Intellicheck, OneID tout banks’ unique position to cut fraud as digital ID enablers

Banks could play a significantly larger role in protecting consumers, businesses and payment systems from fraud, Intellicheck CEO Bryan Lewis and a new white paper from OneID both suggest.

In the United States, a social security number and driver’s license are often the only credentials used to validate a transaction, Lewis told PMYNTS in a recent interview.

People committing fraud are well aware of the templates for different driver’s licenses and ID documents, Lewis explains.

“Keeping ahead of the bad guys is very difficult when you’re just trying to base it on the front of the license or even where things are positioned on the back,” he says. The barcode, which Intellicheck analyzes with proprietary technology, provides stronger assurance, according to Lewis.

He points out that financial institutions have a greater incentive to catch fraud attempts than sectors where regulatory compliance clashes with customer acquisition.

Reusable digital identity raises the stakes. Mobile driver’s licenses hold some potential in this area, but Lewis notes the rate adoption has been mostly modest so far.

Instead, Lewis proposes sharing data across a consortium of banks to provide the data that in collaboration with Intellicheck’s technology could support reusable digital identity.

PYMNTS CEO Karen Webster asks whether the standard to support such a consortium comes before adoption, or vice versa, and Lewis responds that the data for an identity network can already be shared between banks.

“We’re talking to them now about opting in,” he says.

In its absence, auto sales and title insurance are major growth areas for Intellicheck, because of the amount of property “being sold out from under people” in the latter case, Lewis notes.

With stolen personally identifiable information (PII) and fake driver’s licenses available for around $60 in total, a social insurance number and government-issued ID is simply not enough to protect consumer and businesses from fraud.

Lewis sees digital wallets becoming the tool used by consumers to carry out transactions and protect against fraud, at least eventually.

The conversation returned several times to “that first step” of enrollment, and its importance for ensuring that any reusable ID is not a license to commit fraud. Biometrics may have a role here, according to Lewis, but factors like data storage security and compliance make the details of any implementation critical to its success.

Banks can help themselves by helping digital identity

OneID argues in a white paper that a digital identity “supported by banks” represents a way to integrate online services, banks and payment schemes to cut payment fraud.

“Making greater use of previously verified identity in systems and processes will provide fraud defences that we lack today,” the company says.

OneID notes that Pay.UK, a digital payment system operator, is developing the Enhanced Fraud Data (EFD) Messaging tool to allow banks to share information that can help in fraud detection. Norway’s BankID has cut fraud as a percentage of payment transactions from 1 percent to 0.00042 percent, according to the white paper. The OpenID Connect provides the needed standard for sharing ID data to extend these kinds of improvements to more countries, OneID argues.

The white paper reviews changes to the UK regulatory environment for payments and data sharing, and describes how fraud attacks typically work.

Ultimately, OneID recommends UK regulators mandate the use of digital ID online and enable it “for use in payment rails,” and for banks and their trade bodies to support mass adoption of digital identity. Banks should issue digital identities based on the data they hold to their corporate customers, and the government should pass legislation to approve the use of digital credentials instead of their physical counterparts. Finally, payment schemes should enhance fraud data with embedded digital identity tokens at the point where payments are initiated, and businesses should strengthen their onboarding practices and collaborate on pilots to reduce fraud by using digital identity.

Article Topics

banking  |  digital identity  |  digital wallets  |  financial services  |  Intellicheck  |  mobile banking  |  OneID  |  reusable identity