Take a few extra steps to prevent fraud and enhance the user experience

Barley Laing, the UK managing director at Melissa, explains how the tech behind acronyms like eIDV, MRZ, OCR, and AI can deliver valuable information to keep the public sector fraud-free

By Melissa

13 Sep 2021

The public sector is under huge financial pressure thanks to COVID-19. The budget deficit in the UK has skyrocketed, with £270.6 billion borrowed by the Government in 2020, up from £222 billion in 2019, according to the Office for National Statistics (ONS).

While there are positive signs of a strong economic recovery in 2021, tax receipts have experienced a sharp drop over the last 18 months, showing a 9.8% contraction in the UK economy in 2020. This will continue to put huge pressure on valuable budgets for a while to come, not only at government departments but also across the wider public sector.

At the same time, the pandemic is supercharging the move to ‘online’. Unfortunately, increased interaction in the digital space has led to an upswing in fraudulent activity. This is a huge issue as fraud in the public sector, including benefit, tax credit and student loan fraud, is already estimated to cost £31-48 billion a year - with the higher figure larger than the UK's annual defence budget. The Policy Exchange estimates that fraud and error during the Covid-19 crisis is set to cost the UK Government £4.6 billion. Civil servants must work to mitigate this potential loss, particularly as know your customer (KYC) and anti-money laundering (AML) regulations are tightened.


Electronic identity verification (eIDV) provides real-time verification

eIDV is a significant tool in the fight to combat fraud. For example, when a person goes through the online application process for a service, eIDV can run cross-checks against the data they have provided, in real time. This means matching someone’s name, address, date of birth, email address or phone number against reputable data streams, like government agency, credit agency, and utility records. However, to do this effectively, requires access to billions of global records in real time to ensure the customer experience isn’t compromised.

By assessing an applicant’s residency and proof of address, a determination can be made as to their ‘right’ to access a service or assistance. The ability to verify age goes further, ensuring only those who qualify for support receive it.

This automated approach is much better than the alternative – a manual ID check. Physical inspections of ID are time consuming, much more costly, and subject to human error. Because of this, manual processes are more likely to deliver a negative customer experience.

eIDV capabilities are delivered through apps, SaaS, and web APIs, and therefore simple to integrate into existing online platforms. They can also easily be scaled up, delivering as little as 100 checks per year through to many millions, if required. 

Fraud in the public sector, including benefit, tax credit and student loan fraud, is already estimated to cost £31-48 billion a year - with the higher figure larger than the UK's annual defence budget.

Going further with ID / document scan verification and biometrics

While eIDV is a significant advance in the fight against fraud, it can be further strengthened with document verification and biometrics. This combination delivers a strategic KYC process.

Document verification is vital in the ‘remote onboarding’ of online users. Using machine readable zone (MRZ) and optical character recognition (OCR) technologies, it is possible to collect customer ID at the onboarding stage. These established tools enable public sector personnel to verify ID documentation and identify the user in real time, with confidence, as the ID is sent through via the user’s preferred device.

The photo ID embedded in these scanned documents supports biometric ID verification. Biometrics adds value as part of the KYC process because it can be used to digitally identify a person. Users can access services, or their account, quickly and easily without the need to answer time consuming security questions or remember passwords, facilitating a positive customer experience.

However, basic biometrics can be hackable which is why it’s particularly important to use a biometric algorithm that checks for eye movement. This ensures organisations are engaging with a real, live person, not a static image or avatar, to further combat fraud.


Fighting fraud: consider artificial intelligence (AI)

One form of AI, semantic technology, associates words with meanings and recognises the relationship between them. The machine reasoning and automated pattern recognition provided by this technology helps to identify possible fraudulent applications in real time. Also, semantic technology makes it possible to apply context and make inferences with data, ensuring properly validated identities as well as broader data quality and integrity.

With online interactions and transactions increasing, the cost of embedding ID solutions that deliver fast, secure, and accurate identity verification into your online platform is minuscule compared to the risk associated with fraud. Plus, they help to deliver a standout user experience. Now is the time to act and help protect precious budgets from fraud by employing user friendly ID tools that are cost effective, easy to integrate into existing platforms, and seamlessly scale up. Only when identity is confirmed and verified can valuable budgets stop being disbursed incorrectly.

Barley Laing, UK Managing Director at Melissa

Email: barley.laing@melissa.com 

Tel: 020 7718 0070

Website: www.melissa.com/uk

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