Voice of the Industry

Emma Lindley, Innovate Identity:"The most dependable solution is to create trust"

Friday 14 February 2014 14:00 CET | Editor: Melisande Mual | Voice of the industry

The digital market is changing, it has the potential to take global single market integration to an unprecedented level

Social data for identity

The digital market is changing. With its innovation, speed and reach across borders, it has the potential to take global single market integration to an unprecedented level. And with this comes the increasingly more common use of alternative forms of data such as social data to provide digital trust.

2.7 billion people online

With 2.7 billion of the world’s population now online, economies like the BRICs (Brazil, Russia, India and China) and the newly coined MINT (Mexico, Indonesia, Nigeria and Turkey), are touted to be the next economic giants. The question for many merchants is how can they embrace these new markets whilst effectively managing the associated risks?

The most dependable solution is to create trust. Yet, with fraud one of the major factors undermining potential growth of the digital market, how do companies create such trust?

Traditional identity footprints are limited

One solution used by numerous companies is to verify the identity of the buisness or consumer in the transaction. Examples of these are credit data used for verifying identity or the use of identity documents. However, these traditional forms of identity footprint data are sometimes limited to geographies and certain demographics. As a result, this makes verifying identities and creating trust difficult too.

Organisations are left with gaps in their ability to manage risk and on-board new customers. One of the ways we have seen organisations moving forward is towards new sources of “big data” such as social data to validate identity attributes. Particularly for those companies and organisations operating across borders, many use social data as an alternative or as addtion to the traditional forms of identity footprint. Early adopters of these new methods include Airbnb, eBay and Paypal.

The new world of big data

Social data statistics from across the globe certainly kickstarts some interesting conversations about this new big data (and its use). For example, social networks in China account for 1/6 of their total online population. The main social network in Russia covers over 100 million of the 118 million strong population where there is no viable alternative identity data sources. In the UK, social media accounts are owned by 90% of the 16 – 24 year old age bracket, a demographic which has already been historically very difficult to verify. The opportunity certainly awaits for those who take it.

We have no time to lose

Taking advantage of the alternatives offered by social data, a number of organisations have set up specialist services including Trulioo, Veridu and Trustev. These companies are enabling accounts to be distinguished from real or fake, use visual knowledge-based authentication and verification of other identity attributes contained within the social profile.

This is something to be encouraged according to recent communication from the European Commission, who urges us to embrace the wave of globalisation in order to exploit the opportunities offered by the digital market; something they believe is yet to occur. Or at least not to its full potential.

What can merchants do?

According to the Single Market Act II (2012), the internet economy already accounted for 21% of GDP growth in some key economies.

40% of shoppers in the European Union now use the internet to buy goods and services. However, 35% of internet users are not buying online because they have concerns about payment, security and delivery. Using the new methods of creating trust through alternative data and social data could help to close this gap.

As consumer confidence grows in online shopping and regulation changes to enable trade, European cross-border transactions could account for at least 20% of all e-commerce within the next five years. If European cross-border commerce could increase to 20%, it is estimated it would contribute a 4% growth in GDP across the whole of Europe.

Further afield in APAC, according to Boston Consulting Group, cross-border payments transactions will rise from 4.1bn transactions in 2012 to 11bn by 2022.

With governments, regulators and researchers like Open Identity Exchange mulling over how these new identity methods fit with more traditional methods, we believe that whilst still in its infancy social data, other “big data” like it, and future innovations in this area, have the potential to take us into a new world of identity services and trusted transactions in the future.

Emma Lindley has over 14 years’ experience working with technology led identity, compliance and fraud systems. She works with merchants, regulators and governments globally helping them build best practice for identity and risk.
Emma has an MBA from Manchester Business School.

Innovate Identity is an independent consultancy providing advisory services focused on digital trust, data and technology innovation within the global online community.
Our areas of expertise include Global Identity Proofing, “Midata”, Identity Verification, Age Verification, Know Your Customer, Anti Money Laundering, Data Privacy and Anti Fraud technologies.
We improve our client’s global reach, competitive advantage, return on investment and enable sustainable business transformation through identity innovation.

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Keywords: Innovate Identity, fraud, digital market
Countries: World

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