Beyond OTPs: Why Digital Identity Protection Is Becoming Critical in Insurance & Lending

Mumbai, Jul 28

As fraud techniques evolve faster than most security systems, relying solely on OTPs is no longer enough. In both lending and insurance, where sensitive data and high-value transactions are involved, digital identity protection needs to be multi-layered; think biometric authentication, device fingerprinting, and behavioural analytics.

Talking to Bizz, Kunal Varma, Co-Founder and CEO, Freo, says, “We're entering a phase where trust will be built not just through what the user knows (like a password), but through who they are and how they behave online.”

For fintechs and insurers alike, investing in smarter, adaptive identity tools is no longer optional; it's foundational to user safety and long-term credibility.

Vinay Singh, CPO, Olyv says, “The digital lending and insurance ecosystem is at a critical inflection point. Traditional authentication methods like OTPs, which we have relied on for years, are simply not enough anymore.”

Having served over 4 crore users across 19,000+ pin codes in India, we, at Olyv, have witnessed firsthand how fraud patterns are changing faster than conventional security systems can keep up, he said.

Preventing digital fraud is difficult, but not impossible. I believe the real challenge here is to create trust in an increasingly digital-first world. When someone applies for a loan or insurance policy today, they are signing up for quick decisions and seamless experiences. But behind that simplicity and agility, we need strong identity protection that goes far beyond a simple OTP.

Today, sophisticated attacks like SIM swapping, synthetic identity fraud, and AI-generated documents are easily bypassing traditional verification methods. It might seem hard to believe, but in the first 10 months of 2024-25, digital financial frauds had already drained Rs 4,245 crore. What’s even more concerning is the fact that this was a 67 per cent increase from 2022-23. These numbers are enough to make it clear the extent to which people’s financial lives are being disrupted.

The future lies in multi-layered identity verification that combines biometric authentication, behavioral analytics, and AI-driven risk assessment. The goal here should be to keep the process as simple and user-friendly as possible for genuine customers, while creating insurmountable barriers for fraudsters.

As India’s leading digital lending platform, we, at Olyv, understand and acknowledge that our responsibility extends beyond just providing access to credit. We continue to ensure that every digital interaction is secure, every identity is protected, and every transaction builds trust rather than vulnerability in our financial ecosystem.

EoM.