As economic crime continues to rise, the UK fintech industry is taking significant steps to address this growing challenge.
Following the launch of the Centre for Finance, Innovation and Technology (CFIT)’s second industry coalition, which now includes major partners like AWS, Barclays, EY, HSBC and Mastercard, CEO Ezechi Britton MBE shares insights into how the sector is uniting to combat fraud through innovative digital verification solutions.
He also discusses how enhanced digital identities for businesses can play a crucial role in thwarting fraudsters and creating a more secure economic environment.
Ezechi Britton MBE, CEO of the Centre for Finance, Innovation and Technology (CFIT)
With Parliament returning from its summer recess this week, the Prime Minister has pledged that ‘the business of politics will resume’ – but also that ‘it won’t be business as usual’. That amounts to a clear commitment to deliver transformative change to the UK.
If the new Government were to rank its policy areas by order of priority, economic growth would certainly top that list. Following the turbulent summer, law and order would likely place a close second. So fraud, an issue which straddles both areas, should command overwhelming attention in the months ahead.
Crime impact
Economic crime has now reached such huge proportions that it acts as a significant drag on UK growth. According to the Economic Crime Survey 2020, around one in five businesses had been a victim of fraud in the previous three years (18 per cent). Forty-six per cent of businesses that experienced fraud had experienced more than one incident.
The City of London Corporation estimates that there could be £500million of value added to the economy annually throughout the remainder of the decade through the adoption of digital verification solutions that help mitigate fraud. Neither a state with squeezed finances nor an economy facing severe headwinds can afford for such large sums to be diverted away from productive investment and into criminal enterprise.
Meanwhile, fraud has quietly become the crime to which Britons are most likely to fall victim – accounting for nearly two in five offences. UK Finance estimates that around £1.2billion was stolen from consumers last year – equivalent to a more than £40 surcharge on every household in Britain. That comes as the cost-of-living crisis enters its third year and puts unprecedented strain on disposable incomes.
The drivers of this rise in fraud are well-understood. New technologies, the ubiquity of social networks and the migration of economic activity online has made it easier for scammers to target thousands of people simultaneously, impersonate loved ones and sell non-existent products.
Which is to say, Labour’s manifesto may have committed to introducing a new expanded fraud strategy. But it is financial services and technology companies, rather than government, who are on the frontlines of this battle. And the fightback has begun.
Latest coalition
This week we announced that some of the world’s leading finance and tech firms had joined an industry coalition led by our organisation, the Centre for Finance, Innovation & Technology (CFIT), to combat economic crime. The companies and organisations involved include AWS, Barclays, EY, Experian, HSBC, Lloyds Bank, Mastercard, Monzo, NatWest, Revolut and Santander. That blue-chip line-up underlines just how seriously industry is taking this problem.
One avenue which we see as having real potential to effect a step-change in tackling fraud is digital verification. The concept of a digital ID for consumers has been relatively widely discussed – its corporate equivalent much less so. But we believe that an enhanced digital identity for businesses, one which can be shared and understood across institutions and sectors, would help thwart fraudsters and create a more secure economy.
This would involve providing standardised and verified information about a business that is interoperable with other financial systems for data cross-referencing, enhanced authenticity checks and additional fraud detection tools.
To make enhanced digital verification a reality, our coalition will be employing the tried-and-tested model of building a ‘proof of concept’. This will test and help quantify the impact of a digital corporate ID, including preventing potential criminals from being onboarded onto the financial services they need to perpetrate their scams. Industry and government can then better decide where to allocate future resources for fighting fraud.
Identity opportunities
Pioneering a ‘Corporate ID’ also represents a major opportunity for the UK fintech ecosystem. Facilitating seamless access to financial services for businesses and reducing compliance costs for financial institutions will reduce inefficiencies and promote greater growth, productivity and innovation. And, as with any field of innovation, being a first mover will allow the UK to set standards which are emulated globally, making technology and service exports far easier in the future.
Many new innovations in financial technology have the potential to boost productivity within financial services. and accelerate economic growth. But in the area of economic crime, and digital corporate verification in particular, the industry can do this while simultaneously helping to crack down on criminals preying on some of society’s most vulnerable.
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