Study shows data security is key to rebuilding consumer trust
GB Group plc (GBG), global experts in digital identity and fraud prevention, recently gathered insights from more than 5,000 consumers and 300 business leaders worldwide to produce their annual report, “The Global State of Digital Identity 2023.”
This year’s report focuses on the growing need for businesses to build back consumer trust in digital transactions. Moreover, it examines businesses’ complex challenges in safeguarding data integrity and combatting fraudulent activities while maintaining a user-friendly online customer experience.
The report reveals a crisis of consumer trust in the digital world. Customers are increasingly wary of doing business online as fraud, data breaches, financial crime, digital ID theft, fake news articles, and cyber-attacks increase around the globe. Alarmingly, one in seven consumers admits to being a victim of fraud in the past year. Additionally, 55 percent of businesses reported experiencing fraudulent attacks, an increase of 13 percent compared to 2022 study figures.
Moreover, GBG’s research shows that 67 percent of consumers are concerned that their personal details are available for sale to fraudsters on the internet, and more than 50 percent mistrust eCommerce sites, believing their data is not secure. A staggering 92 percent of people surveyed reported being afraid of falling victim to fraud soon. This lack of trust and fear of online crime means businesses must adopt proactive and transparent measures to fight fraud, safeguard customer data, and rebuild confidence. Consumers want to know that their personal data is safe and that the businesses that hold it are committed to maintaining its safety.
Fraud is costly for both consumers and businesses. For consumers, the cost is inconvenience, emotional distress, and financial losses. The cost is more than financial for businesses — it can damage their brand’s reputation. In fact, 43 percent of businesses listed damage to brand reputation as one of the most significant potential risks associated with fraud.
The dilemma for most businesses lies in effectively safeguarding their customers’ digital identity information and preventing fraud without making the process of doing business too cumbersome. There is a fine line to walk, but 85 percent of customers prefer brands that can provide advanced identity verification, and 52 percent are willing to accept some ‘good friction’ and robust fraud prevention, even if it means sacrificing speed and simplicity. This presents an opportunity for businesses to integrate advanced fraud and identity verification solutions into their processes.
As of the publication date of this report, 71 percent of businesses employ identity verification technologies to combat fraud and establish trust with customers. Current technologies include identity data matching against external sources, identity document verification, PINs, biometric authentication (including liveness), email address authentication, transaction monitoring, IP address lookup and geolocation, facial recognition, screening for synthetic identities, fraud outcome data, screening against PEPs and sanctions lists, mobile device authentication, consortia fraud data, and syndicated industry data.
When asked to look ahead, business leaders worldwide identified five key identity protection solutions to rebuild trust between businesses and customers. The functions of these tools include establishing a global identity score similar to a credit score for measuring confidence in digital identity, fostering fraud consortia for real-time fraud intelligence sharing, reducing data source complexity by consolidating identity verification providers globally, implementing multi-layered fraud protection programs, and focusing on synthetic identity fraud prevention.
In this climate of heightened mistrust and digital fraud, it is more important than ever for businesses to protect client data diligently and to be transparent with customers about their security methods. By implementing the study’s suggested solutions and embracing a comprehensive approach to fraud prevention and data security, businesses can rebuild trust, reduce losses, and foster strong relationships with their customers in the digital landscape.