Zumigo and GDS Link enhance identity verification for lenders and enable better customer experiences
When consumers apply for lines of credit such as car loans and credit cards, they want the application process to be quick and easy. Small and medium businesses expect much the same from their lender, with fast, convenient digital lending application access.
But in serving the customer demand for digital applications delivered via online and mobile channels, lending firms open the door to risk of identity fraud. Such risk is driven by sophisticated organized fraud rings as well as the weaknesses in digital identity verification workflows.
With fraudsters using increasingly sophisticated techniques to exploit vulnerabilities in online platforms and mobile devices, the types of fraud they conduct are extensive and far-reaching: identity theft, loan stacking, synthetic identity fraud, phishing, and account takeovers. For example, fraudsters use stolen or fabricated identities to get approval for loans with no intention of repaying. They use PII data available on the dark web or acquired via phishing to submit fraudulent applications under stolen identities. The fraudulent loan often results in significant debt and/or damaged credit for the victimized entity
The Impact of Fraud Cannot be Ignored
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- In 2024, the FTC reported over 1.1 million identity theft complaints, and with related fraud, financial losses exceeded $12.7 billion
- According to LexisNexis, every $1 dollar lost to a fraudster costs North America’s financial Institutions $4.41
- Experian finds that in the US, 38% of consumers have reported considering ending a new account opening mid-way through the process due to a poor experience, while 20% report moving their business elsewhere
For lenders, the costs of digital fraud add up: losses from fraudulent loans and unauthorized transactions, legal and regulatory penalties, reputational loss, plus the expense and consequence of detecting, investigating and remediating these activities. Consumer losses include financial damages, plus time cost to close and switch accounts when trust in the business is lost.
Complex Fraud Requires a Modern Approach
With increasingly sophisticated threats arising every day, lenders can no longer rely on traditional fraud defense solutions such as single-factor authentication. Usernames and passwords are weak, unsecure, and hard to maintain. Even widely accepted measures like multi-factor authentication (MFA) are permeable, especially when social engineering tactics or mobile device hijacking are used to gain access to accounts. With emerging technologies and easy access to account credentials on the dark web, fraudsters are refining their tactics continually. Lenders that don’t update and modernize their defense approach leave themselves open to new fraud threats.
To build a robust framework to support advanced fraud detection and verify and authenticate a consumer’s identity quickly, it requires a multi-layered approach: one that can verify and validate various aspects of a customer’s digital identity using a variety of risk signals.
It should be mentioned that this framework should also be aligned with a lender’s topline goals of increasing conversion rates to meet target revenue.
A New Collaboration To Speed Identity Verification for Online Loan Approval
Recognizing what lenders are up against, Zumigo and GDS Link are taking charge to help them win the fight against fraud. Together, we are collaborating to strengthen the front-end verification of fraud detection during a loan application so that lenders can successfully, and quickly, verify an applicant’s identity while also keeping a positive experience for legitimate applicants.
The collaboration enables financial clients to use the GDS Link Decisioning Platform to strengthen their authentication workflows with Zumigo digital risk signals to prevent identity-related fraud and ensure trustworthiness. Lenders can embed fraud detection earlier in the decisioning process through tiered or layered Know Your Customer (KYC) and form pre-fill solutions, helping accelerate approvals without sacrificing risk controls.
The GDS Link Decisioning Platform gives lenders a flexible, modular system to connect data sources, apply real-time decision logic, and configure tailored risk strategies across the credit lifecycle. Zumigo adds real-time, deterministic risk signals across various aspects of an applicant’s digital identity to increase the accuracy of the decisioning process.
Summary
As fraudsters evolve their strategies and toolsets, lending organizations must recalibrate their prevention approach and tools. By adopting a multi-layer framework for identity verification and authentication for digital customers, lenders can reduce fraud risk without sacrificing online experiences and conversion rates.
Yu-Ting Huang is Sr. Director of Marketing at Zumigo. Comment or questions? Find her at on LinkedIn @yutinghuang.