Defrag KYC landscape to prevent fraud, reputational damage, American Bankers Association says

The American Bankers Association (ABA) hopes to settle nerves in the fraud-prone U.S. financial sector with a new guide to the role of digital identities in onboarding, KYC and customer login. It intends to save face as well as money.

The guide is aimed at “senior executives at Financial Services institutions operating in the U.S.” and as such serves as something of a primer for the executives, possibly to lead to more fruitful (or less painful) interactions with the departments presumably already trying to implement its findings. As such, it would be relevant to financial execs the world over.

‘The Growing Significance of Trusted Digital Identities in U.S. Financial Services’ rounds up scare statistics (“Synthetic identity fraud is costing the U.S. Financial Services industry $20 billion a year,” “85% of U.S. Banks rely on username and passwords to authenticate customers,” “Reputational damage incurred through negative customer experiences. Reports show that the sum of these costs can be as much as 4x the size of the original loss experienced by the customer”), but focuses on the practicalities.

It acknowledges how attempts to combat fraud and conduct KYC have led to a fractured, complex industry and market, and how digital identities are in a “state of flux” in the U.S. and elsewhere. It provides an overview of the U.S. digital identity landscape.

The various sections explain the types of approaches and technologies available and their potential benefit. A little more uniquely, it explains the role of the authorities: “The federal government and its various agencies are playing multiple roles in the digital identity ecosystem, and so their impact is also multifaceted. Collectively, these agencies have the mandate to simultaneously shape the landscape by establishing legislation on key related issues.” The guide even explores the status of various bills impacting digital identity.

On similar themes, Fast Company carries a report titled ‘Why identity verification should play a key role in digital transformation efforts’ on how (digital) identity is the backbone of digital transformation.

The wondering at possibilities is not limited to the U.S. The Times of India published ‘How will digital identity solutions revolutionize society for the upcoming generations?’ by Vamsi Kotte, CEO of Syntizen Technologies, the day after the Fast Company piece. Possibly given the fact the country already has a functioning, albeit highly controversial digital identity system, Aadhaar, the author concludes that future generations will enjoy more secure data and more convenient transactions. Something not currently the case for many Indians.

Article Topics

biometrics  |  digital identity  |  fraud prevention  |  identity verification  |  KYC  |  onboarding  |  secure transactions  |  synthetic identity fraud