Telcos are well positioned to make an impact with biometrics

In this interview, the second in a two-part series, Simon Marchand, Chief Fraud Prevention Officer at Nuance Communications, discusses the effects of fraud on organizations and how telcos can monetize identity services while protecting their customers. In the first interview, he spoke about the challenges to combatting fraud, including how the Covid-19 pandemic has resulted in new risks, and how biometrics technology can help. Why is it becoming imperative for organizations to tackle fraud? The amount of money fraudsters are successfully stealing from victims is higher now that it was five years ago, so there is more incentive to pursue prosecution of cases. This increases public exposure and puts pressure on organizations to demonstrate that they understand fraud is not just about the bottom line. It’s about good corporate citizenship and the organization’s social responsibility to protect customers and tackle fraud as a global issue. A million dollars for a business that makes billions is nothing, but when you start putting faces on the losses – when you start talking about victims – there is pressure to act.

Why is this important for telcos specifically? Legislation around the world is also starting to address fraud a lot more. In Canada, we’re going to see more and more laws requiring that companies disclose even the smallest privacy breaches and that they address identify theft. If telcos have to disclose every SIM swap to public entities, we will have a clear portrait of how bad the situation actually is, which will certainly have repercussions in terms of public opinion and loyalty. Because of this, telcos are looking to take more definitive, preventative action. There has also been a real challenge for telcos in fighting the idea that they are a “dumb pipe”. They are trying to show how they can add value and that they can be a trusted entity. If the face of their brand is one of fraud and SIM swaps and significant loss, then people are not going to trust them. Why is authentication such a big issue? When I was working in banks, every month or two someone would be fired from the call center for making a mistake in the authentication process. You can imagine the stress of that person’s fellow employees. Fear of making a mistake can lead to poor customer service because agents become so strict with the process that they show no flexibility. Eventually, they get penalized for that too, so it’s a vicious cycle. In addition, carriers recognize the need to reduce agent turnover – there are significant costs associated with training and churn as well. However, if a customer can be authenticated using biometrics before the agent gets involved, the agent’s role can be to simply ask the customer’s name and why they’re calling. This allows the agent to get straight into helping the customer resolve their issue, increasing satisfaction for both involved. What kind of benefits will telcos see from using biometric technology? Telcos want customers to open accounts; they want to retain customers and drive ARPU (average revenue per user) to be as high as possible, and they want to thrive in the competitive landscape. But when customers are giving their information, the business has no real way of knowing if the person is who they say they are. With biometric technology, as a service rep is collecting identity information to do a credit check, they can authenticate the person’s voice. By this I mean that other partners will have shared the voice prints of previous fraudsters, and the business can check these against the new customer. This capability helps to ensure that the only problem the agent has to manage is credit risk, without focusing too much on synthetic or stolen identities. For carriers this represents immense opportunities for savings in terms of compensating for fraud, but also on the operational side by reducing costs. Beyond that, there’s also the employee component we talked about. Employees working in customer service are not usually highly paid, yet they have a great deal of responsibility. It takes a long time to train them and get them to the position where they can effectively be the face of a brand. The more tools we can give employees to deal with customers who are often already irate, without the customer having to go through the authentication process repeatedly, the better. There is also the employee’s wellbeing to consider. There was an instance in Canada where employees experienced PTSD-like effects when they were constantly berated following a data breach. It got to the point where people needed grief counselors. So, businesses should actively seek to reduce average handling time, remove pressure from frontline employees and increase security in the identification process when accounts are opened. This will result in a better experience for customer service agents and less churn because customers will be more satisfied as well. How can telcos capitalize on digital identity services and build new revenue streams? There’s a whole conversation around how to strengthen identities. So, instead of having a driver's licence, how can we enhance that and move from the physical to a digital ID wallet? Telcos see an opportunity to leverage the data they have about their customers – account data and network data such as how they’re using their phone and how long they’ve had their SIM. If they embed biometrics on top of this data, they can provide a level of security that’s much higher than a lot of other players in the identity field can provide. This would allow telcos to provide services to governments and differentiate their offerings. They could provide stronger ID wallets and facilitate portability. Ultimately, they could use biometrics to enhance digital identity and increase the accessibility to services. For example, if someone is in a remote location and they want to get government service, using biometrics is just as good as signing up in person, if not stronger. If telcos seize the opportunity, they could develop a whole new line of business and even work as a consortium to create one identity platform that covers all citizens in a given country.