Interviews

Evolution of digital identity

by Mark Rowe

Data-driven digital identity solutions have forced businesses to re-think their customer engagement model to match the digital explosion. Digital identity is inherently linked to the increasing volume of digital interactions. The rapid acceleration of the preference for digital-first was sparked and evolved throughout the Covid-19 pandemic, however the concept of digital identity and the need for an evolution will remain a prevalent need for both consumers and businesses, says David Britton, Experian VP of Industry Solutions.

Customers are increasingly leveraging digital channels across devices and businesses are facing a need to evolve to properly identify an individual, to recognise their customers in a digital-first environment. With the rise in digital transactions and consumer expectations, solving the identity challenge, is even more critical than before and remains a significant challenge in what is predominately an anonymous environment. A consumer’s digital identity has evolved to include all digitally observable information that is generated as a consumer interacts in this environment. This observable information can include data points related to what device they use, how they use each device to interact with an app or website, the data they may submit, and the context of the interaction.

Digital interactions are clearly not limited to traditional services like accessing a bank account or making an online purchase, but now include access to media and streaming services, lifestyle apps, food delivery and many more. Each of these interactions in the digital environment can generate rich and insightful sets of data that can be used to reduce some of the friction usually present in the traditional engagement model.

The ability for businesses to properly identify an individual depends on being able to access and to pull together the right data. The behavioral insights and the context observed during the interaction has become increasingly important to the process, which can generate significant amounts of meaningful data. Business must also be able to use advanced analytics to not only accurately identify the individual, but also to create meaningful observations.

Using advanced analytics and machine learning solutions against the data allows businesses to more easily and accurately identify customers in a less intrusive way, without requiring the customer to take unnecessary steps on their end. Conversely, this approach also allows the business to have better confidence that the consumer is who they claim to be, thereby degrading the overall risk and friction in the process. This approach which takes advantage of rich data, processed via advanced analytics, is more transparent and passive in nature, and can be used throughout a consumer’s digital journey, ultimately enhancing the user experience while providing a stronger sense of security to the business.

Value of digital identity: Reduce fraud and strengthen customer relationships

The benefits of enhancing digital identity solutions for businesses stretch far beyond a seamless consumer digital experience towards overall top-line growth. Businesses want to take advantage of the fact that consumers are rapidly preferring to engage in the digital channel but recognise that it is the channel that also may expose them to additional risk.

Adopting a forward-looking stance to identity reduces the risk of fraud. According to Juniper Research’s Digital Identity: Technology Evolution, Regulatory Landscape & Forecasts 2020-2025 report, it is estimated that in 2024 over $43 billion will be lost due to online payment fraud. The opportunity to capture what may be a fraudulent identity before it is used is an inherent benefit of implementing data-driven solutions to digital identity.

Conclusion

Digital identity solutions and the forward-looking businesses that support this evolution using AI and ML solutions will help reduce fraud and enhance the user experience in meaningful ways as consumers continue to prefer digital transactions.

Digital businesses that can pull together a more elegant process for identity and risk mitigation, by leveraging this digital data, will provide their consumers with a more elegant, convenient and secure interaction. Over time, it provides a more consistent and higher value experience to the customer, creating improved loyalty and top line revenue growth with each interaction. For the business, the approach also means that they are able to serve more customers better and more securely over time.

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