ABA Sets Out Five-Year Vision for Tackling Scammers

Improvements to digital banking security will deal a “body blow” to online scams over the next five years, according to a new report.

The work by the American Bankers Association (ABA) and management consultancy Oliver Wyman set out a framework for enhancing the security around onboarding new digital banking clients and ongoing verification processes.

Alina Lantsberg, partner and Americas retail and business banking head at Oliver Wyman, said customer onboarding, authentication, and transaction authorization would all be “dramatically better” in five years’ time, with “highly secure” processes that are “still low-friction for users”.

“These changes will deal a body blow to synthetic identity fraud and account takeover fraud, reducing financial losses and consumer frustration,” she explained.

The report warned that any weaknesses in the three core areas it outlined could open the door to fraud. Strengthening these areas would reduce fraud losses, improve compliance, and improve the experience of customers using online and mobile banking.

“One of the aspects that makes digital identity such a complex topic is the influence of government and quasi-government organizations on the market,” said Brooke Ybarra, head of the ABA’s Office of Innovation. “A number of forces are shaping the landscape, and this paper helps banks identify those influences in order to design a solution that will remain relevant over time.”

Banks should put digital identity at the center of their work on online services, the ABA and Oliver Wyman recommended, by making it a priority for executives and ensuring they have a clear understanding of their digital infrastructure as it relates to customer identity and verification.

The report follows separate ABA research that found 45% of US bank customers preferred to manage their account via a smartphone or tablet app. A further 27% preferred online banking via a laptop or PC.

The report — ‘The Growing Significance of Trusted Digital Identities in US Financial Services’ — is available to download from the ABA’s website.