Mutual authentication and permissioned access will allow AI agents to change the way we approach banking and finance. Verifiable Credential technology enables trust between users and AI to allow the agent to perform time consuming and irritating tasks on behalf of the customer for a better experience.
By Tim Spring
Recently, I tried to pay an organization in Europe from America: it was flagged as a potential fraudulent charge and was stopped which is good! There is a system in place to check for fraud and it’s doing its job. However, the process to have my card unflagged and pay (on a deadline) is painful and slow.
The problem is that it’s hard to digitally prove your identity when digital identity fraud is easy to do — and getting even easier with AI.
The result is banks requiring a tangle of security solutions that are inefficient in terms of resources and cost, and time consuming and annoying for customers.
AI and AI-agents are being touted as the next gen solution, and they offer a simple way to fix the problem — but they can only work as effectively and efficiently as the identification processes they are tied to.
Decentralized identity technology provides the simplest, most secure way to prove identity while maintaining complete control for the user. I’ll explain:
Step 1: Proving your identity
Every day, banks are inundated by fraudsters trying to gain access to accounts that aren’t theirs.
Anyone can call in pretending to be you as long as they have the right information, which unfortunately scammers are very adept at getting. In 2024, the Federal Trade Commission reported that these imposter scams cost Americans $2.95 billion dollars.
How do we change this in a way that’s simple to deploy for banks and simple for customers to use?
The answer is decentralized identity and Verifiable Credentials for bank and financial — or really any kind of customer — accounts.
Think of a Verifiable Credential as a digital container that seals the information it contains. Attempt to tamper with the information, the seal breaks. Each container is bound to its point of origin, so you always know who issued the information inside. If you trust the issuer, you can trust the information.
So, when a bank onboards a customer, having gone through its identity assurance and compliance checks, it sends the customer a digital credential containing that information, which the customer stores securely in a digital wallet application.
The customer can then scan a QR code and immediately access their account. No usernames, logins, passwords, multifactor authentication or any other kind of friction.
The account credential can’t be shared and it can’t be stolen. A scammer can’t phish a person’s credential information because the identity of any relying party must be cryptographically established before data can be shared. And if the customer were to lose their phone the credential can be easily revoked and reissued.
Step 2: Add biometrics
This all gets even more powerful when we incorporate authenticated biometrics into the account credential or pair the account credential with a credential that contains an authenticated biometric — such as a digital passport.
Once paired, a bank call center can use the biometric data presented in an account credential to compare with an online liveness check to provide an extra layer of verification — without having to store any customer biometric data to perform the verification.
This is a game changer for call centers afflicted with biometric identity fraud, but it also is a way to provide the strong assurance required for mobile payments — without the infrastructural and compliance challenge of storing biometric data.
Now that we can quickly prove who we are cryptographically and biometrically, the stage is set for agentic AI.
Step 3: Identity and access permission for AI
The next step in customer experience is smarter, more capable AI, no more being passed between departments to find the right person or the right service to help me. By pairing these strong decentralized identity systems with AI agents — meaning they can be verified by the user, and they can verify that the user is a legitimate customer or account holder — we can unlock automation and convenience for the consumer.
Unblocking a credit card is a good starting point that can free up time for the support team, but AI can easily perform more complex tasks, such as setting up wire transfers, applying for loans, or setting up savings programs.
By issuing AI agents their own Verifiable Credentials to identify themselves, the customer can be sure they are interacting with a legitimate agent of the bank, we can trust AI agents with our data, and these features become not only feasible to implement but easy to trust and use.
But the grander vision for agentic AI is that with access to sufficient customer data, the agent will be able to “reason” its way to quickly delivering services and solving their problems. Siloed departments can now be easily integrated into a unified customer experience.
This works if — and only if:
- The AI agent can be certain that the customer is a real customer
- The customer can be certain that the AI agent is their bank’s AI agent
- The customer can give clear consent to the AI agent accessing their data
Agentic AI in banking and finance promises to be a game changer in customer experience and business efficiency, but as we continue to innovate it is important to keep in mind security, compliance, and privacy concerns.
Luckily, these concerns can be addressed today — simply, easily, and cost-effectively with Verifiable Credentials for account and AI agent identity.
Explore Verifiable Credentials for customer accounts now
Indicio is a world leader in decentralized identity and Verifiable Credential technology. We were the first to create a Digital Passport Credential for border crossing, the first to combine authenticated biometrics with Verifiable Credentials, and the first to combine EU and global digital identity standards in a digital wallet for seamless workflows.
We work with global enterprises and governments on state-of-the art decentralized digital identity solutions — give us a call to discuss how Verifiable Credential technology can provide the better operational efficiency and customer experience for your organization.
****
