The fraud market is on a steady incline, with account opening fraud as one of the top threats that can occur at any time creating ample opportunities to cause harm.
With new digital registrations increasing in volume and expected to reach an estimated 6.5 billion in 2028, it’s critical to thwart any malicious actors’ attempts to deceive companies and individuals alike. Identifying and mitigating fraud is of utmost importance, considering fraud losses expected to exceed $12 billion in 2024.
Enterprises and solution providers around the world are facing a threat, and require new approaches to combat the growing risks.
Capabilities and Considerations for Global Account Opening Fraud
Fraudsters have an increasingly wide arsenal of tactics to falsely open new accounts, such as using fake or stolen identities or AI to trick traditional identification methods. Protecting customers from attackers is an arms race powered by AI, which can thwart traditional anti-fraud techniques like document verification and biometrics.
Instead, more organizations are looking to harness real-time access to global authoritative data sources, advanced analytical capabilities, and regional knowledge of country-specific fraud patterns to stay ahead of criminals.
There are several key concerns most businesses have about account openings, around Know Your Customer (KYC), application fraud, and customer onboarding.
A recent Liminal report, Solving Advanced Fraud in Account Opening, commissioned by Data Zoo, found application fraud was the second biggest challenge for buyers across the world, with 48% of respondents globally reporting issues. KYC was fourth at 40%, and customer onboarding was fifth at 39%.
The Liminal report asked buyers several questions about their needs from service providers around key fraud-related issues.
The study asked buyers about the importance of several capabilities onboarding methods when selecting an account opening vendor.
Globally, about 68% of respondents said access to authoritative data was either important or very important when considering Know Your Customer, 70% when considering Application Fraud, and 66% when considering Customer Onboarding.
Access to this data can help companies determine in real-time whether the person trying to open an account is actually who he or she says he or she is.
When asked about considerations when seeking solutions with regional expertise, 61% said access to country-level data, 60% said knowledge of country-specific fraud patterns, and 50% said strong regional data partnerships were important or very important for KYC. For account fraud and customer onboarding, access to country-level data 77% (the top consideration), knowledge of country-specific fraud patterns 58%, and strong regional data partnerships 53%.
Having access to real-time, regional, or country-level data and a greater understanding of regional fraud patterns helps companies stay ahead of attackers by detecting irregular patterns that can bypass more static measures.
Understanding the Global Challenges of Account Opening Fraud
When asked about challenges, 58% of enterprises surveyed said limited regional identity document coverage, 56% said insufficient knowledge of local fraud patterns, and 43% said lack of reliable regional data partnerships were very important or important for KYC and account fraud.
Companies that do not have access to data and advanced analytical capabilities or cannot detect regional patterns are at greater risk of successful attacks.
These companies should lean into data-driven verification methods that can verify a customer in under two seconds as the preferred defense, as well as a sufficient understanding of local fraud patterns.
It is clear that any account opening fraud prevention strategy requires a layered approach that includes authoritative data as a powerful tool to identify inconsistencies that indicate fraud and proactively assess risk and detect suspicious activity. This study demonstrates that companies are looking to harness more data and regional expertise, but are struggling to access both.
Global Solutions to Protect Against Growing Fraud Risks
Data Zoo provides best-in-class data combined with regional expertise, enabling enterprises to prevent sophisticated fraud attacks.
We use authoritative data at multiple stages of the user journey. During onboarding, we verify identity early in the process to prevent fraudulent accounts from being created by checking names, addresses, dates of birth, and other key identifiers against authoritative sources.
Investing in a leading solution that reduces fraud while enabling an easy account creation process produces a strong ROI for companies by lowering associated costs while increasing legitimate accounts. Depending on account volume, businesses can save millions of dollars by removing fraud and accelerating new customer acquisition.