A new proof-of-concept demonstration showcased last week by research organization CULedger suggests blockchain-like technology could soon wield significant power in verifying identities and clamping down on fraud at credit union call centers.
The prototype hinges on something called a distributed ledger, which is a database that is shared across a network and keeps list of interactions among the network’s participants — credit unions, in this case. The records are synchronized and updated automatically. Commonly associated with bitcoin, where the technology is used to track the exchange of virtual currency, distributed ledgers are finding their way into other business uses — including call centers.
CULedger’s technology, which it demonstrated at the National CEO Roundtable in Tucson, Arizona, last week, sends an authorization “challenge” to members when they dial participating call centers. The request goes to the member’s device and requests authentication information, such as a fingerprint though a smartphone, for example, to validate the caller’s identity. The whole thing can take less than a few seconds, according to CULedger, which is a “research-to-action” effort backed by industry partners.
“Let’s say that a call center representative was on the phone with a fraudster and that fraudster was attempting to take out a loan on [the member’s] behalf or do an ACH. Along the way they would then try to authenticate them, and that actual authentication would come directly to the real person’s phone, the real member. Or really, whatever devices they have,” explained John Best, who is CEO of Tampa, Florida-based Best Innovation Group and part of CULedger’s organizing group. At that point, the member becomes aware of the fraud attempt and can deny the transaction, he said.
The technology could be used in teller lines, in mobile banking apps and even at drive-throughs, Best said. For call centers, it adds a layer of security that other authentication technologies — such as voice recognition — can supplement but not replace, he added.
“The challenge with voice-recognition technology, although I’m a big believer it can definitely be used, is it doesn’t play well with your mobile apps and your home banking apps. Nor does it play well with the teller line. Can you imagine trying to talk into some speaker? Imagine trying to pick up voice verification through the speaker in the drive-through. No, this is about using a whole other way of doing authentication. It includes cryptology that includes biometrics and includes the power of a distributed ledger around that,” Best said.
CULedger said its technology could also create a threat-information exchange that allows credit unions to alert each other about fake phone numbers, e-mail addresses or other fraud threats.
The next step, however, is to set up a new business plan, a monetization strategy and funding, Best added. Then it’ll be time to scale up.
“The hardest thing about implementing any software at any credit union, is always dealing with the identity. It’s why everybody wants all their apps behind the same login, because passwords are a crisis for them,” Best said. “They don’t want to have people put in other passwords, because it’s a barrier to them actually using it. It causes unnecessary friction. So the push is that we go away from that and we have no passwords and what we do is we check with the person, the source of truth every time something happens. It changes the game.”
