COVID-19, the Touchless Digital Economy, and its Ironic Magnification of Online Friction
Few forcing functions have magnified the friction between a clean customer experience (CX) and verifying identity like the global pandemic. Just since March, the numbers of new entrants into the digital economy has skyrocketed. This isn't because of some epiphany that digital is the future, but rather because they have very few other choices. Worried about exposure to the virus but …
- need stuff, Amazon.com has you covered … go online;
- need to pay your AT&T cell phone bill without touching something … go online;
- need to order groceries without going to Whole Foods … go online; and
- need to send money to a family member without going to Wells Fargo … go online.
However, what if you’re new to the digital economy? Then these brands that are all anxious to help you with your shopping, banking, and e-commerce needs have a problem. Do they trust this brand-new customer and risk fraud losses, or do they introduce friction and risk transaction abandonment? Moreover, what about the volume of returning customers? Is the increased frequency legit or are these bad actors with stolen credentials? So, what do they do? They step up to make you prove that you are really you.
Who Are You?
In the physical world, this conundrum is pretty easily answered. At the point of sale or identity verification, you present your highest, most trusted form of identity within the context of that transaction and, bingo, you’re done. The physical world provides a hierarchy of identity and transaction context that's easily determined and makes sense. For example, when you travel and are interacting with TSA, your passport is the best way to proceed. It's issued by a trusted government entity, has all of your pertinent information, and is implicitly trusted. Outside of your DNA, it is your most trusted form of identity. Conversely, when you visit the San Jose public library, your library card is perfectly acceptable. Show up TSA with your library card and you'll face friction. Why? The context of that transaction dictates the identity verification based on the trust in the issuer.
Online, however, there are several challenges. First, you have multiple identities that must be harmonized to truly understand if you are you. Assuming email as the lowest common denominator of identity, your work, personal, school, family and spam email accounts all represent identities that you use to transact across multiple industries and services. You probably use your Santa Clara University email to buy and access your Chegg e-textbook for the fall quarter. You log into your TD Waterhouse account with your personal email, and use your company email to renew your Blue Cross insurance. Each of these transactions are distinct versions of you transacting with vendors that verified your identity using their own digital identity solution. That raises an important question: Unless all of your online identities are harmonized, can anyone of them really be trusted? A compromise of any one of the identities threatens them all and increases the risk of fraud.
Who Can You Trust and How Do You Know Me?
Online, there's no recognized and always trusted issuer of identity. Put another way, there's no hierarchy of identity. On the contrary, there's an entire digital identity supply chain each armed with their own identity graph derived from their understanding of your activity. Often, that identity is an amalgam of the vendor’s direct interaction with you, third-party cookies, identity partner signals, publicly available data, and behavior inferred and modeled based on prior activity. But does any one of them really know the “whole” you?
Bye-Bye IDFA and See Ya Third-Party Cookie
To compound matters further, the device identifier so frequently used by marketers is making an abrupt exit in just a few short weeks with the release of Apple’s iOS14. Furthermore, the third-party cookie so magnanimous in its data sharing is sailing off into the sunset in a few quarters. Each of these events further complicates the identity landscape, and the timing cannot be worse. With a flood of new customers coming into the digital economy, each with new or infrequently seen digital identities, the tension between friction and CX is once again front and center.
Harmony, Context, Confidence and Trust
So, what should digital businesses do to temper the increased friction while not opening the floodgates to opportunistic fraudsters? What's the best digital identity solution in the crowded digital identity supply chain?
In the midst of all of these changes, your identity solution needs to understand the context of the transaction, harmonize and verify the identity across multiple industries thereby increasing the global view of that identity, and provide you a trust factor relative to the specific transaction.
Think of it this way: confidence that the customer is the customer and trust that, within the context of this transaction, there's nothing weird in the customer’s behavior. The key: all within the global view of a harmonized identity … all of them. If your digital identity can’t do that, embrace the friction.
Frank Teruel is chief operating officer at ADARA, the word's leading permissioned data and digital identity solution.