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    COVID-19 and the Touchless Digital Economy – The Ongoing Challenges of Verifying Identity

    COVID-19 and the Touchless Digital Economy – The Ongoing Challenges of Verifying Identity

    Frank Teruel looks at the challenges and importance of verifying identity online.

    By Frank Teruel - Nov 19, 2020

    Image: Andrew Neel via Pexels

    Few forcing functions have magnified the friction between a clean customer experience (CX) and verifying identity like the global pandemic. Since March, the number of new entrants into the digital economy has skyrocketed, not because people think “the future is digital”, but because they have limited choices.

    Consumers are worried about being exposed to the virus, but if they need to buy groceries, pay their bills, or even transfer money to a family member, they can now go online in the comfort of their homes to do all that and more.

    If you’re new to the digital economy and vendors are flocking to help solve your needs, this could lead to a few identity and security issues. Firstly, do vendors trust this brand-new customer and risk fraud losses, or do they introduce friction and risk transaction abandonment? Moreover, what about the volume of returning customers? Is the increased frequency legitimate or are these bad actors with stolen credentials? So what do these vendors do? They make customers prove their identity.

    Verifying identity

    In the physical world, this conundrum is straightforward enough. At the point of sale or identity verification, a person presents their highest, most trusted form of identity within the context of the transaction and they’re verified. For example, when you travel and are interacting with airport security, your passport is the best form of verifying your identity. It is issued by a trusted government entity, has all of your pertinent information, and is implicitly trusted. Aside from  DNA, it is the most trusted form of identity verification.

    Verifying one’s identity online, however, comes with several different challenges. First, there are multiple identities that must be harmonized to truly verify one’s identity. Assuming email is the lowest common denominator of identity – your work, personal, school, family, and spam email accounts all represent identities that you use to transact across multiple industries and services. Each transaction made shows the distinct version of you transacting with vendors that verified your identity using their own digital identity solution.

    This raises an important question – unless all of your online identities are harmonized, can any of them really be trusted? Once one identity is compromised, it threatens them all and increases the risk of fraud and identity theft.

    Verifying one’s identity online, however, comes with several different challenges. First, there are multiple identities that must be harmonized to truly verify one’s identity.

    In the virtual space, there is no one recognised and trusted issuer of identity. On the contrary, there is an entire digital identity supply chain, each armed with their own identity graph derived from their understanding of the user’s activity. Often, that identity is an amalgamation of the vendor’s direct interaction with the user, third-party cookies, identity partner signals, publicly available data and inferred behavior based on prior activity.

    Saying goodbye to IDFA and third-party cookies

    To compound matters further, the device identifier so frequently used by marketers is making an abrupt exit with the recent release of Apple’s iOS 14. The third-party cookie is so magnanimous in its data sharing, it will soon sail off into the sunset in a few quarters. Each of these events further complicates the digital identity landscape, and the timing could not be worse. With a flood of new customers joining the digital economy, each with new or infrequently seen digital identities, the tension between friction and customer experience is once again front and center.

    So, what should digital businesses do to temper the increased friction while not opening the floodgates to opportunistic fraudsters?

    In the midst of all of these changes, one’s identity solution needs to understand the context of the transactions, and harmonize and verify the identity across multiple industries. By doing so, it increases the global view of that identity, providing vendors with a trust factor relative to the specific transaction. Think of it this way: confidence that the customer is the customer and trust that, within the context of this transaction, there is nothing amiss in the customer’s behavior. The key is all within the global view of a harmonized identity. If your digital identity is unable to do that, then embrace the friction.

     

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