How to Balance Fraud, Friction, and Acceptance

New consumer onboarding is vital to business growth, requiring a well-crafted strategy that maximizes automated approvals of good identities while introducing necessary user friction to mitigate risk of fraud losses and ensure regulatory compliance.

Instead of relying on a one-size-fits-all approach, Socure empowers customers to build custom onboarding workflows based on their risk tolerance, with the ability to seamlessly adjust friction based on real-time risk signals. At a high level, there are three primary factors that influence how you determine the most optimal onboarding strategy for your business:

Organizational imperatives: The top-down strategic direction sets the tone for determining the optimal onboarding strategy for your business. Are you focused on primarily increasing consumer base and/or revenue? Are you more concerned with managing risk and fraud losses on the balance sheet? Clarity on the relative weightage and goals for key performance indicators (KPIs) such as customer acquisition rate or fraud capture rate will help you fine tune the most optimal onboarding strategy for your business. It’s typically a best practice for the Risk & Growth leaders in your organization to have this discussion jointly - not in siloes - so that all interests are fairly represented. In some cases, guidance from your senior executives can help align on the relative importance of growth versus risk.
Unit economics: As a bottom-up exercise, your business should have an estimate of the value of a “good account” (a good identity that purchases your goods or services without any malice) versus a “bad account” (a fraudulent identity, either stolen or fabricated, that leads to losses). As an example, consider a “good account” valued at $125 whereas a “bad account” valued at $500. To balance out every loss, the business needs about 4 good accounts to onboard to run a marginally profitable business at a false positive rate (FPR) of 4:1 or better. Using the 4:1 FPR as a starting point, Socure can help your business increase auto approvals while driving down FPR.
User experience and friction: Your business needs to estimate the impact of user friction on application conversion rate. Requesting too much personally identifiable information (PII) may frustrate good users leading them to abandon the application. Socure provides industry-leading “progressive onboarding”, enabling your business to request minimal PII from the consumer, reducing user friction and enhancing conversion rates for new applicants while ensuring a high bar on fraud capture.

Socure’s unparalleled accuracy and performance resulting from the identity graph and advanced machine learning models can help you achieve up to 98% frictionless auto-approvals for all ages and demographics while achieving up to 95% reduction in third-party and synthetic identity fraud and up to a 13x reduction in false positives. Our extensive experience across 2,400+ enterprise customers across the risk spectrum has shown that it's best to balance the quantitative data relevant to your business with the qualitative considerations outlined above to determine the most optimal onboarding strategy that maximizes business growth while reducing fraud risk and user friction.