If you are reading this article, then you might want to ask the questions:
Why is ID verification crucial in modern business?
Why is it essential to protect your customers’ Personal Identifiable Information PII?
The above questions can be explained with a proper understanding of the problem. And there are two main sides to it;
First: The Data Theft Problem
Online frauds – Identity fraud, in particular, is one of the greatest threats to the banking industry world over. It may seem hard to believe, but when we mull over the fact that fraud costs the UK banking industry a whopping £ 1.2 billion in 2018, and that a new financial fraud is reported every 15 seconds, the sheer scale of the problem becomes apparent.
Identity fraud is the use by one person of another person’s personal information, without authorization, to commit or to deceive or defraud that other person or a third party. Surreptitiously obtaining another’s personal information is what is commonly referred to as Identity theft
The mobile banking channel has become an especially prime target for hackers, with mobile banking fraud incidences rising by 20% between 2017 and 2018.
Increasingly, frequent thefts of data make it easier than ever to perpetrate fraud. The online and mobile banking explosion has opened new channels for banks to protect their data while also leaving some gaps for criminals to infiltrate. But here is the scariest part of it: Some banks and financial organizations continue to rely on obsolete identity verification methods that are simply not up to par in today’s threat landscape.
And that’s why it has become essential to verify your client’s or customer’s ID before completing a transaction or going into a long-term business partnership with them.
So, what’s the ultimate solution? How can we manage to consistently stay one jump ahead of these fraudsters? There is no better way than independently verifying your customer’s identity. With the invention of modern tech solutions, ID verification has become as easy as rolling down the log.
Second: The Big Data Problem
Advancing technology platforms are rapidly changing the way people relate and businesses operate. With digital tools like cell phones, the Internet, social media, and e-commerce, there has been an unprecedented explosion in the supply of all kinds of data.
Big data, as it is called, is being collected, analyzed, and processed by businesses and shared with other companies. The wealth of information provided by big data has enabled companies to gain insight into how to better interact with customers.
However, the emergence of big data has also increased the number of data breaches and cyberattacks by entities who realize the value of this information.
These data breaches expose colossal amounts of PII Personal Identifiable Information (PII) across the web and are a major contributor to identity fraud. With this type of data in hand, it’s relatively straightforward for criminals to cross-reference breached data to commit account takeover fraud and new account fraud.
Personal Identifiable Information (PII) is information that, when used alone or with other relevant data, can identify an individual. PII may contain direct identifiers (e.g., passport information) that can identify a person uniquely, or quasi-identifiers (e.g., race) that can be combined with other quasi-identifiers (e.g., date of birth) to successfully recognize an individual.
As information technology and the Internet have made it easier to collect PII, banks are being overrun by identity fraud, as they have long relied on legacy, manual identity verification methods and static credit agency data to determine the identity of a customer.
PII: The Danger If Stolen By Fraudsters
Lately, cybercriminals can breach data systems to access PII, which is then sold to willing buyers in underground digital marketplaces.
With detailed knowledge of both sensitive and non-sensitive PII, fraudsters can easily infiltrate your account
For example, in 2015, the IRS suffered a data breach leading to the theft of more than a hundred thousand taxpayers’ PII. Using quasi-information stolen from multiple sources, the perpetrators were able to access an IRS website application by answering personal verification questions that should have been privy to the taxpayers only.
In early 2018, Facebook Inc. (FB) was embroiled in a major data breach. The profiles of 50 million Facebook users were collected without their consent by an outside company called Cambridge Analytica as reported by The Guardian.
Cambridge Analytica got its data from Facebook through a researcher who worked at the University of Cambridge. The researcher built a Facebook app that was a personality quiz. An app is a software application used on mobile devices and websites.
The app was designed to take the information from those who volunteered to give access to their data for the quiz. Unfortunately, the app collected not only the quiz takers’ data but, because of a loophole in Facebook’s system, was able to also collect data from the friends and family members of the quiz takers.
As a result, over 50 million Facebook users had their data exposed to Cambridge Analytica without their consent. Although Facebook banned the sale of their data, Cambridge Analytica turned around and sold the data to be used for political consulting.
The data breach not only affected Facebook users but investors as well. Facebook’s profits decreased by 50% in Q1-2019 versus the same period a year earlier. The company accrued $3 billion in legal expenses and would have had an earnings per share of $1.04 higher without the expenses, stating:
Customer information is the most critical type of data held by many organizations. All it takes is one major breach of such data for your customers to lose faith in your company, and for your business to suffer as a result. Any type of customer information is a tempting target for hackers and cybercriminals. But the holy grail among criminals is Personal Identifiable Information (PII) such as social security numbers, names and physical addresses, and usernames and passwords.
Companies will undoubtedly invest in ways to harvest data such as personally identifiable information to offer products to consumers and maximize profits. However, regulating and safeguarding PII will likely be a dominant issue in the years to come.