In the evolving landscape of the digital economy, identity verification is shifting from a regulatory necessity to a vital competitive advantage for businesses. During a recent discussion with PYMNTS CEO Karen Webster, Trulioo Chief Technology Officer Hal Lonas emphasized the fragmentation of identity verification processes. He noted that bank customers experience inconsistent verification methods when opening accounts, while shoppers encounter varying login procedures across platforms.
Lonas described this inconsistency as “bewildering,” pointing out that the current methods reflect a lack of standardization in identity verification despite its significance in the connected economy. Businesses that view digital identity merely as a compliance requirement risk alienating users and missing opportunities to enhance customer experience.
Challenges of a Fragmented Identity Landscape
The existing patchwork approach to digital identity has not kept pace with rapidly changing customer expectations. Organizations often adopt isolated solutions that fail to scale or integrate effectively. Lonas remarked, “The bar for table stakes keeps going up,” highlighting that businesses must invest in engineering and product development just to stay relevant.
He warned that a “good enough” mentality may leave companies behind as consumers increasingly demand seamless verification experiences across devices and regions. “Customer expectations are only getting higher,” Lonas added, indicating that businesses must do more than just meet basic regulatory requirements.
Reframing Identity as a Competitive Advantage
Many organizations mistakenly settle for meeting the minimum standards of know your customer (KYC) and know your business (KYB) regulations. Lonas pointed out that this compliance-focused mindset often dominates initial discussions when Trulioo first engages with potential clients. “We absolutely understand the compliance aspect, but don’t leave it at that. Make it a competitive advantage,” he urged.
At Trulioo, Lonas and his team strive to expand conversations about identity verification beyond compliance divisions. They aim to involve product leaders and executives to help companies recognize the value of identity as a differentiator. This requires technology that is both sophisticated and user-friendly. “The last thing companies want to hear is that they have to dedicate scarce engineering resources,” he explained, advocating for a streamlined implementation process that reduces time from six weeks to just two.
The tools developed by Trulioo, including APIs and merchant control panel servers, are designed to simplify the integration process for businesses. “We think about how we’re going to make it just easy, easy, easy to implement and use,” Lonas stated, emphasizing that as the industry evolves, the efficiency of these systems will improve.
Identity systems, when executed effectively, can do more than ensure compliance; they can enhance fraud prevention, foster trust from the initial interaction, and provide valuable insights that strengthen customer relationships. “Identity and knowing your customer are absolutely a competitive advantage,” Lonas reiterated.
Adapting to New Challenges in Identity Verification
As the rise of artificial intelligence reshapes commerce, new challenges in identity verification are emerging. Customers increasingly rely on digital agents to manage various tasks, raising questions about the authenticity of these agents. Lonas noted, “Merchants ask us: ‘How do I tell an agent from a bot?'” This concern is critical, as businesses seek to protect themselves from fraudulent transactions while accommodating the growing use of AI-driven solutions.
To address these challenges, robust identity verification standards and safeguards will be essential. “It is going to be messy for a while,” Lonas acknowledged, calling on industry leaders to establish good practices and help companies navigate the initial complexities of integrating AI.
Despite the current fragmented identity landscape, Lonas is optimistic about the potential for increased consistency. He mentioned the development of agent templates that could include preloaded identity verification components, creating a baseline of trust across various implementations. “Instead of the hodgepodge universe we live in now, we could have a more regulated, more trusted experience for everybody,” he stated.
The concept of portable, tokenized identities—similar to initiatives like CLEAR, which streamline travel—offers a glimpse of what a standardized identity system could achieve. “It’s a big opportunity we have in front of us to make it more uniform and know what we’re going to get,” Lonas concluded.
Ultimately, the future of digital identity in the connected economy will depend on businesses moving beyond mere compliance. Those who embrace identity verification as a source of trust, efficiency, and differentiation will be better positioned to thrive in an increasingly competitive landscape. “Don’t leave it at compliance,” Lonas urged. “Make it a competitive advantage and help users feel that sense of trust from their first interaction.”