Digital identity, remote consumer enrollment, biometrics (physical and behavioural), risk and identity assurance solutions, as well as downstream reauthentication solutions, have been leading the pack for global enterprise spend over the last few years. The global COVID-19 pandemic has served to further highlight the importance of these solutions. The rapid transition to a work-from-home environment necessitated an equally rapid IT education for employees caused a ripple effect across the identity ecosystem forcing enterprises to provide safe and secure solutions that enable employee access to critical resources and systems as if they were sitting at their in-office workstation. For significant consumers of digital services such as banking, insurance, and healthcare, the ability to create new online accounts and remotely verify online identity is paramount to gain access to critical services in a COVID world.

The Identity Challenge in the Enterprise

The need to provide a safe and secure way for employees to gain access to data, communication and collaboration tools – as well as for consumers to access services – has been a new sales goldmine for the many identity solutions and providers as of late. But, at what cost?

For the enterprise, identity solutions present yet another vendor to onboard and manage, a new workflow for IT departments to implement and integrate into their corporate systems, and a potential new set of vulnerabilities for the CISO’s team to watch. For enterprises operating in regulated industries, including banking, finance, ecommerce, gaming, healthcare, and the broader ‘sharing economy’, the primary enterprise stress is driven by the need to solve and manage digital enrollment. These businesses must address the proverbial ‘are you who you say that you are?’ question and demonstrate compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) rules. This required identity management causes consumer friction, which can impact the business units (BU) who are focused on increasing sales with new customer growth and providing consumer services, while at the same time protecting consumers against both identity and financial theft, fraud, and loss of personal or private information. These same solutions to protect consumers can also impact the consumer experience and lead to a negative experience, consumer drop-off, and the loss of revenues, from new and existing consumers switching to competitors who have better digital workflows and consumer experiences.

Digital Identity Point Solutions

There are a myriad of point solutions being marketed for identity management, including Anti-Money Laundering (AML), Know Your Customer (KYC)/Know Your Business (KYB), ID verification, facial ID match, genuine assurance identity, device ID/GEO ID match, mobile network operator (MNO) match, face finger voice biometrics, behavoural biometrics, passwordless login, fraud risk assessment, credentials & blockchain, AI-based fraud detection, identity hardware, and identity platforms (orchestration).

What is most interesting is that many of the companies in each of these categories have partnerships with one another and in some categories – such as identity platforms – players have partnered with all the listed categories and more. While many of these partnerships make sense for the underlying businesses, they can cause problems for the enterprise (the customer). To explore this, consider the challenge that using more than one identity vendor poses to the consumer. How long does it take to enroll in a new service such as opening a bank account remotely? What consumer friction is involved? What are the headwinds to enrollment? How many steps will it take? Does the consumer feel safer, and does s/he understand the process? What about the enterprise back end? If the solution providers are cloud-based, how many API calls will the bank have to make, potentially exposing customer data? What is the overall efficacy of the complete multi-assembled identity solution? What if four of the seven vendors say ‘yes’ (it is a verified you), but the other three say ‘no’? How can the bank properly orchestrate the identity results with confidence and configure the right algorithmic workflows? The questions and complications are nearly endless – and the list above does not even begin to consider the total cost of a multi-vendor solution.

Next-generation Customer Identity Platform (CIP)

These questions appear ripe for a solution that enables frictionless identity and offers the required privacy protections, data management and compliance capabilities, custodial ownership, high efficacy rates, and seamless future portability of an individual’s identity.

I believe the winning solutions will enable both frictionless identity verification and reauthentication in a single, integrated platform. They will further allow for the use of multiple forms of proprietary and complementary authenticators and offer an intelligent real-time decision engine built on an automated, microservices and API-based cloud platform – all supported by an AI-based infrastructure with integrated enterprise tools and capabilities to optimise the consumer and employee experience.

In short, the future of identity is moving rapidly towards an integrated identity solution that can actively address critical questions such as ‘are you who you say you are?’, ‘what do you have?’, ‘what do you know?’, ‘where are you going in a session?’, ‘why – and most importantly – is this your predictive or past behaviour?’. AI-based intelligent verification and authentication is coming.

About the Author

Ralph A. Rodriguez is an Executive-in-Residence at Summit Partners where he works alongside Summit’s technology team to identify new opportunities within growth stage technology companies. Previously, Ralph was an MIT Fellow and a Research Scientist at Facebook where he led Applied Identity and Intelligence. Prior, he was the Co-Founder and CTO of Confirm.io, which Facebook acquired in 2018. As the longest-serving Fellow at MIT, he pioneered research on AI, cloud, mobile, neural science, and security at the MIT Media Lab and Harvard-MIT Health Sciences and Technology (HST) department.

 

This article originally appeared as part of The Paypers Fraud Prevention in Ecommerce Report 2020/2021, a comprehensive overview of the known and emerging fraud threats, new technologies, and changes in the commerce industry. Visit The Paypers to view the full report.

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