Experts in TFT webinar urge smarter digital ID to combat fraud
A recent webinar organized by The Fintech Times (TFT) explored how digital identity solutions can be used to tackle the effects of the fraud economy in the UK.
Defining fraud economy
The event opened with Lee illustrating the main causes of the fraud economy today.
These include traditional payment fraud techniques like stealing credit cards, money laundering, and cryptocurrency fraud, but also account takeovers, and misinformation techniques.
Lee also mentioned the lack of collaboration of internal teams, which opens the door to potential vulnerabilities within companies, as well as the proliferation of tools that are not necessarily compatible with one other.
During the last year, all these trends have grown further due to the pandemic and the ensuing growth in digital adoption globally.
The characteristics of a new digital ID
Birch, who joined Biometric Update to discuss how sharing fraud information within a broad network can help fight synthetic identity attacks shortly after he joined AU10TIX as an advisor, then took the floor, defining the role of digital IDs within the fraud economy.
According to the financial advisor, there is a need in the industry to “reconstruct digital identities for the new era we are living in.”
Such digital ID would have to feature three separate characteristics, the first of which would be intelligence.
“Passports and driving licenses are stupid,” Birch said. “They don’t know who’s looking at them. They disclose everything to everybody, and they’re indiscriminate in the kind of information they provide.”
An intelligent digital ID would be instead able to disclose only the necessary information for a given authorization action.
The second characteristic would be connectedness, intended as the capability of safely gathering information about an individual for authentication and authorization processes, without having to disclose any personally identifiable information (PIP).
Finally, Birch said new digital IDs should be interactive, intended as capable of taking intelligence decisions between individuals.
“It doesn’t just tell people other things about you, but also validates what other people are telling you,” he explained. “There’s a wonderful symmetry in this online decentralized world. It doesn’t fit with the hierarchies of the past.”
Getting involved in digital ID
Lord Holmes then discussed the importance of getting involved in the development and adoption of digital IDs, both from governmental and private sectors.
Lee echoed the point, highlighting the benefits of digital identities to combat not only crime but also other adverse online phenomena like bullying.
In other words, if any online interaction would be connected to our real identity, individuals would likely behave more socially than they do online when their real identities are hidden.
The Sift executive also added that while privacy concerns are a reality when it comes to developing digital IDs, the benefits clearly outweigh these risks.
Holding the keys
The webinar then moved onto trust-related issues, who should be in charge of holding cryptographic keys for user authentication, and whether it would be safer to deploy a decentralized system instead.
According to Lord Holmes, the UK pushes for digital IDs development are currently fragmented, divided between different fintechs and government departments.
“The reality is there is still an extraordinary need for leadership from the government on this,” he said, “whether that comes from the Cabinet Office, whether it comes from HMRC.
“It doesn’t necessarily matter which department has it, but it’s got to be a tighter grip, clearer leadership, and a clear culture built around this,” Lord Holmes added. ”An understanding of what we’re trying to deliver here.”