Why being recognised goes a long way to building trust

There’s commercial value linked to recognition as we constantly strive to recreate reliable digital identities across industries, channels and countries, says Experian fraud director Chris Thomas. But in doing so a careful balance between trust, customer security, convenience, fraud and friction needs to be created.

Our 2018 Global Fraud and Identity Report, analyses findings from more than 5,500 consumers and 500 businesses, gauging opinion on online security and the relative confidence of businesses in accurately identifying their genuine customers.

Unsurprisingly, the research found that most businesses — around 70 per cent — regard fraud as a growing concern. It also shows that businesses need to better identify their customers to help combat online fraud. But more surprisingly, it also emerged a similar number favour detection over trust – and knowingly deny more transactions than they should. It’s a tactic that doesn’t just lead to a loss of sales, but is it’s also likely to damage the lifetime value of the customer.

Business leaders unanimously agree that if they were more precise in identifying customers, instead of denying genuine transactions, they would see an increase in revenue. In fact, 84 per cent say the need for fraud risk mitigation could be reduced if they could be more certain about their customers’ identity.

As businesses undergo digital transformations, they recognise the importance of trust and the need to invest in reliable technology to deliver it.

Findings from the study show that while consumers want to be recognized, they also expect online banks and retailers to do everything they can to protect their information and secure their transactions. Nearly seven out of every 10 consumers like security protocols when they transact online, because it makes them feel protected, an essential feature in many regions, but particularly in Southern Europe, where rates of device penetration are among the highest in the world.

Regional snapshot of findings

The report reveals several other variations in regional opinions and habit. But across all parts of the globe, customer don’t like friction – online identity hurdles or inconvenience. The most effective fraud prevention and identity strategies are those that keep genuine customers safe without disrupting their experience.

• While different regions put different levels of emphasis on advanced security measures for digital customers, South Africa make it a significantly higher priority.

• At the same time, tolerance for friction in the name of security varies across all countries surveyed. Consumers in South Africa are more tolerant of security protocols because it makes them feel protected, while customers in Turkey are generally less tolerant.

• Southern Europeans are generally less trusting of security protocols and try to avoid storing information with merchants. But 64% of this group also value all security protocols when they transact online, because make them feel more protected.

• In fact the clear majority of Southern Europeans (83%) regard personal data protection as one of the main priorities of their banks and trust in their ability to protect their information.

• Four out of five European consumers consider their banks to be technologically advanced.

• A similar number of businesses say they are interested in adopting even more advanced security measures and authentication processes, given most of their customers feel comfortable with existing online transaction security.

But most businesses acknowledge fraud is constantly evolving and fraudsters are becoming ever-more resourceful. It’s also clear good fraud detection requires multi-layered strategies because the better a digital customer can be recognised, the better fraud can be stopped.

To read the report’s findings in full, simply click here.
Alternatively, hear our latest fraud webinar by clicking here.