By Emma Okonji
A report released recently by Mobile World Live, a global multimedia resource platform that offers telecoms information to mobile professionals, has highlighted subscription and identity fraud as areas where mobile network operators (MNOs), including telecoms subscribers, often lose money to fraudsters.
It, however, recommended new ways by which such financial loopholes could be blocked.
The whitepaper showed how a digital identity framework could be the differentiating factor that sets one mobile operator apart in today’s highly competitive mobile market.
Giving details how mobile operators could use digital identity to fight identity and subscription fraud, the whitepaper report explained that subscription and identity fraud accounted for over 30 per cent of the losses faced by mobile network operators.
It predicted that global mobile subscription would rise from 5.1 billion in 2020, to 5.8 billion in 2025, and an increase in mobile devices from eight billion in 2020 to 8.8 billion in 2025.
According to the report, “Today, there are more than 5.1 billion individuals with a mobile subscription and 8 billion devices connected to mobile cellular networks. By 2025, these figures are expected to grow to 5.8 billion and 8.8 billion respectively, and nearly three quarters of internet users around the world will access the web solely via their smartphones.
“Mobile connectivity has been a powerful catalyst of much of the digital transformation taking place across the globe. In addition to facilitating access to countless services including banking, insurance and e-commerce, mobile connectivity also has the power to bring financial inclusion to the unbanked and underbanked in developing economies. Today, 1.7 billion adults around the world remain unbanked, yet two-thirds of them own a mobile phone that could help them access financial services.”
The report however said before consumers would perform sensitive transactions, they need to trust that their mobile transactions would be protected against potential fraud and security risks. The report cited Juniper Research, which estimated that over half of the value of fraudulent remote payments in 2019 originated through mobile channels. The report expects this figure to increase to over 70 per cent by 2024.
“As the providers of communications infrastructures, MNOs have a responsibility to protect their networks and to verify who can access them. As operators continue to extend their reach across the globe, regulators are paying much closer attention to assuring that telecom operators are protected against terrorist attacks, money laundering, and other criminal activities. As a result, they are now requiring that telecom operators strengthen their KYC and customer ID verification procedures.
“To meet these additional regulatory requirements, MNOs can connect their identity services to a System of Record (SOR, or sometimes known as a Root of Trust) such as a government database or department of motor vehicles, to cross-check demographic and biometric data and verify a customer’s identity,” the report stated.
The whitepaper report also cited the 2019 Communications Fraud Control Association (CFA), which stated that the survey of mobile operators worldwide, showed that fraud accounted for $28.3 billion in losses, an increase of 37 per cent, compared to 2017.
According to the survey, “Subscription fraud, which is a form of identity fraud, is one of the fastest growing and most prevalent types of fraud facing mobile network operators today.”
Identifying some of the frauds as device fraud, mobile money fraud, insider fraud, SIM-swap fraud, the report noted that as of January 2020, 155 countries in the world were mandated to embark on registration of SIM cards to reduce fraud, mitigate national security threats such as terrorism, and fight against money laundering and other criminal activities. This requires mobile operators to capture and verify the identities of their customers before activating service and granting them access to the network.
Identifying digital identity as catalyst for diversification, the whitepaper report further noted that enhanced digital identity framework could also support the diversification strategy of mobile operators, enabling them to easily move into new sectors such as finance, insurance, media, energy,
healthcare and retail.