Jaime Ramírez, CEO of Preventor
With the migration of critical processes and procedures that in the past were done physically to the virtual world, identity verification became a strategic area for organizations and a differential factor to generate greater reliability, efficiency and competitiveness in an increasingly hyperconnected world in which cyber risks continue to wreak havoc in different sectors of the economy.
Identity verification has been in constant evolution in recent years thanks to an unprecedented wave of innovation, but at the same time we have witnessed how frauds diversify along with new technologies and generate a greater impact on organizations of all sizes.
In fact, the most recent attacks expose major security breaches in identity verification that companies end up paying for with the loss of reputation in a product or service, higher abandonment rates or million-dollar costs associated with delays in recovering from these incidents.
After a challenging year in the industry, 2023 will not be at all exempt from transformations and the consolidation of several trends that we have seen growing. Here are five expected changes for digital identity verification this year that we see from Preventor:
The concept of artificial intelligence (AI) made headlines around the world and generated widespread debate about the surprising activity of ChatGPT, the chatbot that generates text naturally and answers virtually any question asked of it. The system, developed by AI company OpenAI, demonstrates the power of this technology and reminds us once again of its potential in different areas of human life. Well, artificial intelligence could also generate different disruptions in the identity verification industry this year, by giving it more tools for the fight against fraud thanks to early detection and automated response to known threats. But at the same time, on the attacker side, AI is increasingly being used for malicious purposes that challenge businesses and consumers. According to figures from LexisNexis Risk Solutions, up to December 2022, bot attacks on digital identity showed a global increase of 38% and the e-commerce sector is the most threatened, as e-commerce frauds rose by a staggering 155% year-on-year.
The advent of Web 3.0, the next generation of the internet that decentralizes web transactions and gives users control over their own data, will revolutionize the verification business and Preventor is at the forefront of these changes. Already on the way is its new digital identity wallet, mio.id, which will be released in 2023 and will be available to users and merchants who want to speed up their processes with greater agility, security and privacy.
Web 3.0 will drive new trends such as self-sovereing identity in spaces like the metaverse. This method will give users sovereignty in managing their credentials and allow them to decide what kind of information they share with services, validating their identity without intermediaries. All this will be possible thanks to the infrastructure that supports it, the blockchain, whose potential has been more than demonstrated with the global irruption of cryptocurrencies. But beyond that, its adoption in industries such as finance has provided greater security and transparency in transactions, since its network carries information that is auditable, traceable and verifiable, as explained by the U.S. firm IBM. The blockchain and web 3.0 will be a reality for identity verification in 2023 and is expected to occupy an increasingly relevant place in the industry, generating a safer environment for consumers, at the same time that companies can generate greater efficiencies, save costs and reduce bureaucracy.
For many years we were used to most digital frauds being focused on generating direct impacts on companies, mainly in areas such as health or finance, where a high flow of sensitive user information is handled and this type of crime usually generates millions of dollars in revenue. However, as companies become better protected against fraud, attackers are making the leap from the corporate world to increasingly impact users directly with their strategies. To do so, they rely on so-called social engineering to execute techniques such as phishing or smishing. In the U.S., it is estimated that online fraud generated losses of US$3.56 billion in the first half of 2022 alone, which represented an increase of 53% compared to the same period last year, according to figures from the Federal Trade Commission (FTC), compiled by Atlas VPN.
Data is the most valuable asset in the digital world, and preserving its integrity has become a major concern across the globe as the debate over data management in services such as social media has grown. With the rapid expansion of biometric facial and voice recognition tools, companies are exposed to increasingly stringent regulatory scrutiny over the management of this sensitive data. As the stakes for virtuality increase with corporate initiatives such as the development of the metaverse, the global debate on the importance of regulating digital identity and all initiatives related to this issue is also growing. The European Union, for example, has anticipated these discussions and foresees that by 2030, 80% of citizens will have their own wallet or digital identity, a type of document that could be used for a diverse list of services such as opening a bank account or entering university.
Given that threats are relentless and organizations will be increasingly exposed to the challenges associated with fraud, it is expected that identity identification tools will evolve in effectiveness and agility in the face of a greater concern for developing interoperability in companies and states themselves. In this scenario, it can be expected that identity verification will increasingly become part of the value chain of organizations and their day-to-day operations. With this, it is foreseeable that these tools will be applied constantly in the different services accessed by consumers and that responses will be given in almost real time, thanks to solutions such as artificial intelligence and machine learning that will take this industry to the next level. This will not only help reduce response times, but will also help generate more confidence in these tools as companies continue to save costs and pass these efficiencies on to their users, who in turn will see bureaucratic processes reduced thanks to the interoperability of different devices and platforms that will make identity verification simpler. A wave of innovation is yet to come and we will witness what it will bring in 2023.
