By Barley Laing, the UK Managing Director at Melissa
AI-driven technologies, such as deepfake software, automated phishing systems, chatbots, and advanced data analytics are enabling scammers to create highly personalised and convincing fraudulent schemes, quickly and easily.
It’s largely why fraud and scams are at record levels according to the UK’s Financial Ombudsman Service. They have revealed that consumers lodged 8,734 fraud and scam complaints in the three months April – June 2024, up from 6,094 over the same period in 2023. Also, Action Fraud recently highlighted that banks were named in more reports of fraud in the last financial year.
These alarming figures require financial institutions to take swift action to reduce the volume of fraud as we enter 2025, to protect their customers, bottom line and reputation.
Contact customer data quality is key
In our experience the quality of contact data is critical to the effectiveness of ID processes, influencing everything from end-to-end fraud prevention to delivering simple ID checks; meaning more advanced and costly techniques, like biometrics and liveness authentication, may not be required.
Access to accurate customer contact information, such as name, address, email and phone number, makes the verification process more reliable. With this data ID verification technology can confidently cross-reference the provided information against official databases, or other authoritative sources, without discrepancies that could lead to false positives or negatives.
A growing issue is fraudsters exploiting inaccuracies in contact data to create false identities and manipulate existing ones. By maintaining clean and accurate contact data ID verification systems can more effectively identify suspicious activity and prevent fraud. For example, inconsistencies in a user’s phone or email, or an address linked to multiple identities, could be a red flag for extra scrutiny.
Address, phone and email verification
Address verification, in particular, is recognised as the foundation of contact data quality. It’s because having access to up-to-date customer addresses makes it much easier to match and verify identities across multiple sources. As a result, verifying the accuracy and legitimacy of an individual’s address should be the first step in any identity related process, with any discrepancies between a claimed address and official records highlighting a potential fraudster.
By identifying these inconsistencies early ID verification technology can help to mitigate risks, making sure only legitimate users are granted access to services, thereby protecting both their business and customers from fraud.
Address verification also plays an important role in regulatory compliance, by ensuring that the address information provided meets know your customer (KYC) and anti-money laundering (AML) regulatory standards.
It’s also vital to recognise the role of phone and email verification as part of a comprehensive ID verification process, and therefore in preventing fraud. The ability to verify all three contact channels contributes to enhanced security by filtering out fake or high-risk contact information, improving the accuracy of the ID verification process.
Autocomplete services
Using autocomplete or lookup services are a great way to obtain accurate customer contact data.
With an address autocomplete tool it’s possible to deliver accurate address data in real-time by providing a properly formatted, correct address at the onboarding stage, when the user starts to input theirs. Services such as these are vital because around 20 per cent of addresses entered online contain errors; these include spelling mistakes, wrong house numbers, and incorrect postcodes, as well as inaccurate email addresses and phone numbers, typically as a result of errors when typing contact information. An additional benefit of these tools is the number of keystrokes required when entering an address is cut by up to 81 per cent. This speeds up the onboarding process and improves the whole customer experience.
Similar technology can be accessed to deliver first point of contact verification across email and phone, so these valuable contact datasets can also be verified in real-time.
SaaS data cleaning platforms
Alternatively, use a scalable data cleaning software-as-a-service (SaaS) that can be easily accessed, and doesn’t require coding, integration or training to use, to deliver address and wider data quality in real-time across existing customer databases. It can cleanse and correct contact data and match records, ensuring no duplication. A single, intuitive interface offers the opportunity for data standardisation, validation, and enrichment, ensuring high-quality contact information across multiple databases. It can deliver this with held data in batch and as new data is being gathered. As well as SaaS, such service capabilities can alternatively be accessed via cloud-based API (application programming interface), Microsoft SQL Server or deployed on-premise.
eIDV is essential
Data hygiene practices on their own aren’t enough to deliver KYC and prevent fraud. Those in financial services should also use an electronic identity verification (eIDV) platform. These can be accessed via any delivery mechanism – SaaS and cloud API – and can be scaled up or down according to the needs of the user.
These ‘always on’ tools can, in real-time, cross-check the names, addresses, email addresses and the phone numbers provided by prospective customers when remote onboarding – providing a good customer experience, while helping to prevent fraud. For best results it’s recommended to source an eIDV platform with access to billions of consumer and business records from reputable sources from around the world, such as from government, utility and credit agencies. This ensures an effective ID verification and therefore customer onboarding service wherever in the world the user is.
Using such a tool is considerably quicker, more accurate and cost-effective way to undertake ID verification and prevent fraud than manual checks. The technology requires no additional staffing or training costs, and minimises the risk of human error.
Those in financial services need to be on the front foot in 2025 with AI starting to supercharge fraud and scams. This necessitates a focus on data quality with customer contact data and access to an effective eIDV service.
