Banks are being challenged by deciphering between their customers and cybercriminals amid a push to provide robust digital experiences.

A collaborative effort is required to verify identities, according to solutions presented at the recent Federal Deposit Insurance Corp. (FDIC) FDITECH Sprint, which sought solutions on modernizing digital identity proofing or verification for remote customers. The sprint was made up of several teams with a diverse set of stakeholders from banks, academic institutions and private companies to members of the public, and ran over three weeks, culminating in a competition and presentation.

The FDIC gave the nod for “most effective” to a solution from a team that included employees of digital fraud analytics firm FiVerity and Beloit, Wis.-based First National Bank and Trust.

The team proposed a collaborative effort between financial institutions and services providers to create a decentralized network for sharing intelligence about bad actors in a privacy-preserving manner, Greg Woolf, founder and chief executive at FiVerity, told Bank Automation News.

The team considered “How can we do a better job of them kind of leaning on each other’s shoulders and being able to help each other?” Woolf said.

“Information-sharing technology in a secure fashion would allow [the decentralized network] to be owned and run through a set of protocols and standards by the banks, by the community themselves, by the participants,” he said. “And the key phrase that we left with is in this community-sharing model ― everybody gets 100% of the benefit for a fraction of the cost.”

Speed of information sharing

Solutions presented at the FDITECH Sprint — held at the request of the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) — are taken into consideration for implementation.

Key to the decentralized solution is the velocity at which information can be shared, Lisa Zeimetz, senior vice president, risk and compliance officer at First National Bank, told BAN.

“If you have a set of criminals doing an exploit, where they’re trying to open up as many accounts as possible across many different banking platforms, that can cause a lot of damage in a short amount of time,” Zeimetz said. This makes information-sharing speed critical.

With the winning solution, a bank that becomes suspicious of an individual attempting to access an online account can submit the identity to the decentralized network and compare notes on “bad actor” indicators, she said.

Looking forward, FDIC and FinCEN have been receptive to the intelligence-sharing solution developed by FiVerity and First National Bank, and the agencies may have an announcement soon, FiVerity’s Woolf said. “We have a ton of support from them to move the initiative forward,” he told BAN.

The FDITECH Sprints have attracted top industry talent to help solve some of the financial services industry’s toughest challenges. An event in September 2021 brought together Amazon Web Services, Google and other companies to focus on reaching unbanked customers via fintech solutions.

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