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U.S. federal financial regulators have opened a registration period for participants to join their Tech Sprint aimed at increasing the efficiency and security of digital identity proofing.
The Federal Deposit Insurance Corporation (FDIC) and the Financial Crimes Enforcement Network (FinCEN) are inviting businesses to join their Tech Sprint to help measure the effectiveness of digital identity proofing.
Tech Sprint participants were asked: “What is a scalable, cost-efficient, risk-based solution to measure the effectiveness of digital identity proofing to ensure that individuals who remotely (i.e., not in person) present themselves for financial activities are who they claim to be?”
Remotely-delivered financial services have become the new normal in many parts of the world following the pandemic.
Digital technology plays a key role in the compliance aspects of remotely-delivered financial services, including client onboarding, identification, customer due diligence, anti-money laundering responsibilities, and risk management.
Technology can also provide cost-effective and efficient solutions that ensure these financial services are available and affordable even for small financial institutions.
Digital identity proofing, through which financial institutions collect, validate, and verify information about a person, is a core element that enables the provision of remote financial services.
However, digital ID proofing faces increasing challenges due to the growing number of compromised personally identifiable information (PII) and the use of synthetic identities.
The agencies now say the solutions developed during the Tech Sprint will “inform future FDIC, FinCEN, and industry-led efforts, plans, and programmes to increase efficiency and account security; reduce fraud and other forms of identity-related financial crime, money laundering, and terrorist financing; and foster customer confidence in the digital banking environment.”
Instead of a “one size fits all” solution, the agencies would like to see innovations that encompass a range of outcomes, including a scoring model for digital identity proofing sources and processes, or ideas on how to enhance assessing existing solutions.
The solutions could also consider the use of artificial intelligence and machine learning programmes to identify and red flag suspicious identities leading to dynamic scoring, or create other technical solutions that answer the sprint’s main question.
The FDIC and the FinCEN encourage participants to consider a set of additional questions alongside the main problem statement. Among the questions, the agencies ask what role, if any, should the government play in the technical implementation of the solution to ensure sector-wide adoption?
The registration is open for two weeks until February 15. The sprint is expected to kick off on March 11 with a demonstration day planned to take place on April 4.
