Building Smarter Identity Verification: Key Insights from Javelin Strategy & Research

A recent white paper, Future Strategies for Effective Identity Verification that Build, Not Break, Business, by Tracy (Kitten) Goldberg of Javelin Strategy & Research, offers timely insights into the evolving identity verification landscape. Drawing on two decades of expertise in fraud, payments, and cybersecurity, Goldberg outlines the challenges businesses face and the strategies that can help them protect their customers.   

Identity Verification: The Growing Crisis

The landscape of identity verification has become increasingly complex. With personally identifiable information (PII) readily available through social media profiles, public records, and data breaches, traditional identity verification methods are proving inadequate in detecting synthetic IDs created with this information. Goldberg's research highlights how cybercriminals are evolving—from simply stealing identities to engineering sophisticated synthetic identities using a blend of real and fabricated data.

The statistics are concerning. New account fraud surged in 2023, affecting everything from credit cards to mobile phone services. Even more concerning is the rise of synthetic identity fraud, where criminals blend stolen data from multiple individuals to build concerning fake identities.

Consumers are feeling the pain from scams and financial loss. So are financial institutions (FI). Consumers impacted by scams are nearly twice as likely to leave their primary FI—even if that institution wasn’t at fault. This results in a loss of trust and leaving customer retention at risk, especially when identity verification measures fail.

The Problem with Traditional Identity Verification

Traditional identity verification (IDV) puts too much pressure on people who often forget, overshare, or unknowingly compromise personal data. This makes for a system that’s easy to exploit and hard to secure.

A Smarter Approach

Instead of relying on consumers, financial institutions should:

• Start with automation and leverage biometrics to detect fraud.
• Reduce dependence on PII and traditional PII-based verification to stop synthetic identity fraud.
• Automate verification to improve both security and the customer experience.

Consumers are onboard as we see interest in biometric ID programs rising. The less PII they share, the safer everyone becomes.

The Optimal Risk Mitigation: Instant Decisioning

The solution for identity verification lies in automated, invisible processes that reduce consumer friction and improve fraud detection. Instant decisioning—powered by real-time trusted data—offers the speed and security today’s institutions need.

The pandemic fueled the rapid transition from in-person to digital payment forms (peer-to-peer, in particular), which has left financial institutions cautious. These FIs also learned that customer friction doesn’t enhance security, prevent fraud, or improve the customer experience. Instant IDV is everyone’s preference. With reliance on trusted, validated, and anonymized data sources, instant IDV enhances and reinforces its validity. Like any IDV strategy, instant IDV relies on cross-checking PII, such as names, Social Security numbers, physical addresses, dates of birth, and employment histories, which can be tied into previous business interactions.

Recommendation: Building Trust through Better Security

In her paper, Ms. Goldberg provides these recommendations:

1.   Remove human touch points in verification processes to reduce social engineering risks.By relying on identity tools, such as physical and behavioral biometrics, and data sources, such as anonymized consortium data and public records that remove the consumer from the equation, financial institutions increase their chances of reducing new-account fraud and account takeover fraud, as well as losses linked to scams.

2.   Defend against synthetic identities by minimizing reliance on PII. Since synthetic identities combine fragments of legitimate data from multiple consumers, traditional PII-based verification is ineffective.

3.   Automate onboarding and verification for a more secure, and smooth, customer experience. A streamlined, automated IDV onboarding process creates a more personalized experience while reducing fraud risks.

4.   Keep sensitive data off the front lines by using backend validation systems.

The future of identity verification lies in creating systems that are both more secure and more user friendly. By removing the burden of authentication from consumers, and relying instead on sophisticated background verification methods, businesses can better protect against fraud while building stronger customer relationships.

In an increasingly digital world, getting identity verification right isn't just about preventing fraud—it's about building the foundation for lasting customer relationships based on trust, security, and convenience. We invite you to learn more by downloading Future Strategies for Effective Identity Verification that Build, Not Break, Business or watching the webinar on this topic with Tracy (Kitten) Goldberg and the CEO of Intellicheck, Bryan Lewis.  

Fraud Starts with Identity Theft, Identity Theft Ends with Intellicheck.

To see an identity validation experience that’s ready for business, register for a live demo with an ID validation expert.