IDC Study Identifies How Businesses Can Earn Consumer Trust in Digital Identity Verification
IDC Research today released its findings on how to bridge the trust gap between businesses and consumers in the digital economy. The results reveal that consumers are on the verge of adopting more advanced forms of identity verification, but still demand a high level of secure and simple processes from institutions.
IDC’s research, commissioned by GBG, sought to understand the key mechanism of digital identity of the future, how it would be supported by businesses, and how consumers would receive it and be likely to adopt it.
The research revealed a range of acceptable and desirable digital identity verification methods, but also found that companies still have work to do to help educate and guide customers, as well as ensure their data is safe. safe from leakage and abuse.
The research findings were presented by Michael Araneta, Associate Vice President, Head of Consulting and Research, IDC Financial Insights Asia Pacific. A panel comprised of Carol Chris, Regional Managing Director, ANZ, GBG; Ian Hendley, Managing Director, thelawstore and live-sign.com; and Steve Shipley, deputy chief information officer, IDC Financial Insights Asia Pacific, provided further clarity on these findings.
The research consisted of two surveys, one for Australian consumers and the other for Australian businesses, during the third quarter of 2021. Consumer data was divided by age and income, while business data were broken down by industry type, with 45% being fintech and payment companies. , 31% being professional and personal services and 24% being banking and financial services.
The key theme that emerged from the research results, explained Araneta, is “more” – that more and more we will see fingerprints or voice and face checks to integrate new services or to connect to existing services. Increasingly, we will see digital identity verification among current and future digital use cases with Australian consumers ready to trust digital services.
The main use cases found by IDC for digital identity verification were buy it now / pay later scenarios, approval of deposit-based financial services, and instant loan approval. In each case, IDC has found that consumers and businesses are aligned to find these desirable situations for using digital identity verification – provided that trust is in place, and with the caveat, consumers expect digital identity verification to lead to near instant results.
Continuing on the theme, IDC is seeing more digital services registrations in key industries, and in fact, massive integration on the horizon with growing demand growing every day.
However, all that being said, despite a desire for digital identity verification and the ramifications that it means, IDC’s research has found that consumers still prefer face-to-face today.
In fact, while IDC has found that the more people experience facial biometric and document identity verification online the most they prefer, research still found that 54% of older consumers 18 to 44 year olds prefer face-to-face contact and 67.3% of consumers. 45 and over prefer face-to-face.
Thus, there is a clear mismatch between the desire to conduct digital transactions and the preference for face-to-face, and IDC has found it to be about trusting.
In their research, IDC found that consumers aged 45 and over look to big, reputable organizations, such as the government and big banks, to lead the way.
Among the 18-44 year old cohort, preference was split between other factors such as increased education on digital identity verification security and how the data will be used, and the ability to continue to access and use essential services with the pandemic, among other concerns.
Meanwhile, IDC research has found that businesses have a lot to gain from digital identity verification due to the importance of fraud. This fraud includes identity theft, account takeover, identity theft, scams, identity theft and other issues.
Financial institutions have procedures for dealing with money laundering, terrorist financing and similar risks known as KYC – or “know your customer”. According to IDC research, 67.4% of fintech and payments companies reported an estimated monetary loss of more than $ 50,000 due to fraudulent incidents in their KYC processes in 2020. 49.6% of companies Financial technology and payments companies said identity theft accounts for 10-20% of fraud, with 20% saying it accounts for 20-30% of fraud. Banks and financial services were similar with 37% reporting 10-20% and 20.5% reporting 20-30%.
Digital identity verification methods can help institutions fight such fraud and provide benefits to consumers. However, organizations still need to invest to gain trust through increased and open communication about how data is stored and secured, and for what purposes it will be used.
The main results of IDC’s research are as follows:
- Australian customers on the verge of adopting more advanced digital identity verification
- Use is not preference is not trust – that is, using something does not imply that it is preference, nor does it trust, so simply following up on adoption is not in itself a measure of preference or confidence
- Biometrics and online digital identity verification are seen as the best way, leading to good customer experiences, speed and trust – and customers’ conversion to this best way will be based on their experience.
- Customers can quickly change their preferences
- Businesses want to better support customer preferences – but are overwhelmed with options
- Regulatory mandates will accelerate adoption of solutions
- New capabilities in biometrics and online digital identity verification have emerged and an end-to-end value proposition is now possible
- There is a link between digital identity verification and fraud reduction
The IDC research was commissioned by GDG.
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