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Five ways identity tech will help fintechs reach the next billion

(Image credit: Image Credit: Dom J / Pexels)

Over a billion people around the world lack a recognised form of identity. And at a time of increasing globalisation, teething pains for new technologies and complex political environments, uncertainty is the new normal for industries like retail and financial services. But one thing is clear: reaching this ‘no identity billion’ is both a societal duty and an economic opportunity in the UK and beyond.

Our identity is now more digital, recorded, stored and verified through an increasingly disparate global web of data – our phone numbers, device and email addresses are as much a part of our identity as our fingerprints. And as we transition away from the old-world approach of centralised, paper-based documentation, our identity won’t just be something that separates the ‘haves’ from the ‘have nots’; in fact, it has already begun rewriting the rules of access to services in developed and developing markets alike.

Here are five ways identity technology is powering financial services and banking across borders, helping reach the next billion:

1 - Leveraging biometrics for better UX. As the era of smartphones and wearables makes technology more personal than ever, advances in the availability and reliability of biometrics – whether it’s your face or fingerprint – move us closer to verifying the identity of almost anyone, anywhere, at any time. The financial services that are pulling ahead in the digital economy are those thinking beyond traditional identity verification, looking to new tools: global datasets, APIs, machine learning, or smartphones equipped with microphones, cameras, and fingerprint scanners. In doing so, these businesses are reinventing the consumer journey. And this is just today, increasingly passive biometrics such as the way you hold or open your mobile phone will begin to provide even more seamless identity.

2 – Syncing data for success. Data orchestration has become a ‘must have’ for risk managers, strategists and technologists working with APIs, artificial intelligence (AI), and other technological innovations, to unify consumer data into a single location. Data partnerships which de-silo information are revolutionising the way final-mile pioneers like what3words and our location solution, Loqate, are doing business, and would benefit any business looking to expand while maintaining a strong link to their customers. By adopting a data-centric approach, AI and machine learning are able to power networks in real-time, which means the way teams operate are constantly improving and minimising errors, ultimately delivering what consumers want – a good experience, delivered without hassle.

3 - Verifying non-fraudulent purchases. While ‘digital transformation’ has brought many benefits, it has also allowed for the industrialisation of fraud, from which banks and other financial services providers need to be increasingly on guard. For example: for every UK retailer hit by fraudsters during the holidays, an average of 1,278 customers are affected. Data orchestration again plays a role in efficiently and effortlessly arranging the use of all this data through one layer – key to preventing fraudulent activity.  When siloed data is being replaced by connected datasets that ‘speak’ to each other, systems are pre-emptively verifying identity and cross-checking whether individuals or entities have committed fraud elsewhere, giving further context to identify a true customer versus a potential fraudster. It is increasingly important to do this globally, as we see evidence of fraud patterns crossing borders.

4 - Connecting markets more seamlessly. As consumers engage with the global online marketplace, they expect a frictionless experience, inexpensive and fast delivery, and localised content and services. All of this can be a challenge considering that identity data looks very different from region to region. For example: address formats vary from country to country, and without access to global data, and an understanding of how to trade across borders, businesses will struggle to compete. Identity intelligence provides a new layer of connected, global datasets to open up markets, and companies that invest in this technology will best drive a borderless experience and lead a new era of international financial services.

5 - Improving the digital value-exchange. Consumers are overwhelmed by how digital identity is evolving, particularly navigating the value exchange that powers today’s financial industry. A ‘win-win’ situation is frictionless trust: delivering simple UX while protecting data privacy and protecting businesses from fraud. However, the lag in understanding of the digital value exchange has created widespread trust issues among consumers and businesses. The tension between delivering a secure and frictionless experience means that organisations must find the right balance. But there is good news. Customers have been clear about their expectations: make the experience as easy and safe as possible, and ultimately, customers will continue to share their data with trustworthy fintechs and businesses.

You can’t securely and safely trade with people or organisations you don’t know – but the internet was built without identity in mind.

So, as global commerce becomes increasingly borderless and mobile-first, being able to identify and reach every customer becomes critical to the global economy. With these new identity technologies and approaches, we can take a few steps towards creating ‘frictionless trust’ for both sides of the digital value exchange – helping businesses trade and open up access to services beyond borders, to the ‘no identity billion’ and beyond.

Gus Tomlinson, Identity and Fraud Solutions, GBG