A Matter of Trust

I’ve been thinking a lot about trust. Trust is the bedrock of any community. And being able to develop trust allows people in a community to work with each other and form agreements whether it be a financial transaction, a partnership or new venture.

In the world of commerce -- and especially e-commerce -- where members of the community are numerous, we must rely on data rather than a personal relationship, to form this basis of trust.

Once, simple information from a Driver’s License would satisfy in forming the basis of trust.

Today, we have to rely more heavily on multiple sources of information presented by the consumer, such as Social Security Number (SSN), Date of Birth (DOB), physical address, phone numbers and email addresses.

Identity verification (IDV) solutions attempt to confirm and verify these personal items of information. They work on a premise that says, “If I get all the right information from the person, then they must be who they say they are.”

Over the past few years, these solutions have become the norm to allow companies to form a basis of trust and fulfill all the Know Your Customer programs mandated under the Bank Secrecy Act, USA Patriot Act, etc.

Unfortunately, we all know how these solutions can be duped. Or they can’t verify all of the elements, which happens a lot. Personal identifying information can be lifted – and consumers can be victimized – so easily these days. Fraud is rampant, and nearly every industry is feeling tremendous pain.

We are definitely ready for a next-generation solution. One that will focus on what ID Insight refers to as Access-point ReputationSM.

Think of it this way: Fraud almost always has an access point. Where ever transactions occur, whether it on a computer during an online purchase, the branch of a bank, or via cell phone, there is a “home location” or “access-point location” where the consumer (or fraudster) is on the other end.

As the leaders in access-point reputation, ID Insight will indeed launch the next-generation IDV solution the industry needs. It will analyze and determine the reputation of each of the access points connected to the consumer. It will create a holistic view will provide a determination as to the level of trustworthiness/risk you should assign to the consumer.

Sure, you’ll still get power-packed verification on all the identifying information the consumer presents. But we’ll also look behind the curtain – and use unique analytics -- to see what the consumer may be hiding. In short, you’ll finally get a complete ID.

Say, sounds like a great name for the solution: CompleteID.

Please, email me and let me know what you think about access-point reputation and CompleteID.

A.E>>>

Need Gas?

Let's say you are in need of gas and see two gas stations ahead. Both are advertising 87 Octane. However, Gas Station ABC is advertising at $4.00 per gallon and Gas Station XYZ is advertising at $2.00 per gallon. Question - which station do you choose?

I am a simple mathematician - but I might hit Gas Station XYZ and maybe buy some Lottery tickets with my savings!

However - I continue to be amazed by banks that are being asked to make this same decision to comply with FACTA - and yet they many times continue to choose Gas Station ABC. What I am talking about is how many banks are considering how to comply with FACTA Section 114B - which requires card issuers to validate consumer requested address changes. FACTA says that you can either send a letter to the former address of the consumer requesting the change - or used some other reasonable risk-based approach. More than not - banks are thinking of adopting the letter strategy at a cost of anywhere from $0.75 - $2.00 per address change. With 15% of consumers moving annually - this cost can add up to $0.30 in incremental cost per account holder each year.

Adopting a risk-based or information based approach can cost much less, while also providing protections that the letter strategy cannot. In a current economy that has banks scrambling to cut costs, Gas Station XYZ looks pretty good.

The 5 Stages Of Grief

Interesting article yesterday in Bank Technology News. The title was "Red Flags and the 5 Stages of Grief". The author mentioned how the banks have gone through the denial and Anger (or fear)stages and have entered the bargaining stage. All that is left is Depression and Acceptance. Hopefully the Depression mode will be short as are now less than 5 months away.

Here is the link

http://www.americanbanker.com/btn_article.html?id=20080528ZVKMHQA7

A.E>>>