Staying one step ahead of the bad guys is becoming more difficult by the day for financial services companies. For example, identity verification is a double-edged sword. While necessary for security, it can also create friction in customer experiences. But as identity fraud continues to rise, the need for aggressive yet user-friendly identity verification solutions becomes critical.
As Bryan Lewis, CEO of Intellicheck, shared for the “What’s Next In PYMNTS: Payments Modernization” series, it’s critical to adopt identity verification solutions that balance security with ease of use. “We work with them [financial institutions] to provide basically frictionless ways for somebody to prove who they are,” said Lewis. He referenced a recent study indicating that 62% of authentication processes require four or more steps, causing significant drop-off rates.
“People drop out,” Lewis said. “So we work with them [financial institutions] to figure out how to seamlessly integrate identity validation into their process.”
Lewis highlighted the effectiveness of Intellicheck’s technology, which focuses on verifying the authenticity of government-issued IDs. “Our technology, the core of what we do, is we authenticate that that driver’s license, or state-issued ID, is real,” he said. This level of accuracy is a key differentiator for Intellicheck, earning the trust of 28 state-level law enforcement agencies.
Identity fraud is not just a distant threat but a pervasive issue affecting millions. Lewis cited examples of how easily identities can be stolen and misused. “The simplest way to steal your identity is I buy it all online,” Lewis said, referring to the dark web, where data thefts like the United Healthcare breach and the recent AT&T breach exposed millions of individuals’ information, including his.
Lewis illustrated the real-world consequences of identity fraud with a compelling example: “There’s a woman who just had $81,000 moved out of one bank account into an account at a different bank that somebody opened up using identity theft,” he said. “Now she has said she’s moving banks. So the bank has lost the long-term value of that client.”
Account takeovers are gaining momentum and are startlingly simple in terms of the mechanics of the crimes. It starts with an email address. “And if you’ve got my email address,” Lewis said, “you can change every password I have.” He said account takeovers have been the fastest-growing attack vector in financial services. The FBI recently issued an advisory warning the public about scams targeting the elderly, with billions of dollars of unwitting victims’ money moving to fraudsters’ bank accounts, up 11% from a year ago.
To combat these sophisticated fraud methods, Lewis counseled financial services companies to implement multilayered security measures. Lewis advised focusing on the efficacy of the systems used to ensure they are integrated seamlessly into the customer journey.
“The vast majority of people aren’t crooks. So don’t treat them like crooks to stop that little small percentage that are crooks,” he said. Effective tools can reduce the number of authentication steps required, minimizing customer drop-off rates and enhancing overall user experience.
The impetus to beat the fraudsters has been a tailwind for Intellicheck, which offers identity validation and onboarding services for know-your-customer (KYC) and authentication needs of its clients. The company just reported a record quarter in Q1. As reported by PYMNTS, the company reported a 10% increase in Q1 revenue, reaching $4.68 million, up from $4.25 million in the same period last year. Software-as-a-service (SaaS) revenue also saw a 9% rise to $4.61 million.
Lewis attributed the growth to heightened demand for robust yet user-friendly identity verification amid escalating identity theft and fraud incidents. The business is growing, with clients coming to Intellicheck across various verticals, though the core business remains tied to banking.
Among other fraud defenses, Intellicheck’s core business involves authenticating driver’s licenses and state-issued IDs, which are crucial for onboarding and authentication. The company validates the minutiae of IDs, down to fonts and other details, thwarting artificial intelligence (AI) and other advanced tools employed by fraudsters. But regardless of the business vertical, Lewis emphasized a few core tenets in authentication: It needs to be frictionless, or the customer will walk away.
Against that backdrop, he said, it’s imperative that financial institutions be able to authenticate and verify both sides of the transaction and make sure the parties are legitimate — and that they have legitimate motives in moving money as well.
“If you can be that much more certain of a government-issued ID being real, you can cut the number of steps that that customer has to go through — which leads to less abandonment and happier customers,” he said. “If you make identity validation simple, people won’t mind. If you make it difficult, they’ll go somewhere else.”
