Merging Physical Identities with the Digital World

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In this episode Armen is joined by Thomas C. Brown, SVP, US Commercial Markets and Global Market Development at LexisNexis Risk Solutions. They explore the under-banked, cross-border dynamics, and the increasingly complex threat environment.


Armen: We’re here today, with today’s edition of Digital Identity 360 live from the floor at the digital identity summit in San Francisco, and I’m privileged to be here with Thomas C. Brown of LexisNexis, Tom, welcome to the show, and to the Summit.

Thomas: Thank you very much, it’s my pleasure.

Armen: Great. So Tom you just delivered an hour ago a very interesting speech, and really provided some amazing context to our audience, and one of the themes among many was the fusion of offline data with digital data, and how that helps LexisNexis build an even richer data set, and solve more scenarios and deliver better value in use cases, so I’d like to talk a little bit about that, just how you see that evolving over time, sort of that merging of the offline world with the online world.

Thomas: Yeah I think there is really two dynamics in the future that really are going to help bring about stronger tools for fraud mitigation, risk mitigation, exactly what you point out, merging the real identities, the physical identities to the digital world, I think that both applies to consumer and small businesses, I mean keep in mind we have to be worried about entities as a whole, as banks and other enterprises engage in the economy, they are engaging with customers and they could take many forms, so, very excited working with ThreatMetrix in that regard, bringing the strength of our alternative data repository, really into fully capable from a digital perspective. And then the other dimension is really the cross-border dynamics. I mean so often now if you can’t handle transactions globally, it’s a real efficiency drain… it can introduce a lot of international risks, so we’re excited to tackle both those challenges with you guys.

Armen: One of the really interesting, sort of eye opening themes was just the discussion around the under-served, or even the under-banked around the world, it’s a challenge a lot of us don’t think about here in North America, but I would love to hear just a little bit more from you around, how big of a challenge is that around the world, and what strategies has LexisNexis put in place to really help address that?

Thomas: Yeah its interesting, because a lot of people think about the under-banked challenge only related to credit worthiness, and one of the points in the discussion this morning was that if you don’t have the data and the insight to do a credit evaluation, well you likely don’t have that insight to mitigate fraud, you don’t have the insight to vet customers from an anti-money laundering perspective, so it is critical to look at all dimensions, and as I mentioned this morning, in the most developed country in the world, you’ve got tens of millions of under-banked consumers, and many of those consumers are very strong credit risk, very desirable customers, they just happen to not be in the main stream economy in some respects. And then of course as you go around the world the situation only gets more dynamic, I mentioned as well on China, there is more under-banked consumers in China then there are consumers in the US…

Armen: That’s an amazing statistic; I was blown away when I heard that.

Thomas: And it’s…But think about the potential for growth. You have China, arguably either one or two in terms of economic activity today with the US, but then you’ve got an entire consumer population that can come online if they are able to mainstream those consumers into traditional economic activity, that could really sustain a lot of growth, not only for China, but for the world, and bring those consumers to a higher standard of living. When someone is excluded from the financial sector, from the economic sector, they have a lot less flexibility, just think about what it would be like to not have a credit card, and to not have the ability to finance payment…finance a car or what have you, so it really does have the potential to unleash greater value for really everyone in society, and the other dynamic that people don’t often connect is the linkage between the under-banked and some of these dramatic events that happen around the world around terrorism. A lot of times the terrorism is being driven because of marginalized individuals…

Armen: Right, right, with no path out…

Thomas: No path. And so if they’re able to have a path, and if we could bring them in, and more growth and more opportunity, you know, it’s not going to solve these problems overnight and as I mentioned it is something that requires collaboration, not only with companies like ours, but also industry, bringing industry together to solve those problems, and I think it’s certainly going to be a time when innovation around cross-border and digital to physical really are going to be the key solutions to that broader challenge.

Armen: Yeah. This collaboration theme in many ways…you know as I shared in some of my comments… on stage you sort of defined the ThreatMetrix business model, this globally shared intelligence, anonymized and encrypted of course, to protect any PII, but that’s really the foundation for enabling these downstream decisions, with the right level of context. Because there is a global data set across industries…diverse across geographies…an even use cases provides that rich context to make the very best decision, not just to root up the fraudsters but to treat the good customers well, and enable a frictionless transaction. But when you think about that level of globally shared context…I guess, what are your thoughts on the future of what that might look like, how that might help LexisNexis, fuel your business going forward.

Thomas: Right. Well, it’s a big challenge, often times when we talk about globalization, my customers will come to me and say, well if you could just do what you do in the US everywhere in the world, that would be great.

Armen: Sure.

Thomas: Well it’s easy to say but it’s a very tall order. You are talking about each 190 some odd jurisdictions, and you’ve got other territories, each with their own set of privacy laws, and different quality of data, so it is a very significant challenge. Now we do operate global databases, for example in the financial crime arena, we operate a database that covers entities in over 240 countries and jurisdictions. So I think there are ways to begin to drive more inclusion transparency around the world and across borders, and I think what you are doing with your device and your network that you’ve created shows great progress in that, and I think it’s trying to figure out how can we further extend upon that and I do think it will require more collaboration from industry participants. I think in particular, in the eCommerce space. I think there is a lot of collective value by sharing capabilities and experiences between various eCommerce companies to enable safer and more efficient transactions globally. So, I don’t know the exact answer, but I do know some of the components, and we are certainly excited to embrace it going down that path.

Armen: That’s right. Yeah, and one of the themes you just talked about, sort of that merging of the offline world and the online world, tremendous use cases from where we sit at ThreatMetrix, we are sort of digitally native in the data attributes that we collect, but having visibility in some of the offline attributes to sort of round out our profile is compelling. And the reverse is true as well, with, you know, maybe longer considered decision cycles, and others, where having some of the digital context to drive a richer decision, you know, in the offline world is equally compelling…Any thoughts on that? Do you see all decisions ultimately being made in real time, or is there still a role for longer considered decision cycles that still can level the digital context.

Thomas: Well, I think that really in our environment today we can make decisions in milliseconds, and it just depends upon where it fits with a customer’s work flow-

Armen: Yep.

Thomas: But I think the point you bring up is that there is multiple domains that one has to consider, this digital domain where everything is instantaneous, is obviously, you know, time is of the essence. When you are looking at credit risk and credit worthiness, while you develop your perspective over a longer period of time, you still may want to return the decision in milliseconds-

Armen: Yep.

Thomas: And so especially in today’s environment, where everything is mobile-based and consumers don’t embrace delay… we all know that, I know from personal experience-

Armen: Sure thing.

Thomas: You can get frustrated and move on, and that can create zone risk issues, you get dome adverse selection and so on. So I do think that increasingly that decisions are going to be made more in real time, but again, it’s going to be on multiple domains, fraud-

Armen: Sure.

Thomas: Financial crime, credit risk and also, again that dimension of both consumer and small business, I mean so much of economic activity…just look at the US, how much economic activity is driven by small business entities, and as I mentioned this morning, they actually have a higher unbanked percentage then consumers.

Armen: Yep.

Thomas: And so it creates another dynamic, the other aspect, we talked about the challenges of identifying trust with a consumer, think about it from a business perspective. When the information is, you know, it’s not a natural person.

Armen: That’s right.

Thomas: It’s much more complex and that’s going to continue to be a challenge, I think just overall everyone has to become more accustomed to dealing in real time with all types of entities-

Armen: That’s right.

Thomas: And working across borders in an efficient manner.

Armen: That’s right. You know one of your themes that you hit in multiple ways on stage was, if you look at the world through the lens of the customer, which we all aspire to do all the time, across that buyer journey not all transactions are created equal. How you risk someone or assume risk for an account creation might be very different from a login experience or a payment experience.

Thomas: Right.

Armen: But without the right level of context, it’s hard to distinguish what’s happening in real time and apply those right policies at that right moment in time; we as an industry now have evolved where we have those capabilities. We have the data, we have the policies, we have the context to make those decisions. How has that sort of capability helped fuel your business? You know, new innovations, new markets, etc.

Thomas: Yeah, certainly new markets. One of the historical markets that we’ve been very strong is in financial services, and obviously it’s because of as you highlighted, account opening within a bank, and represent a lot of exposure-

Armen: Sure.

Thomas: Not only to the bank, but to the consumer in terms of the disruptions and distress that identity fraud and the like can take. What we are seeing increasingly is all types of enterprises have to deal with this risk dynamic, so transactions that you would have thought wouldn’t contain a lot of risk, wither it’s a simple purchase transaction, whether it’s an airline reservation, whether it’s a hotel booking, whether it’s a rewards activity on a loyalty program, whether it’s the vetting of third parties within corporate entities. So you see everyone is kind of having to deal with these risk issues, and again, it’s not just essentially credit risk, but it also includes that financial crime component.

Armen: That’s right.

Thomas: Not only… we didn’t talk much about today in the talk…but in edition to anti money laundering, preventing bribery, bribery is a-

Armen: Sure.

Thomas: Very significant drag on the global economy, just look at what’s happened in Brazil over the past 5-6 years. So all that together, it’s a much more risk-aware environment, and the key really is being able to engage with our customers within their workflow in a manner that allows them to service their customers in as frictionless a way as possible.

Armen: Excellent. So, in parting comments, any final thoughts as you reflect upon you’re past day and a half here at the digital identity summit, or even just the conversation that we’ve had?

Thomas: Well it thinks it’s a great forum. We appreciate being allowed to participate. One of the things I mentioned earlier, I think it’s worth reiterating, so often we will pick a particular technique or technology and everyone will pile on, and talk about how it is no longer effective because of-

Armen: Right, right.

Thomas: Some recent event, and the message needs to be very clear, no one technique or technology is foolproof it’s a matter of using these technologies and capabilities in a coordinated way to mitigate risk. And I think that’s going to be even more important as the threat environment continues to intensify.

Armen: The threat environment will become no less complex-

Thomas: Absolutely.

Armen: And so you’re absolutely right, just layered approach and having the right context to make the right decisions with the right tool sets is really what it comes down to. So great insights Tom-

Thomas: Alright.

Armen: Really appreciate your time-

Thomas: Thanks very much.

Armen: Thanks very much.

Thomas: Thank you.

Armen: And so that’s our edition for Digital Identity 360. Thanks for joining us today.

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