be able to interact with, and have access to, the online economy.
So, all these different players have to contribute and we’re only as strong as the weakest link. Government organisations that want to help drive secure access to data, that want to be able to create strong identity systems, users that naturally want to interact online but don’t want their own information to be put at risk, and technology partners that are the catalyst to it all, really need to work in concert together.
I think the easiest way to think about an identity network is as an orchestra. It’s an orchestration of services that layer together and provide a robust but flexible and customised consumer journey. That will maximise your verification while minimising friction and fraud. Using existing services when you need them and having an intelligence layer to conduct them, is how we define an identity network.
TFM: What are the benefits of an identity network for your customers, including any impact on a frictionless user experience?
ZC: We provide a proprietary software and intelligence layer that we share with all of our customers, so they can see, ahead of time, what has worked, in what situation, when and where. When you’re planning a global rollout, whether you’re a small business or a large one, that is incredibly powerful.
Another main benefit of the identity network is evolution and change. We all know fraud risks will change, we’ve seen the regulatory environment change and we know customers change. You need to be able to easily evolve along with that, to take full advantage of the marketplace.
When consumers first started interacting with fintech apps, they were savouring speed over all else. In a recent survey that we ran, more than 60 per cent of individuals responded that security is more important than speed now.
How do you balance both? You make sure that you’re doing business with technology partners that understand that for a start. And, frankly, you do not need to retain any personal information with an identity network because it learns over time. It recognises normal and abnormal situations and it allows you to leverage services without necessarily having to resubmit all the same information each time. You have the flexibility and sophistication to be able to do more with less and also apply common standards so that information isn’t put at risk.
TFM: Will a global identity network help financial inclusion?
ZC: Our mission around the world is financial inclusion. It’s to make the online economy accessible for everyone and you can’t do that if you’re not thinking about the end users’ experience, but also those fintechs and other online organisations that are trying to reach them. If we’re not servicing those organisations that tend to be smaller, with less resources but big goals in mind, we’re not satisfying our mission, either.
There are huge numbers, in the billions, of individuals who are unbanked or underbanked, not by choice. We believe the first step to financial inclusion for them needs to be fuelled by a solid identity solution that’s inclusive and functional, that also satisfies the regulatory obligations that are becoming commonplace.
We see privacy and compliance changes impacting the world, and you need a regulatory technology that can act as a catalyst to power them all. We’re really excited to be part of it and we really believe that the identity marketplace, the identity network, and EmbedID are the future to it.