Exclusive: ‘We have to believe the FCA does things in our best interest’ says fintech chief
Telecom giant EE said this morning it is planning to burst onto the fast-growing cyber security scene. The operator unveiled new products such as alarm systems and an online cyber security package.
The telco’s move underpins the fast-growing character of the cyber security space.
Particularly the need for ID verification online seems to be stronger than ever, with the value of fraud amounting to over £20bn this year alone.
The cost of it to any business is significant, both in terms of revenue and dealing with the fallout, but also in terms of reputation.
Moreover, with the added complications of conflicting regulation affecting how companies are monitored by the FCA and other regulatory bodies, it’s a complete minefield.
Time for Morning Wire to catch up with Colum Lyons, the founder and chief executive officer of fast-growing online security fintech ID-Pal.
Lyons revealed to this paper that, today, his firm is now a government-certified identity service provider (IDSP) for digital right to work and right to rent checks in the UK, meaning employers, landlords and letting agents can verify identities and addresses using ID-Pal.
The need for ID verification online is huge, particularly since fraud is expected to hit close to £20bn this year alone. What is going on?
There are several reasons for this staggering figure and its growth. However, the one I believe everyone forgets about is the improvements using technology such as strong ID Verification providers to catch fraud.
“If I was given a £1 for every time that someone told me there is no fraud in their company and they are simply looking for cost efficacies and improvements in user experience, I’d be doing ok!”
Colum Lyons
The key thing here is businesses now really know how much fraud is in their business, so more and more fraud is being reported, not necessarily more fraud occurring, it’s simply now been caught. As I said, there are several reasons, but this for me is one we always seem to forget about.
ID fraud rose rapidly during the pandemic. How do you explain that?
As Albert Einstein said, “in the midst of every crisis, lies great opportunity”. The pandemic is no different, fraudsters adjusted their game quickly to take advantage of the greatest opportunity. The world went remote and online and many individuals and businesses were not ready for the immediacy of the change. It’s as simple as this: the fraudster won while businesses were scrambling. It’s been interesting to see the variances in industries to adapt to change quickly.
The cost of it to any business is huge both in terms of revenue and dealing with the fallout but also in terms of reputation. It nearly seems an inevitable business risk?
Every business has risk associated with it. However, it’s about assessing risk correctly. How likely is this to happen to your business and what would the impact be? They are the two key questions.
“A big misunderstanding in the market is the cost and speed of implementing one of these platforms.”
Colum Lyons
In this scenario, we are talking about ID fraud and, unfortunately, for every business, both questions will score high unless they have appropriate systems in place, which most firms don’t. My motto is, customers are the key to your success, don’t risk your success!
With customers increasingly savvy, it’s not something businesses can afford to take lightly. Or do I overestimate customers’ stance here?
Believe it or not, the digital ID&V space is relatively new. As a result, customers haven’t had enough time to be savvy when it comes to verifying their identity. This may not be the popular answer, but there are a lot of misconceptions out there in terms of what is a secure way of verifying your identity. I am constantly surprised every time someone tries to convince me that emailing their identity documents is genuinely a more secure way of sending documents than a solution like ours.
And what else?
The other big misconception that exists out there today is around the softer side of the market such as Buy Now Pay Later (BNPL) or gift cards for example. The lack of understanding on Anti Money Laundering regulatory requirements for these products means customers easily confuse this with GDPR rights. It’s a battle we deal with every day.
With the added complications of conflicting regulation affecting how companies are monitored by the FCA and other regulatory bodies, the fact that regulations in each country in which a business operates might be completely different and Brexit affecting data flight, is it a complete minefield?
Great question, and the term minefield might be putting it lightly. The usual question I get asked here is, who’s to blame? My answer is no one and no, I am not sitting on the fence.
“We have to believe that the FCA and other regulatory bodies are doing things in our best interest and nothing else.”
Colum Lyons
Businesses are making decisions to adhere to these guidelines and protect their customers, so everyone is working with a common goal. In reality, it’s sometimes like mixing oil and water. I do think massive strides have been taken over the past three to four years to improve this, but we still have a long way to go.
Finally, a recession is looming, Covid cases are slowly rising again. Do you expect another tsunami of ID fraud this winter?
As long as fraudsters are having success in the area of ID fraud, the graph will continue its upward trend. Fraudsters will always look for the area of least resistance – those systems that have the least touch points and the weakest security because these are obvious points of penetration. And to answer your question, however, yes, that graph will keep pointing up but is this because of the looming recession or increases in Covid again? No – it’s simply that there are still far too many firms out there without the correct solution to protect their business from ID fraud at the source.