An identity verification service that uses information gathered from a range of public sources to confirm identities for online and phone transactions has prevented £250,000 worth of fraud during trials at one UK financial services company and boosted efficiency 40% at another.

Identity Verification from RSA, the security division of EMC, is a knowledge-based authentication solution that is designed to confirm user identities and authenticate transactions in real-time. it works by presenting a person with a series of questions created using relevant facts unique to that individual that are obtained by scanning public records and commercially available databases such as electoral registers and credit reference agencies. This combination is engineered to greatly reduce the ability for someone other than the genuine individual to provide correct responses.

Bryan Knauss, head of identity verification services at RSA, described the system as "one tool in a layered security strategy - it simply verifies that people are who they say they are".

Typically it does this by creating multiple choice questions that the individual is likely to the answer to off the top of their head - "which of these other people with your surname have you lived at this address with", or "which of the following addresses have you previously lived at". The exact format and presentation is customisable, and RSA has developed a set of strategies to maximise the effectiveness, such as including red herring questions - fraudsters nearly always try to guess, apparently.

Knauss saidthat the system is currently 95% accurate. One issue is that "people have faulty memories", he says, so false negatives can be generated. The system is designed to escalate the procedure in these cases, adding more questions, for instance. Data quality can also be a problem - a lag in people changing address beign reflected in records for example.It has been available in the US for some time- Knauss says that 8 of the top ten banks there are users. In the UK three pilots have been running with card-issuing institutions, one of which is about to go live having seen call centre productivity go up 40% while fraud was reduced by 30%, he says. One of the other pilots saw a 40% increase in client approvals and new account opening.