As we reach the end of 2016, we can finally pause for breath and take stock of what has been a tumultuous year. Old certainties were turned on their head, new realities took their place and across business, economics, politics and society, experts were left scratching their heads in confusion.
In the area of security and fraud , there has been a consistent trend in the development of verification and authentication technology. How this trend will continue to impact the digital economy 2017 will be critical.
The EMV liability shift in the US was widely predicted to see a spike in CNP (Card not Present) fraud in the US and beyond. Figures from the end of Q2 2015 to Q1 2016 (which takes in six months of post-EMV activity) suggests that there has been a 137 percent rise in CNP fraud in the US. To put this into context, between 2014 and 2015 the market saw a mere 20 percent rise in CNP fraud.
The global rise in data breaches is a key driver in the growth of fraud. FFA UK, the UK anti-fraud organisation stated that “financial fraud losses across payment cards, remote banking and cheques totalled £755.0 million in 2015, an increase of 26 percent compared to 2014. The rise across all fraud loss types during 2015 owes much to the growth of impersonation and deception scams, as well as sophisticated online attacks such as malware and data breaches.”
The US switch to EMV is only one-third completed, however as more and more merchants adopt EMV terminals, fraudsters will more into the CNP space resulting in a rise in CNP fraud.
To fight this, merchants and banks will increasingly look towards biometrics with facial recognition software and ID scanning to bolster verification.
Biometrics is rapidly gaining in both consumer trust and corporate confidence. With a number of trials already taking place, 2017 will be the year it breaks into the mainstream.
With 70 per cent of the UK population using mobile banking, it is now the dominant form of bank interaction for UK consumers.
This trend has been matched by a corresponding rise in online only banks. Virgin Money, an online only bank is now the eighth largest lender in the UK, above both the Yorkshire Building Society and Clydesdale Bank, both long established institutions
The Second EU Payment Services Directive (PSD2) will have a significant impact on mobile banking in 2017. It is designed to, in the words of EU Commissioner Jonathan Hill, “ensure that electronic payments in Europe become more secure and more convenient for European shoppers.”
This commitment to convenience and security will mean that banks will have to have strong but convenient authentication at the heart of their mobile banking strategies.
With PSD2 due to come into force by 2019, banks will have to start planning for this in 2017. Getting the right authentication methods in place to not only comply with PSD2 but, also, keep customers happy will be a priority in 2017.
At a value of $15bn per year, and predicted to reach $335bn in the next decade, the global sharing economy represents one of the largest and fastest growing markets in the world. The UK sector alone is set to climb to £9bn from £500m in the next ten years.
Despite this growth, trust in the sharing economy remains a vital sticking point amongst several demographics, which is holding the industry back.
A recent study by global online review community Trustpilot found that 39 per cent of people worry that services provided through the sharing economy can't be trusted as much as those through traditional outlets. 42 per cent say they would usually wait until someone they know has used a sharing economy scheme before using it themselves.
Overall, 2016 has seen the sharing economy grow extremely fast in both popularity and value. In order to continue this growth, businesses will encourage trust by providing customers with extremely strong security measures while maintaining an excellent customer experience.
With the recent announcement of TrustSeal, Sharing Economy UK’s initiative to boost consumer trust by requiring businesses to meet a list of ‘Good Practice Principles’ relating to things such as identity verification, product transparency and customer service, the importance of using technology to secure authentication and verification has never been more important to businesses entering the sharing economy in 2017.
There are already some measures in place, but traditional risk assessments can be time-consuming and costly for businesses, involving court visits and hard copies of customer records. EasyCar Club, for example, require a driver licence check and a video call to confirm identity. How much time could be saved through the use of up-to-date ID verification technology?
Businesses in the sharing economy that optimise their security procedures in 2017 stand to gain a competitive advantage over their competitors.
Andrew Saul, senior partner at international law firm Osborne Clarke, said he believed the sharing economy space would look entirely different in five years’ time: “Many of the issues currently being faced by companies will have been resolved. User reviews will be much more sophisticated and trust will be less of an issue,” he said.
This makes it crucial for businesses to steal a march on the competition. There are several ways to secure a sharing economy business from ID fraud. The technology is out there to remove the risk of reputational and financial loss.
Identity verification technology is a fast and convenient way to ensure that customers and hosts in the sharing economy are who they say they are. Good anti-fraud technology will operate on several levels, including ID and facial recognition.
Overall, 2017 will see identity verification and the ability to connect digital ID to the real world identity will take centre stage in a number of verticals as it is looked upon to solve existing problems and be future proofed against new problems. It will certainly be an exciting year for those of us working in this dynamic field.
Image Credit: Anton Watman / Shutterstock
Philipp Pointner, VP, Product, Jumio