My Money2020USA Analysis: Industry Segmentation, Consortiums, No-booth Culture, Biometrics and FIDO
Executive Summary: The blog covers my analysis of various aspects of the identity verification services industry based on the conversations with several vendors at Money2020USA this week. It discusses the three segments of the industry- specialized, platform, and digital wallet, and how they provide different services. The blog also highlights the need for increased transparency in the industry, with vendors providing more visibility into the verification process. It talks about the rise of consortium-based identity verification services and the challenges associated with fragmented data across multiple consortiums. The blog also covers the trend of vendors opting for smaller booths or scheduling dedicated meetings outside the exhibition hall. It concludes by mentioning the continued popularity of face biometrics and the lack of discussion on FIDO at the conference.
Fragmented Ecosystem - It is a very crowded space with non-differentiated identity verification services falling into one of the 3 segments - specialized, platform, and digital wallet. Specialized services include but are not limited to standalone core services, such as device fingerprinting, phone and email verification, watchlist services, identity document validation, face verification and liveness detection. Platform vendors provide a one-stop shop for businesses offering a range of services across the entire account lifecycle from pre-KYC to post-KYC, KYB, compliance, and case management, among others. Digital wallet vendors create verifiable credentials for proving identity and personal information digitally, eliminating the need for repeated verification.
Gray Is The New Black - In the past, phone verification services, for instance, used to provide only one risk score for phone numbers, without disclosing which sources passed or failed. This resulted in a black box for customers. However, recent developments in the field such as Trulioo and AiPrise, have started to provide more visibility into the process. Apart from the overall risk score, customers can now easily compare the sources that have passed or failed, enabling businesses to assign specific weightage to each source based on their use-case. This increased transparency is a significant development in the field of identity verification services. I hope this becomes a trend across all the identity verification sources.
Siloed Consortiums - A few vendors have recently announced consortium-based identity verification services, joining the ranks of early adopters in this space. These consortiums rely on a variety of identity attributes such as device, name, email, phone number, face, and driver's license number. It appears that consortiums are the next wave in identity verification services, following the earlier trend of orchestration platforms. However, the data associated with individuals' identities is often fragmented across multiple consortiums, making it difficult to obtain a complete picture of identity fraud by analyzing data from a single consortium. Mergers and acquisitions within the industry are likely to address this fragmentation to some extent.
Booth vs no-booth - IMO Mastercard, Incode, Au10tix and Jumio have consistently been the top winners of vendor booths at M2020 year-over-year. However, recently, I have observed a rising trend of vendors opting for smaller booths or no booths at all, and instead, scheduling dedicated meetings with clients outside the exhibition hall. While there are advantages and disadvantages to both approaches, I personally prefer the former, as it allows me to engage in conversations with partners, friends, and vendors in a single location. I hope vendors will continue to set up booths to showcase their products and services.
Biometrics - As an enthusiast of biometric technology, I sought to explore whether the industry is moving away from using face biometrics to other biometric modalities in the past year. However, my research revealed that face biometrics is still the most commonly used modality across the identity verification (IDV) services offered in the industry. Behavioral biometrics and voice biometrics rank second in popularity, being used for tracking the real-user behavior and two-factor authentication (2FA) respectively.
FIDO and Money2020 - I attended the FIDO Authenticate conference last week, but was surprised to find that there was very little to no discussion about FIDO at M2020 this year. Upon inquiring with several vendors, I learned that while FIDO is primarily intended for user authentication, M2020 has a more comprehensive scope across the entire Payments industry. Additionally, vendors are closely monitoring FIDO's slow adoption rate and are hearing about the challenges with Passkey interoperability across different operating systems.
Disclaimer: This blog is solely based on my conversations with 20+ identity verification vendors at the Money2020 conference in Vegas from Oct 22-25 this year and is not sponsored by any company.