Long ago, a cartoon ran in The New Yorker, showing a canine
seated at a desktop computer. “On the internet,” ran the
caption, “nobody knows you’re a dog.”
The same premise holds true today and poses a knotty question
in online commerce and FinTech: How do you know the person on the other end of
a transaction is really who they say they are? And even if you do confirm their
identity, how do you know that person can be trusted?
One firm, IdentityMind
Global, provides real-time risk management and fraud prevention
through “digital identities,” collecting data across dozens of parameters,
separating the financial ecosystem into good actors — those deserving of trust
(and completed transactions) — and, well, bad actors.
In an interview with PYMNTS’ Karen Webster, Garrett
Gafke, president, CEO and founder of IdentityMind Global, said that the
construction of digital identities, by necessity, goes well beyond data that
might be thought of as standard, such as a street address, a credit card number
or a two-factor security question test.
True merchant risk goes hand-in-hand with global digital
commerce and, as Gafke described it, comes in the form of people with little or
no history — no history of driver’s licenses, credit cards issued, traditional
bank accounts or other standard bits of information. They may not even be
scored by the traditional credit bureaus. Yet, these individuals are looking to
do business and conduct transactions. Their would-be partners on the other end
of the transaction must decide whether to enter into a relationship (however
fleeting) with that consumer … or not.
Gafke noted that “transactions of any kind leave a kind of
financial, online exhaust” and that each transaction has attributes that, taken
together over time, ultimately, can be assembled into a digital identity. “This
is real, current information,” said Gafke, “rather than just public, physical
information. Good reputations are built slowly, while bad reputations come very
quickly.”
That digital identity is established, as Gafke said, in
IdentityMind Global’s platform, which links and finds correlations between
disparate bits of information and transaction trails that “process, capture,
rate and build overall profiles on online identities.” Emails, digital wallets
and payments are all linked together, said the executive, to build a “trusted”
digital identity.
“Trust” would be the operative word in the relationship
between individuals and the firms with which they seek to do business. Trust
would also extend to, and be colored by, the people associated with that
individual or business. Consider how, in the age of social media, amidst
concerns about money laundering, an individual might be viewed with
demonstrable trails of following, say, terrorist-linked groups on Twitter.
In a recent whitepaper by the firm, IdentityMind Global also
noted that additional data points may come from internet-enabled devices, which
can, for instance, help bring location into consideration when determining good
actors from bad and in screening across sanctioned individuals or nations.
Using these techniques, said IdentityMind Global in its
whitepaper, can help reduce manual review time. There is also a financially
positive impact, via a 60 percent reduction in transactional fraud from
chargebacks and a 90 percent reduction in fraud that comes at the point of
account origination.
