Philipp Pointner, VP Product of digital ID verification experts Jumio, highlights key issues in CNP fraud, mobile banking and the sharing economy that are set to affect businesses in 2017, whilst looking back at 2016’s major trends to make insightful recommendations

As 2016 draws to a close, businesses are taking stock of a year that witnessed ever more data breaches and cybersecurity incidents, the continued development of digital and mobile banking, as well as initiatives to boost consumer trust in the Sharing Economy.

One thing that ties these three issues together is their reliance on security, specifically in the authentication and ID verification space. As we move into 2017, Philipp Pointner, VP Product of digital ID verification experts Jumio, outlines the opportunities and pitfalls for businesses operating in these areas, and how best to learn from 2016’s major trends:

1.CNP Fraud

2016 Trends

• The EMV liability shift in the US was widely predicted to see a spike in CNP (Card not Present) fraud in the US and beyond. Figures from the end of Q2 2015 to Q1 2016 (which takes in six months of post-EMV activity) suggests that there has been a 137 percent rise in CNP fraud in the US. To put this into context, between 2014 and 2015 saw a mere 20 percent rise in CNP fraud.
• The global rise in data breaches is a key driver in the growth of fraud. FFA UK, the UK anti-fraud organisation stated that “financial fraud losses across payment cards, remote banking and cheques totalled £755.0 million in 2015, an increase of 26 percent compared to 2014. The rise across all fraud loss types during 2015 owes much to the growth of impersonation and deception scams, as well as sophisticated online attacks such as malware and data breaches^[1].”

2017 Predictions

• With the US switch to EMV not even one-third completed, as more and more merchants adopt EMV terminals, this will force more and more fraudsters into the CNP space with a continued rise in CNP fraud.
• To fight this, merchants and banks will increasingly look towards biometrics to bolster verification with facial recognition software and ID scanning. 

2. Mobile Banking

2016 Trends

• 70 percent of the UK population now use mobile banking^[2]. It is now the dominant form of bank interaction for the UK.
• There has been a corresponding rise in online only banking. Virgin Money, an online only bank is now the eighth largest lender in the UK, above both the Yorkshire Building Society and Clydesdale Bank, both long established institutions^[3].

2017 Predictions

• The Second EU Payment Services Directive (PSD2) will have a significant impact on mobile banking in 2017. It is designed to, in the words of EU Commissioner Jonathan Hill, “ensure that electronic payments in Europe become more secure and more convenient for European shoppers.”
• This commitment to convenience and security will mean that banks will have to have strong but convenient authentication at the heart of their mobile banking strategies.
• With PSD2 due to come into force by 2019, banks will have to start planning for this in 2017.

3. Sharing Economy

2016 Trends

• At a value of $15bn per year, and predicted to reach $335bn in the next decade, the global sharing economy represents one of the largest and fastest growing markets in the world.^[4]
• The UK sector alone is set to climb to £9bn from £500m in the next ten years.^[5]
• A recent study by global online review community Trustpilot found that 39 percent of people worry that services provided through the sharing economy can’t be trusted as much as those through traditional outlets.^[6]
• British internet users are more likely to have their identity stolen than anywhere else in Europe and North America, with three types of fraud in operation: Impersonation, identity and account takeover.^[7]

2017 Predictions

• With the recent announcement of TrustSeal, Sharing Economy UK’s initiative to boost consumer trust by requiring businesses to meet a list of ‘Good Practice Principles’ relating to things such as identity verification, product transparency and customer service, the importance of using technology to secure authentication and verification has never been more important to businesses entering the sharing economy in 2017.^[8]
• There are already some measures in place, but traditional risk assessments can be time-consuming and costly for businesses, involving court visits and hard copies of customer records.
• EasyCar Club, for example, require a driver licence check and a video call to confirm identity.^[9] How much time could be saved through the use of up-to-date ID verification technology?
• Businesses in the sharing economy that optimise their security procedures in 2017 stand to gain a competitive advantage over their competitors.
• Andrew Saul, senior partner at international law firm Osborne Clarke, said he believed the sharing economy space would look entirely different in five years time: “Many of the issues currently being faced by companies will have been resolved. User reviews will be much more sophisticated and trust will be less of an issue,” he said.^[10]
• This makes it crucial for businesses to steal a march on the competition. There are several ways to secure a sharing economy business from ID fraud. The technology is out there to remove the risk of reputational and financial loss.
• Machine learning algorithms can pick up on digital footprints to highlight risky customers based on their previous actions.
• ID verification technology is a fast and convenient way to ensure that customers and hosts in the sharing economy are who they say they are. Good anti-fraud technology will operate on several levels, including ID and facial recognition.

Philipp Pointner, VP Product of digital ID verification experts Jumio, highlights key issues in CNP fraud, mobile banking and the sharing economy that are set to affect businesses in 2017, whilst looking back at 2016’s major trends to make insightful recommendations

As 2016 draws to a close, businesses are taking stock of a year that witnessed ever more data breaches and cybersecurity incidents, the continued development of digital and mobile banking, as well as initiatives to boost consumer trust in the Sharing Economy.

One thing that ties these three issues together is their reliance on security, specifically in the authentication and ID verification space. As we move into 2017, Philipp Pointner, VP Product of digital ID verification experts Jumio, outlines the opportunities and pitfalls for businesses operating in these areas, and how best to learn from 2016’s major trends:

1.CNP Fraud

2016 Trends

• The EMV liability shift in the US was widely predicted to see a spike in CNP (Card not Present) fraud in the US and beyond. Figures from the end of Q2 2015 to Q1 2016 (which takes in six months of post-EMV activity) suggests that there has been a 137 percent rise in CNP fraud in the US. To put this into context, between 2014 and 2015 saw a mere 20 percent rise in CNP fraud.
• The global rise in data breaches is a key driver in the growth of fraud. FFA UK, the UK anti-fraud organisation stated that “financial fraud losses across payment cards, remote banking and cheques totalled £755.0 million in 2015, an increase of 26 percent compared to 2014. The rise across all fraud loss types during 2015 owes much to the growth of impersonation and deception scams, as well as sophisticated online attacks such as malware and data breaches^[1].”

2017 Predictions

• With the US switch to EMV not even one-third completed, as more and more merchants adopt EMV terminals, this will force more and more fraudsters into the CNP space with a continued rise in CNP fraud.
• To fight this, merchants and banks will increasingly look towards biometrics to bolster verification with facial recognition software and ID scanning. 

2. Mobile Banking

2016 Trends

• 70 percent of the UK population now use mobile banking^[2]. It is now the dominant form of bank interaction for the UK.
• There has been a corresponding rise in online only banking. Virgin Money, an online only bank is now the eighth largest lender in the UK, above both the Yorkshire Building Society and Clydesdale Bank, both long established institutions^[3].

2017 Predictions

• The Second EU Payment Services Directive (PSD2) will have a significant impact on mobile banking in 2017. It is designed to, in the words of EU Commissioner Jonathan Hill, “ensure that electronic payments in Europe become more secure and more convenient for European shoppers.”
• This commitment to convenience and security will mean that banks will have to have strong but convenient authentication at the heart of their mobile banking strategies.
• With PSD2 due to come into force by 2019, banks will have to start planning for this in 2017.

3. Sharing Economy

2016 Trends

• At a value of $15bn per year, and predicted to reach $335bn in the next decade, the global sharing economy represents one of the largest and fastest growing markets in the world.^[4]
• The UK sector alone is set to climb to £9bn from £500m in the next ten years.^[5]
• A recent study by global online review community Trustpilot found that 39 percent of people worry that services provided through the sharing economy can’t be trusted as much as those through traditional outlets.^[6]
• British internet users are more likely to have their identity stolen than anywhere else in Europe and North America, with three types of fraud in operation: Impersonation, identity and account takeover.^[7]

2017 Predictions

• With the recent announcement of TrustSeal, Sharing Economy UK’s initiative to boost consumer trust by requiring businesses to meet a list of ‘Good Practice Principles’ relating to things such as identity verification, product transparency and customer service, the importance of using technology to secure authentication and verification has never been more important to businesses entering the sharing economy in 2017.^[8]
• There are already some measures in place, but traditional risk assessments can be time-consuming and costly for businesses, involving court visits and hard copies of customer records.
• EasyCar Club, for example, require a driver licence check and a video call to confirm identity.^[9] How much time could be saved through the use of up-to-date ID verification technology?
• Businesses in the sharing economy that optimise their security procedures in 2017 stand to gain a competitive advantage over their competitors.
• Andrew Saul, senior partner at international law firm Osborne Clarke, said he believed the sharing economy space would look entirely different in five years time: “Many of the issues currently being faced by companies will have been resolved. User reviews will be much more sophisticated and trust will be less of an issue,” he said.^[10]
• This makes it crucial for businesses to steal a march on the competition. There are several ways to secure a sharing economy business from ID fraud. The technology is out there to remove the risk of reputational and financial loss.
• Machine learning algorithms can pick up on digital footprints to highlight risky customers based on their previous actions.
• ID verification technology is a fast and convenient way to ensure that customers and hosts in the sharing economy are who they say they are. Good anti-fraud technology will operate on several levels, including ID and facial recognition.