Having a universal view of the consumer is the core of modern fraud mitigation

Companies try to reduce the anonymity of the online world by verifying customers primarily through identity challenge techniques (i.e., challenge-response questions), but the harsh reality is that most identity data has been compromised.

In the past two years alone, more than 2.2 billion personal records have been exposed as the result of data breaches. According to Javelin, one in five data breach victims suffered fraud in 2015, a rise from one in seven in 2014. A multi-layered approach to authentication is considered the gold standard for identifying legitimate customers, but this can be hard to do without creating so many challenges that the customer experience is adversely affected.

Knowing the individual customer extends beyond a traditional 360-degree view. It means having knowledge of a person’s offline and online behaviour, not only with your business, but also with other businesses with which that customer has a relationship. This information isn’t “owned” by a single organisation. It requires a more expansive view and collaboration across teams within a company, businesses within an industry, and across different industries. Applying the insights from information such as online behaviour, historical transactions, identity, biometrics, and device intelligence gives companies a more expansive view. It means truly being able to know and recognise your customer, and making their interactions with your business relevant every time.

Having access and insight into this universal consumer behaviour, down to the transaction level, will be necessary for fraud mitigation in the future. The ability to know and recognise a legitimate customer will make fraudsters easier to differentiate. This will mean fewer unnecessary and aggravating challenges to customers — frictionless is the future. It will also help achieve higher conversion rates for marketing campaigns and improve marketing return on investment by delivering the right message to the right person when they are most receptive to it and in the most convenient channel.

Taken together, this is a clear example of the benefits of converging mandates around business growth and fraud mitigation.

1. Experian data on file

2. Javelin 2016 Identity Fraud: Fraud Hits and Inflection Point, February 2016