Publication date: October 15, 2024
Our lawyers took part in the training “Fighting fraud – how a digital identifier increases the security of financial services”, organized by the techUK association. The event was attended by specialists from various areas of financial technology, including Elis Thomas from TechUK, Chris Lewis from Synectics Solutions, Laura Barrowcliff from GBG Plc, Adrian Field from OneID Mand Adam Gagen from Revolut.
Technology is changing the face of the financial sector by introducing innovative solutions such as open banking, digital assets and new forms of payment, which makes financial services faster and more accessible. Nevertheless, technological developments go hand in hand with the increasing number of sophisticated online scams. According to research by Synectics Solutions, in the first half of last year, nearly 600 million pounds of fraud was stolen in the UK, most of which were identity fraud. Forecasts indicate that by 2025, this type of fraud may account for up to half of all bank fraud. In the digital world, effective identity verification is key to fraud prevention, and a digital identifier is becoming an indispensable tool in the fight against these threats. Its widespread use can significantly increase the security of online financial services. However, in order to effectively counter fraud, cross-sectoral cooperation is needed, covering both the financial sector and the technology industry.
The training organised by techUK provided an important platform to discuss these challenges and the opportunities offered by digital technology in the context of combating fraud. The experts agreed that only through joint action and an innovative approach can a safer financial environment be created.
Chris, the head of solutions at Synectics Solutions and former treasurer of the Open Identity Exchange, described the current state of the data security and technology sector. He pointed out that the threat of financial fraud is huge, with hundreds of thousands of reports annually in 2023 only, of which 50% of all crimes in the UK are fraud or related activities. Many of these scams are supported by social media.
One of the main problems is the widespread sharing of personal data on the Internet, which facilitates the creation of false identities. There is also a lack of a coherent approach to identity verification, especially in the field of facial biometrics and document verification. The increase in the number of synthetic identities that are created using data from leaks and AI techniques is becoming a big problem in the financial sector, especially in the area of secured loans. Effective identity verification – digital identifier becomes crucial for protection against various types of fraud. It is a tool that enables unambiguous authentication of the user’s identity in an online environment, which allows for greater security of financial transactions and protection of personal data.
Unlike traditional identity verification methods, the digital identifier relies on advanced technologies such as biometrics, such as facial or fingerprint recognition, and security technologies such as blockchain. Thanks to this, the authentication process becomes more reliable and more difficult for potential fraudsters to fake.
During the techUK webinar, experts emphasized that the widespread use of digital identifiers can significantly increase the level of security of online financial services. Thanks to them, financial institutions can more effectively identify their clients and verify their identity, minimizing the risk of abuse and fraud.
One of the main aspects that speaks for the use of digital identifiers is their convenience and ease of use. Instead of remembering many different passwords or PINs, a user can have one universal digital ID that allows them to quickly and seamlessly authenticate across services and applications.
Adam Gagen from Revolut stressed that in other countries, such as the Nordic countries, digital identification systems, e.g. ID Bank, have been operating for over 20 years and effectively reduce fraud. The introduction of fully digital identification in the UK could allow for immediate authentication of identity and the provision of verified data, which is crucial in the fight against fraud. Digital identification also has the potential to integrate with various online platforms, such as online markets. They may comply with the guidelines of the Act on online security, which will allow to extend the reach of banking and payment systems to these platforms. In addition, the introduction of digital identification could include systems such as “trust mark”, which would allow users to filter offers from verified sellers.
In the context of the future fight against fraud, experts stressed the need for institutions and governments to adapt quickly to emerging threats. This requires not only a continuous evolution of technological solutions, but also close cross-sectoral cooperation and exchange of information between different organizations. It is only through joint action and innovative approaches that we can effectively combat increasingly sophisticated online crimes. Experts agreed that the vision for the future is a society where most people use certified digital IDs, which will allow for additional controls and prevent large-scale fraud.
In the context of the development of digital identity technology, the need to educate the public about safe ways of interacting with financial institutions and avoiding confidential data through unencrypted communication channels, such as SMS or e-mail, was also discussed. A key element is understanding that security requires trusted communication channels, and digital identification gives you the ability to design more secure and reliable transactional processes.
The conclusions of the discussion point to the urgent need for consistent regulations and innovative technological solutions that will enable effective fight against financial fraud and ensure greater security of online transactions. Digital identification has the potential to become a key tool in this fight, benefiting both consumers and businesses. However, to realise this potential to the full, close cooperation between the public and private sectors and continuous investment in the development and improvement of digital identity technology are necessary.
The topic of the training is well written in the most recent cases handled by our lawyers, particularly in the area of cybercrime. Our lawyers are trained in OSINT techniques and apply the skills in assisting clients in mostly cross border cybersecurity and financial crime legal matters.