Challenge
Account opening fraud has fast become the path of least resistance for criminals who open bank accounts for a host of illegal activities, from money laundering to maxing out lines of credit. In 2021, fraudulent new account openings comprised over one-third of detected attacks — an increase of over 70% from 20201. Further, the average cost of a fraudulent account opening is $3,200 per account2. Scammers are using new and innovative approaches to open these fraudulent accounts, including the use of highly realistic — but fake — IDs such as a driver’s license with a fabricated identity.
A top U.S. bank was aware of the risks of account opening fraud. With tens of thousands of new accounts being opened every week, the bank wanted to reduce the number of fraudulent account openings. Like any financial services entity that operates in such a highly regulated environment, the bank is bound by various controls, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) to minimize illicit financial activity and fraud. The bank was searching for an identity proofing solution to reduce account opening fraud and its associated costs, while meeting KYC and AML compliance requirements.
Additionally, the bank was looking for a means to deploy the new solution across all their channels in a centralized way — including in-branch, digital and ultimately across all the lines of business — with coverage across the United States. The bank has a centralized authentication service that supports all the lines of businesses and channels. By incorporating an identity proofing solution into this service, the bank envisioned the ability to quickly and easily expand its use to other parts of the business.
“With the rising rates of account opening fraud we’ve seen in the financial industry — especially in an increasingly digital landscape — reducing fraudulent account openings is one of our top priorities,” said the bank’s senior technology leader. “We needed a solution that could help us flag fake or synthetic IDs while offering best-in-class security and meeting our strict compliance standards.”
Solution
The bank selected Trusona’s identity proofing service in 2019 to mitigate the risk of account opening fraud nationwide while meeting KYC and AML requirements. Trusona’s identity proofing service was the first commercially available solution to utilize the American Association of Motor Vehicle Administrator’s (AAMVA) Driver’s License Data Verification (DLDV). The service verifies that the data on a driver’s license, driving permit or ID card matches the data held by the jurisdiction that issued the document — essentially, the “source of truth” for a given identity.
Additionally, the bank found Trusona’s solution to be the most secure as the only service to utilize patented anti-replay technology. This capability ensures identification requests are authentic and not replays of previous requests, providing an even more powerful method to quickly and accurately reduce fraud without storing any personally identifiable information (PII). Trusona met the bank’s KYC and AML requirements by verifying customers’ identities as part of the onboarding process as well as providing monitoring capabilities.
“While exploring any new solution, we consider the build versus buy question,” said the senior technology leader. “While the bank could have integrated AAMVA’s DLDV service directly, we had to look at both time and cost variables. We selected Trusona since it was the only solution that allowed us to test and deploy quickly, provided built-in variability of state-specific data and offered unmatched anti-replay security.”
The bank was able to set up and deploy the solution using Trusona’s web-friendly JSON REST APIs, facilitating a fast, convenient integration. The identity proofing capabilities were directly embedded into their custom onboarding web application which runs on both a mobile device and a PC browser. To further ensure the highest security standards were met, the bank conducted a rigorous and comprehensive preliminary information security audit of Trusona, followed by subsequent annual audits — all met with high marks.
“Trusona’s identity proofing service has allowed us to meaningfully reduce account opening fraud across our personal banking channels,” said the senior technology leader. “Trusona has succeeded in terms of scale, security and performance, handling tens of thousands of account opening requests per week with an average response time of less than 2.5 seconds. Their anti-replay technology has provided us with peace of mind that the service is highly secure and immune from tampering. Trusona has saved the bank millions of dollars by reducing identity fraud.”
Results
After two years of production usage, verifying the identity of millions of users, the bank saw their fraud rates drop from 3.3% to 0.68%, a reduction of 78%. From a cost savings perspective, this translated to a savings of $70M over the course of a year, yielding a return on investment of over 1,700%.
“The decision to partner with Trusona was easy,” said the senior technology leader. “Unlike most vendors, they were always there to advise, consult and provide us with deep expertise in combating fraud. Trusona truly became an extension of our team.”
1 Arkose Labs, “2021 State of Fraud Report”
2 Javelin Strategy & Research, “Identity Fraud Report”
Identity proofing with AAMVA
Learn more about Trusona’s industry-first identity proofing service with AAMVA and its accumulated state-based knowledge to accommodate the nuances across each state in the way driver’s license data is stored and presented.
