Businesses today are engaged in a balancing act

Businesses want to give their customers a pleasant and effective customer journey and speed them on their way to the checkout. However, they also need to have protection from fraud, or at least keep fraud to levels where the impact of loss is within the limits the business finds acceptable.

Keeping the balance right is crucial and a focus on stopping fraud at all costs can lead to bigger losses elsewhere. Experian recently surveyed a group of 100 senior Fraud and Risk Managers1 asking them whether they were experiencing more loss due to customers abandoning them because of the friction inherent in their processes or more loss due to fraud – the answers were telling that  18% believed the biggest losses were to fraud, whreas 76% identified that the greater losses came from abandonment of business caused by friction and subsequent customer fall-out and 6% didn’t know.

Is your business experiencing more loss due to customers abandoning them because of the friction inherent in their processes or due to fraud?

This suggests that maybe the balance isn’t quite where it needs to be. While we all want to win more business, fraud is clearly a critical issue. Fraud detection that is not only effective but adaptable, tailored to the customer journey and can work in multiple layers is a key strategy in targeting fraud while mitigating risk.

About the fraud risk

Our best estimate of the UK’s fraud losses is an eye-watering £80 billion per year2, we’ve based this figure on various industry sources including the now disbanded National Fraud Authority. Given that it’s likely that fraud is under-reported this is likely to be a conservative estimate. A key trend has been the rise in fraud that is driven by identity theft, a crime that has a huge impact not only in terms of loss to business and the impact on its reputation, but more importantly in the emotional and financial loss to those victims who have had their identity stolen.

So why use multi-layered identity checking to tackle fraud?

There are many factors that drive when, where and what types of fraud are committed, over time fraudsters change their targets and ways of operating, as some areas get too hot for them to handle they identify new opportunities where they can take advantage. Added to that is the customer’s experience and your need to treat customers well, not to mention your drive for sales. As the risk of fraud and financial crime grows, so does the legislative response, expected legislation such as the fourth Anti-Money-Laundering Directive and the Second Payment Services Directive are on the horizon. Both of these directives raise the issue of identity checking and authentication and are likely to add to your already long list of considerations when developing your response to fraud. Fraud exists in a complex landscape and the preventative response needs to be able to work effectively across all parameters. Multi-layer identity checking is fundamentally different to mere identity checking as it incorporates many elements so that the whole will always be greater than and so far exceed the sum of its parts.  Additionally the objective of a true multi-layered identity strategy is to always deploy appropriate solutions that not only tackle the fraud risk but also help you to meet the needs and expectations of your customers. When there’s a high-risk of fraud, or the cost of loss is likely to be greater, then opting for more rigorous checking levels will be appropriate, indeed customer research indicates that in such instances consumers are happy to accept more checks3.  On other occasions, perhaps when re-authenticating identity, customer tolerance to the disruption caused by checks is likely to be lower and therefore lighter touch authentication or authentication that is not visible or only minimally disruptive to your customer is a better way forward.

Key considerations in developing a multi-layered identity checking strategy

In this article we’re limited in the detail we can offer in such a whistle-stop tour of a complex subject. However there are some key areas we can highlight as considerations for those wanting to take a strategic approach to multi-layered identity checking:

  • Have a view on the level of loss and risk your business is prepared to accept.
  • Identify the services or products most relevant for your multi-layered approach based on the type of fraud you encounter.
  • Select a combination of fraud detection and identity checking solution that will integrate well you’re your processes and in your view provide the biggest challenge to the types of fraudsters s you are encountering.

Managing a multi-layered approach to identity checking and fraud prevention can be helped with the right tools. CrossCore, our open platform is designed to help you manage multiple identity checking and fraud preventions solutions in a single platform with consistent workflows and decisioning. Follow this link for more information.


1. Live polling at Experian Identity & Fraud Forum – October 2015.
2. Cost of Fraud Analysis – Experian –
3. Opinium Research LLP carried out on behalf of Experian during July 2013 –