Identity fraud is increasing. APACS, the UK payments organisation, reported the cost of online banking fraud more than doubled in the first six months of 2005 compared to the same period in 2004. Similarly, “card not -present” fraud via the web, phone or mail order swelled by 29 per cent in the same period.

Deloitte recently interviewed APACS, the Financial Services Authority (FSA) and leading financial services institutions in the UK to better understand the challenges that identity theft poses. Not surprisingly, the majority did not believe technology was the chief solution to the problem. The consensus was that people and processes are often the lowest common denominator in identity theft.

It was felt that tougher and potentially inappropriate legislation or even litigation might begin to occur as customers challenge the measures institutions have in place and will seek reassurance that they reflect best practice to safeguard their information. The need to raise the level of protection of customer information is clearly recognised.

Senior management now appears to accept the seriousness of the threat. In fact, investment is on the increase – with one organisation indicating that 35 per cent of its security budget in its current financial year was focused on tackling identity theft. However, many said they struggled to bring together parts of their large and diverse organisations to combat this problem in a cohesive way.

Innovative solutions need to be coupled with a pragmatic approach to delivery. Organisations with the right combination of technology, people and processes might find that they can differentiate themselves in the market.