Commenting on how lenders can fight back against fraudulent credit applications in the challenging COVID-19 landscape, Keith McGill, Head of ID & Fraud at Equifax UK, believes machine learning, biometrics and Digital ID progress are the answer:
“Businesses and consumers are grappling with an amalgam of new fraud and identity trends. At one end of the scale we have positive developments such as instant payments and new digital offerings, and at the other are increasingly sophisticated social engineering scams and mass BOT attacks. Over £200m was lost to authorised push payment fraud1 in the first half of 2020 alone, but the threat was escalating long before COVID-19. Lockdown disruption has presented new challenges for lenders, who now require remote verification tools and processes to protect themselves from opportunistic fraudsters.
“Lenders that deploy full stack fraud protection platforms, leveraging machine learning and advanced analytics, can make smarter, quicker responses in assessing fraudulent applications and reducing false positives. Budget pressure remains an obstacle, as well as a lack of data science expertise, but adoption is moving in the right direction as companies harness holistic platforms that provide economies of scale and the agility to tackle new fraud trends as they emerge.
“Biometrics also have a significant role to play. Reducing cart abandonment and increasing customer retention is a pressing challenge for financial services. Businesses that succeed will gain a huge competitive advantage. Biometrics offer a customer journey that marries personalisation with robust verification controls. Many lenders are still wrestling with roadmaps for optimal deployment, but biometrics are ultimately the most efficient way to balance security and convenience for all parties.
“Similarly progress in the digital ID space could be the passport to a world of streamlined customer experiences that also improve security for lenders, and even financial inclusion for consumers. The government’s response to the Digital Identity consultation is a welcome first step, but now the industry is eager for more detail and clarity on the road ahead. Making use of Open Banking technology could play a crucial role in fast-tracking plans on standards and accreditation, more vital than ever as we race to keep pace with a brave new digital world.”