Since the earliest days of human existence, the concept of trust has presented unique interpersonal challenges that are as trying in the digitized world of the 21st century as they were for ancient civilizations. According to Mitek Systems CEO Max Carnecchia, 100 years of steady, evolutionary progress on the trust front has been rocked by the global pandemic.
“So now we arrive in the middle of March of 2020, and that world [of trust] is turned on its head,” Carnecchia told PYMNTS’ Karen Webster in a recent interview. “It’s a seminal moment where the future has basically been grabbed and pulled forward, and what was going to take 10 years now has to happen in two.”
What had been an orderly progression of corporations and institutions building trust face-to-face around their brands, as consumers eased into using a multi-channel model that combines in-store with app or online experiences, has now arrived at a place of unprecedented consumer comfort with a digital lifestyle.
But while banking or shopping online is one thing, Carnecchia said getting people comfortable with the use and benefits of things like fingerprint, iris or palm scans is a totally different scenario.
“Here we are in 2020, and people are only [just now] getting on board with taking pictures of their checks [to deposit them],” he said. “It’s like a 20-22 percent adoption rate,” he added, saying it illustrates the latency of how generational and behavioral adoption moves a lot slower than technology.
Tech Can’t Stand Still
One of the challenges that the digital identity and trust verification business faces is that it can’t sit still and wait for consumers to get comfortable with technology, since cybercriminals are constantly looking to find and exploit any new weakness.
“We’ve been trying to solve this problem for a long time, and it’s a cat-and-mouse game where every time you shut down one attack vector, the bad guys, the bad actors, go figure out another,” Carnecchia said. “You close a window and they try to come in through the back door.”
To bridge that ongoing and unsolved problem, Carnecchia supports using a more dynamic, linked and layered approach that morphs over time based on what’s working and what isn’t.
“I don’t think the jury is completely in as to what’s unfolded in the course of the last six or seven months with COVID, but I think there is some anecdotal evidence that getting digital identity right, and doing it the right way, has far-reaching consequences,” he said.
Doing Digital ID Right
Carnecchia described the fine line that exists between delivering on the promise and values that consumers expect from the brands they trust, and the messes that can happen when something goes wrong.
“We pick on millennials a lot, but when we think about generations that are coming into this environment that are more digital natives, those folks trade on values,” Carnecchia said, regardless of whether that’s a business, government, school or healthcare provider. So the question — or challenge — that raises is: Will these businesses be able to live up to these values? And will their words actually match the walk?
At the same, Carnecchia cautions about the risks and liability involved in doing digital ID verification poorly, and points to the high rate of fraud that was involved in the disbursement of PPP loans this past spring.
“When you kind of pull the covers back on [PPP loan fraud], when folks are trying to prove identities in a digital world and you’re using low assurance signals and you’re in a hurry, you end up with fraud,” he noted.
But he said the good news is that “when you add a little bit of friction” by using a higher assurance signal such as a biometric, “you get a good outcome” — which, in this example, means less fraud. And while it would be easy to single out banks and financials, he said all companies need to do a better job of communicating the importance of authenticating identity and addressing consumers’ privacy concerns.
Solutions And Consensus
As things stand now, Carnecchia thinks the state of digital identity is very local and very fragmented, pointing to the range of different requirements that a bank might face in Germany, France, the Netherlands and even the U.S. It’s a scenario that begs the question: When will a technology or standard emerge that everyone can agree upon?
Carnecchia personally favors “self-sovereign identity,” where everyone controls their own identity and only allows the elements and answers they deem appropriate.
“Is there a better way, an easier way? Does this evolve or will it be that Big Tech steps in, or will the banking industry create some sort of consortium?” Carnecchia mused.
“I’m probably not smart enough to pick a winner and tell you where this goes,” he said — but he’s pretty sure that the evolution “is going to take longer than anybody expects it to.” But from a business standpoint, that means Mitek is going to have to “place bets across the waterfront until it becomes clear where the dominant approach will be.”
Progress And Optimism
Even though consumers may be behind the industry, Carnecchia is confident that the evolution will continue to carry the digital identity space forward, just as it has with other areas of eCommerce.
“Five years ago, it took 27 steps and a one-time password to apply for a credit card on my laptop, but I got my Apple Card in less than two minutes and six steps,” Carnecchia noted.
He uses that illustration not only as a point of progress but also to highlight the fact that streamlining the onboarding process is better for businesses, too — a reality that will incentivize the adoption and evangelization of digital identity practices.
Taken together, Carnecchia said his overarching message is one of optimism and patience.
“Humans are incredibly resilient and innovative,” he said, noting that if companies work hard and listen to experts, they’ll come out successfully on the other side.
“Necessity is the mother of invention,” Carnecchia said. “It’s usually during recessions and depressions when you get the greatest creativity because it’s mandated,” he added, “so I think we’ll have some real breakthroughs” in 2021.
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