2017 has been a year of rapid growth, momentum and industry recognition for us. Regtech has taken off full force and digital identities have moved beyond a “what are those?” response to “…tell me how they can improve on our current system”. We’ll have more to say about that in a follow-on blog in the New Year. However, to help you get ready for the new year, we have 10 Predictions for 2018 across a variety of topics including know your customer (KYC), anti-money laundering (AML), initial coin offerings (ICOs), General Data Protection Regulation (GDPR) compliance and more.
- Adoption of digital identities will continue to rapidly grow in identity proofing and regulatory compliance. Today’s digital economy is built upon the premise or ability of any company to determine that the user/business entity with whom they are interacting is who they say they are. IdentityMind Global believes that digital identities – the secure sum of a person’s physical credentials (passport, driver’s license, etc.), personally identifiable information (email, Social Security numbers, credit card numbers, phone, etc.) and digital touchpoints (transaction behavior, social media activity, email, devices) as a person transacts on the internet – will continue to gain rapid acceptance as the method for identity proofing and regulatory compliance.
- Machine learning and graph intelligence will continue to advance in fraud detection and compliance. IdentityMind Global’s patented eDNA™ technology leverages machine learning to build identities to analyze for the most accurate reputation score (risk profile) possible. Our algorithms provide reputations for each entity tailored for the industry in which they are doing business. We enable companies to modify their risk process on the fly, adding in additional checks where needed. Machine learning is having an immediate impact on companies bottom lines by dramatically reducing manual review rates.
- Know your customer (KYC), anti-money laundering (AML) and fraud detection are moving from silos to a single customer view. A single customer view across KYC, AML and fraud using digital identities will provide an aggregated, consistent and holistic view of the customer. Enterprises will have the ability to apply a risk-based approach for creating a good digital experience for good end users, while protecting their platform from bad actors.
- Cryptocurrencies and Initial Coin Offerings (ICOs) will continue to skyrocket in 2018 but a day of reckoning is coming. 2017 witnessed the hyper growth of cryptocurrencies like Bitcoin, Ethereum, Litecoin and others while ICO’s continue to skyrocket. According to Autonomous Research, ICOs have raised a total of $4 billion in 2017. We anticipate both trends will continue to escalate in 2018, but a day of reckoning is coming in the form of increasing scrutiny and regulation from the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FIRC), and other regulatory bodies. This will translate into a mandate for banking, financial services and exchanges trading in cryptocurrencies to implement stronger investor protections and stricter transaction monitoring to prevent money laundering. IdentityMind Global continues to excel in AML services to the crypto industry, including banks that offer transactional accounts to service them.
- Are companies ready for GDPR compliance (May 25, 2018)? The General Data Protection Regulation (GDPR) is set to come into full effect on May 25, 2018 and will dictate how companies address data protection in Europe. Many organizations are going to struggle to meet the compliance deadline, especially those who haven’t allocated sufficient human and capital resources to meet the requirements. The result? Many companies will be in non-compliance and will be vulnerable to loss of business and reputation. While the main impact is going to be for those companies operating directly in the EU market, it will have consequences worldwide that will start unraveling as the regulation is being enforced. Some of the most affected companies will be those that use identity data for marketing purposes. IdentityMind Global doesn’t store customer data or use it for marketing purposes such as the large consumer credit reporting agencies.
- Identity theft will continue to grow with non-stop data breaches and the corresponding loss of personally identifiable information (PII). Identity theft will continue to grow, and grow and grow with no end in sight. According to the Identity Theft Resource Center (ITRC), as of December 2017, there have been over 8,100 data breaches in the U.S. with over 1,055,000,000 records exposed. These data breaches have unleashed a mountain of physical and digital PII into the hands of well-organized and well-funded hackers and cybercriminals operating around the globe. Many are beyond the reach of U.S. law enforcement. Cybercriminals are not collecting this data for fun. The black market for stolen identities is huge, with a going rate for an individual identity varying from $2 to $500, depending on the richness of the information, and the value of certain attributes like credit scores, the number of functioning credit cards and more. The need for digital identities to evolve into more meaningful know your customer (KYC) processes will continue to gain traction in the market, and this will help overcome the lack of reliable data sources for identity validation.
- Digital identity portability will gain traction in the KYC industry. Know your customer (KYC) processes will be streamlined and users will no longer have to go through KYC processes with each new institution with whom they want to be a customer. Digital identities in financial institutions will play a huge role in this evolution.
- Mobile identities incorporating biometrics will become a stronger play in authentication. Biometric components – such as facial recognition, fingerprint identification, hand geometry, retina scans, voice analysis and the like – are rapidly coming into play through mobile devices. These devices, in turn, will become the de facto authentication mechanism for identities in every online application.
- Cryptocurrencies will continue to gain mainstream adoption. Cryptocurrencies are gaining acceptance today in e-commerce and marketplaces. At the time of this writing, few banks or merchants offer cryptocurrencies. However, we predict that will all change in 2018 with broader adoption of cryptocurrencies in banking, loans and financial services. Banks will need to allow customers to open accounts that store and trade digital currencies and more traditional currencies such as dollars, yen, pounds or renminbi. To do that, they will need anti-money laundering solutions such as those provided by IdentityMind to monitor digital currency transactions while meeting regulatory compliance.
- Identity trust will become essential to shared economy applications and services. Shared economy services like Airbnb, Uber, Lyft, DogV and others have made their mark on the world economy. As consumers, we can choose to open our houses, cars and lives for everyone. The ready availability of these services has permeated our lives. But, doubt often lingers about the integrity of those offering services, and those using them. How much dilligence has the service put into place to ensure that every user, host, or driver is indeed trustworthy? The central question will not be so much about whether a person has been validated, but whether that person can be trusted. Identity reputation will play a key role in establishing trust in these ecosystems.
We wish you a wonderful New Year both personally and professionally, and hope that these predictions shed some light on where things might be going.