Businesses need to get more value from the data they already have about a customer instead of asking consumers to share even more data for authentication purposes. Advanced authentication systems can intelligently step up or down the required level of challenge based on the risk and known behaviors of that individual customer.

David Britton, vice president of industry solutions for global fraud and ID, Experian

David Britton, vice president of industry solutions for global fraud and ID, Experian

Providing the best customer experience has become the distinction that sets you apart from your competitors. According to our research, business executives are concerned with how to provide that experience while protecting their customers from fraud. This is understandable, as we also uncovered that fraud losses have increased across the globe, particularly when attackers use stolen identity data to set up fraudulent accounts or compromised credentials to take over existing accounts.

Customer expectations are driving the evolution of online retail over the last several years with rapidly changing consumer expectations. Our research shows that 74 percent of consumers see security as the most important element of their online experience, followed by convenience and personalization.

Recognizing your customers without repeatedly asking them to prove themselves or provide the same information leads to greater trust.

It’s often been thought that security and convenience were at odds, with one coming at the expense of the other. Too many security controls lead to friction-filled and frustrating experiences. Too much convenience and you lose the barriers meant to protect the business from fraud losses and consumer’s information from being compromised.

The good news is that businesses don’t have to choose one over the other. Consumers can have both security and convenience. In fact, 70 percent of consumers are willing to share more personal data when they see the value for it—either greater security or more convenience. Today, it’s paramount that businesses understand consumers’ behaviors and previous interactions to deliver a secure and engaging customer experience.

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In 2012 the total amount of digital data reached one zettabyte. According to the World Economic Forum, the entirety of our digital universe is expected to balloon to 44 zettabytes by 2020. This increase in available data is a double-edged sword. On one hand, with more consumer information available to businesses, they can deliver even more secure and relevant customer experiences. On the other hand, the proliferation of that same information, requested from consumers again and again, may put them at a higher risk of fraud.

To prevent increased fraud risk to consumers, we believe businesses need to get more value from the data they already have about a customer instead of asking consumers to share even more data for authentication purposes. In this sense, our research also suggests that recognizing your customers without repeatedly asking them to prove themselves or provide the same information leads to greater trust.

This is true of businesses across industries, where some are establishing digital trust among consumers more effectively than others. We found that digital adoption alone is not indicative of how much a consumer trusts a business. Interestingly, consumers still adopt digital channels despite being highly skeptical of businesses.

So, how do online retailers rank in terms of consumers’ trust? Only 30 percent of consumers across the globe trust retailers “completely” or “a lot” and unfortunately, nearly the same number trust retailers “a little” or “not at all.”

What can online retailers do to improve trust, prevent fraud and ensure the best digital experience?

Be more transparent about how data is used

By being open and transparent with customers about how you are using their data, they will feel more in control and have a strong sense for how you bring them value in the form of security and/or convenience.

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Our report found that 8 out of 10 consumers have greater trust in businesses that are more transparent about the use of their information. Businesses with greater levels of consumer trust have active programs focused on helping consumers feel in control of their personal data, clearly and concisely communicating how data is used.

Use your data to recognize your customers

One of the most effective ways to improve trust, prevent online fraud and ensure a positive digital experience is to recognize your customers without repeatedly asking them to prove themselves or repeat the same information. The better you identify customers with your available data, the more seamless the experience you’ll be creating for your customers.

Use the latest and most advanced technology

Unlike standard authentication tools that typically require username and password, advanced authentication technology aggregates digital data and provides a more passive authentication which creates a secure and frictionless experience for your customers.

These solutions can apply the right response by intelligently stepping up or down the required level of challenge based on the risk and known behaviors of that individual customer. This can be as simple as auto-filling forms, adding phone intelligence to provide a mobile one-time password, using enrolled biometrics, incorporating strong device intelligence, and leveraging behavioral biometrics.

Strengthen your customer relationships

The anonymous nature of digital transactions means that it is hard for retailers and consumers to establish bilateral trust. However, the more repetitious in nature transactions are, the more that trust is built.

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Trust can be conceptualized as a virtuous cycle where factors of customer identity, authentication methods and fraud management are the driving forces that will increase trust over time. The key is delivering this experience consistently because, conversely, lack of trust (or a sense of mistrust) can lead to customer abandonment, negatively affecting a business and its reputation.

Across the world retailers and consumers seem to recognize the growing value of personal data and the growing risk of fraud. However, protecting your customers and your business from fraud is no longer enough. Consumers expect both security and convenience, and online retailers’ ability to meet those expectations is paramount for their business growth.

More sophisticated authentication strategies and advanced fraud detection tools allow online retailers to identify their customers and deliver relevant, convenient experiences, without increasing their risk exposure. The result? Greater mutual trust among consumers and businesses.

Experian is a consumer credit reporting service that says it collects data on more than 1 billion consumers, including 235 million in the United States.

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