The BFSI sector is highly dependent on IT infrastructure for delivering services, such as mobile, online, and core banking. Identity fraud is a major concern when performing financial transactions through online banking portals and insurance apps. With consistent technological advancements across BFSI channels, banks and other financial services institutions are facing data breaches & identity frauds at an unprecedented rate. For instance, according to TransUnion (U.S.), digital fraud attempts against financial services companies rose by 150% in 2021. Also, according to the Nilson Report, payment card fraud losses worldwide exceeded USD 32 billion in 2021.
Digital identity fraud has become a major challenge for the banking sector, due to which banks and financial institutions are investing heavily in incorporating digital identity management solutions to protect customers and digital assets against manipulation and fraud. For instance, in January 2022, Axis Bank Limited (India) partnered with MinkasuPay (India) to offer customers the smoothest and most secure net banking payment experience through a biometric fingerprint & face ID authentication solution. Banks leverage digital identity management technologies in various applications, such as cash withdrawals from ATMs and identity authentication for mobile banking apps through fingerprints or a combination of face and voice verification.
Some of the recent key developments in this space are given below:
- In January 2022, the Federal Deposit Insurance Corporation (FDIC) (U.S.) and the Financial Crimes Enforcement Network (FinCEN) (U.S.) launched Tech Sprint to develop solutions for financial institutions and regulators to help measure the effectiveness of digital identity proofing—the process used to collect, validate, and verify information about a person. Through Tech Sprint, FDIC’s tech lab (FDITECH) and FinCEN seek to increase efficiency and account security, reduce fraud & other forms of identity-related crimes, money laundering, and terrorist financing, and foster customer confidence in the digital banking environment.
- In November 2022, Daon, Inc. (U.S.) partnered with GoTyme Bank Corporation (Philippines) to offer its digital identity capture and authentication platform, Daon IdentityX, for the GoTyme banking app. Daon’s IdentityX platform uses document-centric identity-proofing technology and helps reduce consumer account set up barriers.
- In January 2022, Axis Bank Limited (India) partnered with MinkasuPay (India) to offer its customers the smoothest and most secure net banking payment experience through a biometric authentication solution.
- In January 2022, The Federal Deposit Insurance Corporation (U.S.) and the Financial Crimes Enforcement Network (U.S.) launched Tech Sprint to develop solutions for financial institutions and regulators to help measure the effectiveness of digital identity proofing. The process collects, validates, and verifies information about a person.
- In November 2021, IDEMIA (France) partnered with Federal Bank Limited (India) to help enable biometric authentication for bank employees.
Thus, the increasing frequency & sophistication of authentication & identity frauds in the BFSI sector drive the growth of this market.
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