Karen J. Wendel, Chief Executive Officer IdenTrust

Consumers are losing trust in e-commerce following a recent rash of well-publicised cyber crimes. Governments have rushed to issue regulations designed to curb the growth of online fraud, identity theft and money laundering, but many companies have yet to take stronger measures to comply with these rules, according to Complying with rules for identity management, a new Economist Intelligence Unit report based on a survey of 127 senior executives worldwide.

The study, sponsored by IdenTrust, a global provider of identity solutions, reveals that nearly 40% of survey respondents fear a security breach of their computer systems, while 32% are concerned about the theft of proprietary or competitive information. Twenty percent of respondents say they are “barely compliant” with regulations governing account authentication and “need a great deal of improvement.” In addition, more than 40% say they would increase the number of suppliers they use if they were able to authenticate the suppliers’ financial stability.

“Complying with the maze of rules on identity theft and data integrity requires considerable time, expense and effort,” said Rama Ramaswami of the Economist Intelligence Unit, the editor of the report. “But the pressures on all enterprises to conduct more robust identity authentication will intensify in the future, and companies will need to invest in far more than just basic identity authentication technologies.” The report provides a roundup of the latest technologies available, as well as a summary of current and proposed regulations. It also analyses identity authentication trends in various countries and regions.

Other key findings of the report include:

• Companies recognise identity authentication as a major priority. Respondents identify designating authentication standards (33%) and integrating worldwide authentication options (29%) as the top two steps necessary to safeguard the global supply chain and ensure the safety of online commerce.

   

• Nearly every anti-fraud law mandates identity authentication to some extent. Authentication requirements are embedded in a host of regulations, including the United States’ Gramm-Leach-Bliley Act, Patriot Act, and Sarbanes-Oxley Act; the European Union’s “Community Framework for Electronic Signatures,” Money Laundering Directive, Markets in Financial Instruments Directive, and electronic invoicing directive; South Korea’s new digital signature laws; Singapore’s Electronic Transactions Bill; and evolving e-commerce regulations in Brazil, Chile and Costa Rica.

   

• Simple authentication based on personal identification numbers and passwords is no longer enough. As identity thieves become smarter, the methods to foil them have had to evolve as well. Among state-of-the-art technologies are biometric identifiers, such as fingerprint and iris scans, and emerging multifactor authentication tools that include digital certificates—chip-based cards that establish an individual’s or company’s credentials—along with a public key infrastructure. “Smart” cards, for instance, store an encrypted digital certificate that protects the user’s identity.

   

• Regulations curbing Internet fraud will proliferate, fostering rapid growth of the identity management market. As the market becomes more aware of the value of globally interoperable certificates, and as more business applications require their use, the volume of digital certificates will expand. Consequently, the identity authentication market, which until recently has been focused on access, is expected to commandeer a greater percentage of corporate IT budgets and consumer spending, as the focus expands to authentication.

“Identity authentication solutions are a growing priority for companies as they work to ward off increasingly sophisticated threats while complying with a complicated web of regulations,” said Andrea Klein, chief marketing officer of IdenTrust. “In today’s environment, organisations need identity authentication solutions that are comprehensive and flexible enough to evolve with emerging threats, while ensuring the global interoperability required for e-commerce initiatives that increasingly span the world.”

Download Complying with rules for identity management here