The race to a paperless identity and the role of digital
While it is widely accepted that we are living in a digital age, more connected than ever before, elements of today's customer journey still remain reliant on an original paper-based system, presenting too many opportunities for fraud, identity theft or information tampering.
Ryan Barlow, Chief Technology Officer, e4 - a software as a service company, says that the concept of Connect Your Customer (CYC) is fast becoming a priority as businesses and consumers alike require more effective ways to provide proof of identity and residence in a digital world: "According to Gartner there will be 20,8 billion connections by 2020, making the digital universe an alarmingly powerful place to do business. While it is exciting and evolutionary, the issue of the provision of personal data is becoming more important, especially as businesses and consumers try do business within the digital space."
While FICA, launched in 2001, aimed to assist with curbing money laundering, fraud and information tampering, there are still too many ways for people to misrepresent the quality of information provided to a financial institution. Conversely, using the current methods can also place the customer and his personal information at greater risk.
"Trust is an issue, as is human error and rising fraud levels. To truly operate in a digital environment requires a different methodology," says Barlow. "We have seen technology companies launch central databases or networks, proposing these become the central repository for all consumer ID and residential information. The approach is flawed because there is not one single company that will be used and consumers are then at risk of having their information housed within several of these databases or networks and in addition to this, the inconvenience factor for the consumer still remains. The problem with this is also that each one will need to be updated and as they grow, these central repositories will become significant targets for hacking and consumer risk will increase."
This blockchain approach, he says, also doesn't necessarily solve any of the of the issues related to securely providing up-to-date ID and proof of residency in a digitally accepted format. Barlow says that the self-service approach is definitely not recommended due to the increasing amounts of human error and the fact that fraud will more than likely increase as opposed to eliminating it.
Creating further challenges, Barlow says that FICA requires face-to-face recognition: "This true consumer verification step is still required and is not considered within the central database or network methodology."
He says that one way in which the conundrum of authentically providing proof of ID and residency is for the information to be drawn directly from a source: "Provided that consent is given, a creditor can request the information from the source and receive the information in a secure manner, in real time and it's authentic."
Barlow says that this approach is FICA compliant, more convenient for the consumer and cheaper than processing paper as it requires minimal document checking: "From a fraud perspective, the PDF documents are tamper proof, which mitigates ID theft and money laundering."
The key lies in identifying a gateway that assists in making the process truly digital according to Barlow: "CYC is digital, but ironically enough, the processes still need to become truly digital. While some have ventured into the digital realm, others have tried to shortcut the process, which is not advisable with something as vital as personal information."