The 4 Key Elements of Digital Trust
Digital trust is a mechanism for companies to measure confidence in their clients. It involves identifying safe and secure elements such as transactions and customer behavior patterns. In today’s connected environment, it is essential for banks to build lasting relationships with their connected customers.
Nowadays, and especially after the impact of a pandemic that you might have heard about, our digital interactions are constantly growing. The banking industry is no exception. Banks keep creating new business channels for customers to open accounts and operate remotely. Unfortunately, these channels also open new opportunities for fraudsters.
In a world where everything is digital and instantaneous, the banking industry faces the challenge of fulfilling customers’ expectations and answering their needs for digital-first services. The problem isn’t technological. Instead, the real challenge for banks is how to build and secure trust with their clients. Trust is every business’ basis for success and it is more difficult to establish trust through digital interactions than in the traditional physical world.
Online banking isn’t new, but is newly popular. A long time before the pandemic, these customers’ demands led to digital solutions such as mobile banking and instant transfers. However, the massive adoption of these systems in recent times and the development of sophisticated fraudulent mechanisms led to unprecedented rates of Account Takeover (ATO) and Impersonation scams.
A study made by Feedzai states that ATO scams skyrocketed by 650% while Impersonation scams grew 600% in Q4 2020 compared to Q1 2020.
At the same time, there has been a 200% increase in mobile banking usage, and fraudsters worked to blend in among legitimate bank customers. Online banking experienced a 250% increase in attempted fraud, surpassing the fraud rates experienced via traditional physical branches and telephone channels.
These insights show how important it has become for banks to determine if the person transacting behind the device is who they claim to be. In other words, if banks can trust the customer.
To handle the rapid increase in fraud attacks, banks are forced to step up in the customer journeys with authentication mechanisms such as:
- Multi-Factor Authentications
- Face ID Verification
- Fingerprint Scans
- One-Time Passwords
- Limited Login Attempts
- Manual Review Verifications
However, all these mechanisms add friction and frustration to the process, preventing customers from having a great banking experience. In order to create a more streamlined customer experience, banks can rely on Digital Trust to assess the trustworthiness of their clients. By looking at their customers’ identities and behavioural digital activities banks can detect abnormal patterns as an indicator of potential fraud or high-risk.
Traditional ways of assessing trustworthiness frequently fail to meet most digital banking systems’ speed and scalability requirements. A powerful platform such as Feedzai can help to evaluate multi-dimensional aspects of customers. Using machine learning algorithms and highly accurate profiling, our platform can help banks understand a customers’ digital trustworthiness.
What are the Digital Trust elements?
Identity
The ability to identify the true identity of the customer. Particular events can help us to determine if ATO attempts are in progress.
Examples include:
- A spike in the customer’s password changes
- The customer disables Multi-Factor Authentication settings
- The account experiences biometric changes such as Face ID or fingerprint settings
- The customer changes their primary email address
Behaviour
The ability to identify patterns in the customer’s normal activities.
Examples include:
- Transfers or activity are made outside the customer’s usual hours
- A significant number of login attempts are made outside usual login hours
- The number of payments deviates from the customer’s average ratio
- The velocity between a login and a payment is much faster compared to the average velocity between events
Device
Data elements related to the customer’s device information.
Examples include:
- Changes in screen resolution and device language settings
- Unknown device type — for example, switching to a different device from Android, iOS, or Windows Mobile
- Risky activity with a rooted device
- Phishing or Malware activity detected
IP
Data elements derived from the customer’s IP address.
Examples include:
- Unusual location for monetary and non-monetary transactions
- Risky activity with a Proxy server or Tor connection
- Limit transaction amounts for first seen IP locations.
How can banks secure trust?
Based on the previous four key elements of digital trust, banks can rely on monitoring mechanisms to analyse the customer journey. As clients interact more often with banks’ websites and mobile Apps, banking institutions receive more data than ever before. Not only they receive monetary transactions but also every digital activity performed by the client.
