The technology provides the customers with more options of loan. They include online auto loan. This sounds like a simpler process of getting credit to buy a car, right? As more and more financial transactions are taking place online, lenders have fewer options to check the applicant’s identity personally. As a result, more lenders become the victims of scam applicants. In addition, more customers become the victims of identity theft.
Security Problems with Online Auto Loan
Online lenders offer simpler process of application and approval for loan. They are actually faced with more serious problems in terms of security. Online auto loan is, particularly, more prone to scam applicants. As more and more people apply for the loan, they had fewer opportunities to verify the applicant’s identity. Some of them even have no time to verify whether the applicants are human or not.
As a result, online lenders face increasing rate of fault credits. Why? They deal with fake customers. Data breach has become a pervasive problems in financial industry. Hackers can steal confidential information of the customer and use it to make a new ‘identity.’ This shows that the available security system is not enough to protect the customers as well as the lenders.
The hackers use more sophisticated technology to steal the confidential information, like name and passwords. They can even break the security system that uses “two-factor identification.” Then, they create synthetic identities by using pieces of genuine information they steal.
Now, targeting credit card customers become more difficult, since credit card lenders now use chip-enabled cards. As a result, creating fake credit cards are now more difficult. As a result, online auto loan becomes a new target, since it is considered less secured compared to credit cards.
Future Technology for Online Auto Loan
To solve the problems, lenders are now shifting to the idea of having the applicants’ identity checked. They use biometric means that work just like the eye scans or fingerprints do. The technology will be available particularly for auto loans and credit cards.
The biometric technology offers some advantages over the ‘manual’ verification method. It is more economical, since the verification process will require fewer human resources. The lenders can avoid wasting time and human resources for processing loans from scam applicants. Suspicious applicants will be disqualified automatically.
To use the technology, the applicants may need to supply more information to the lenders. Fortunately, realizing the need for greater security, customers are willing to provide the necessary information. The new technology aims at confirming their identities. It verifies whether you are really ‘you’ or not. The customers will share more data if they perceive the benefits.
A report of Global Identity and Fraud Report from Experian showed promising results. The customer’s confidence upon a financial institution would grow from 43% to 74% if the institution used physical biometric technology to protect their account. No further information is available yet on how the technology will look like in the financial system. However, customers are optimistic that it will provide them with better protection from the identity theft.