Is fear of fraud standing between you and good customers?
Businesses must provide both strong security and an excellent user experience online. Yet striking the right balance can be hard, says Mitek, a global AI-based identity solutions provider
Your business is growing fast and onboarding good customers quickly is paramount, but you need to be sure they are who they say they are. How do you protect yourself and your customers from fraud?
Trust is the lifeblood of a successful business, allowing you to connect with your customers in a sustained and meaningful way, while building your brand and growing your sales. Yet, in the digital age it is a commodity in short supply and firms are under pressure to bridge the growing divide between the physical and online worlds.
Part of the problem is that, in the past, firms usually met their customers before doing business with them, making it easier to establish a basis of trust. Now, however, most of these interactions take place online, consumers are more sceptical, and the risk of fraud is rising.
Identity fraud losses in the US, caused by criminals illegally using victims’ information to steal money, surged to $24bn in 2021, according to the consultancy Javelin Strategy & Research. That was up 79% from 2020, while the number of adults impacted grew by more than 50% to 15 million.
Risks to brand perception
In the current climate, businesses face a series of threats, not least of which are those that impact perceptions of their brand.
Public trust in institutions of all kinds is already at a low and customer loyalty is no longer a given. Nearly six in 10 people say their default tendency is to distrust something until they see evidence it is trustworthy, according to the latest Edelman Trust Barometer, which tracks public trust in businesses, NGOs, government and the media.
To protect themselves, companies must ensure that their customers’ personal data is safe online and their identities are protected. Robust defences must be implemented to avoid breaches and the reputational damage they can cause.
Yet, firms are also expected to provide a user experience (UX) that is second to none and many struggle to strike a balance. In a rush to fortify their defences, they deploy onerous security systems that impair the functionality of their apps and websites, making them less enjoyable and less convenient to use.
That in turn makes it harder to onboard high-quality customers, harms conversions and puts profitability at risk.
Sanjay Gupta is senior vice-president and managing director at HooYu, a Mitek company. He says he understands fraud is a big concern but cautions that it’s a mistake to think that safety and security online should come at any price.
“Delivering a poor user experience is a far bigger threat to your business. Ninety-eight to 99% of your customers pose no risk at all and the cost of alienating them is high.”
Striking the right balance
According to a recent YouGov survey for Mitek, 79% of UK respondents said they wanted their bank to adopt the latest technology to keep their accounts safe. Yet 19% said they abandoned opening an account because it was too time consuming or difficult.
It mirrors wider research that shows the harder a website is to use, the more likely a visitor is to leave before completing a transaction. According to the Baymard Institute, a UX research consultancy in Denmark, some seven in 10 visitors to an ecommerce site abandon their shopping carts before reaching checkout.
In a fast-changing digital market, companies must adapt. Yet some are encumbered by legacy IT systems and can’t innovate fast enough. Others meanwhile can’t find the external support they need and are outpaced by more nimble rivals.
However, Gupta believes that with the right technology and strategy, businesses can deliver both exceptional digital experiences and robust fraud prevention at the same time.
His company Mitek is an AI-based identity solution provider offering a comprehensive set of native and external identity verification signals with powerful orchestration and configuration tools to build tailored onboarding workflows. It has powered bespoke solutions for thousands of the world’s leading banks, fintechs and marketplaces. “Too often firms rely on a narrow menu of tools that are not flexible enough to meet their needs,” Gupta explains. “Customization and control are key when building an effective solution.”
Know your customer
The Nasdaq-listed business is best known for technology that allows firms to verify people’s identity with patented algorithms that capture, classify and verify photos of identity documents such as passports, ID cards and driver’s licences.
However, it is its platform technology that is revolutionising the ‘know your customer’ (KYC) journey for companies. The tech can be easily incorporated into a firm’s digital architecture on a ‘low code, no code’ basis without an army of developers, and is customisable to match different customer risk, product, or lifecycle scenarios. Crucially too, it simplifies and streamlines the experience of the end user.
“The platform is engineered to maximise onboarding success,” says Gupta. “It enables organisations to create fast, flexible and easy-to-configure workflows that meet their exact needs, ensuring new customers can be onboarded quickly and with minimum friction.”
To date, Mitek has worked with an array of different businesses from tech startups such as Airbnb to major retail banks such as Chase.
For businesses looking to build lasting and trusted relationships, Gupta advises being transparent with consumers. “Trust doesn’t just come overnight; it’s built gradually and through the ups and downs. Firms who show that they are serious about security, tough on fraud and communicate what they are doing and why will have the best results. This transparency in communication will send the right message to the customer.”
He also advises companies to educate customers about advances in cutting-edge security processes such as facial recognition and biometrics. “These technologies have attracted negative headlines but when used properly and ethically they can be highly effective. In time, they will replace passwords as the default method of entry to digital spaces. So, it is up to companies to explain the benefits, dispel the myths and show that privacy isn’t at risk.”
Most importantly, Gupta says firms must remember that most people are honest and a heavy-handed approach to fraud and verification can be counterproductive.
“Customer experience and safety on your platform is the number one priority. Strong trusting relationships lead to business growth and customer loyalty, it’s as simple as that.”
For more information please visit miteksystems.com
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