Category: Identity verification

If you’re musing on the role of online identity verification amidst the tech-driven era, let’s dive deep into this.

Opening an account or getting services by visiting brick and mortar locations have almost lost their role and so do the traditional identity verification solutions. The customer verification market is witnessing a paradigm shift from manually performed identity verification to online identity verification.

Companies are harnessing the power of technological advancements, resulting in a substantial rise in digital transaction volume and value. Customers are reaping the benefits of easy accessibility, convenience, and quick results.

But what about cybersecurity?

Businesses are undeniably utilizing the potential of digital transformation, however, it comes with a severe cost. Increasing digital payments have witnessed a steep rise in data breaches, identity theft, fraud, and money laundering.

This is where identity verification solutions come into view.

Defining What Exactly Online identity verification Is

Digital identity verification refers to the process of verifying a person’s identity and ensuring they’re who they say they are. While opening a bank account or applying for a loan, customer verification plays a vital role in risk management and fraud prevention.

Online ID verification helps companies in combating fraud and minimizing risk. With AI-integrated identity verification methods such as biometric verification, face recognition, and ID document verification, customers can be verified rapidly.

Identity verification solutions assist businesses with instant, accurate verification during customer-not-present situations. They allow financial institutions and other companies to run consistent identity checks and determine the red flags if any.

Digital ID Verification is Gaining Traction Across Industries

Be it a financial industry, education sector or a Buy Now Pay Later company, identity verification services have become a vital need for every business.

If put into figures, data breach costs rose from USD 3.86 million to USD 4.24 million in 2021. It has been reported as the highest average total cost in the last 17 years. Not just this, losses due to identity theft reached around $721.3 billion in 2021.

These stats evidence why identity verification solutions are more important than ever. Let’s count on greater reasons for why you should opt integrating ID verification solutions into your systems.

“Online identity verification makes to secure transactions.” Fraudsters are highly using stolen identities to commit cybercrimes such as payment card fraud, account takeovers, and more. Identity verification solutions help companies detect any such suspicious activity before onboarding the customers and minimize fraud-related risks. Further, it authenticates users consistently and enhances the overall security. ID document verification and biometric authentication are the most common methods to prevent unauthorized access of scammers.

In addition to maintaining the security of transactions, ID verification solutions enable companies to build online trust. They create value by onboarding legitimate customers in minimal time through automated ID verification services. Seamless onboarding process and satisfactory user experience help drive conversions or account opening rates.

KYC/AML compliance assures clients that their data will remain safe, establishes trust, and prevents you from reputational damage. Further, non-compliance to KYC/AML regulations may cost you hefty fines and financial loss. Integrating simple, effective ID verification solutions help companies to meet regulatory measures and prevents potential penalty.

The reason why digital ID verification services have gained momentum is it reduces the chances of human errors by verifying remote user accurately. Two-factor authentication mitigates the risk of money laundering by verifying government-issued documents as well as performing facial verification.

Industries Requiring Identity Verification Solutions 

From preventing fraud to complying with regulatory obligations, online ID verification resolves fraud-related issues in seconds. Here’s a list of common use cases of the online ID verification process.

Banks and financial institutions top the list of industries requiring digital identity verification solutions. Firm identity verification helps financial institutions to remain compliant and combat identity theft, data breaches & money laundering. KYC solutions enable them to recognize suspicious behavior of clients and make financial transactions safe, secure.

If we shed a light on the retail sector, e-commerce sites are observing steady growth. The rising cases of identity fraud make it crucial for the e-commerce sector to check if the customer is genuine and ensure that transactions are secure. Compliance with KYC/AML solutions further cut-off account takeovers and similar activities. Online ID verification assists companies with a frictionless process, preventing client abandonments.

With the advent of the pandemic, telehealth services have marked a severe growth providing easy checkups at patients’ convenience. However, the service provider has to keep patient information safe and secure. They are also required to verify a patient’s identity to meet HIPAA requirements. Digital identity verification help businesses in a multitude of ways such as compliance checks, onboarding remote patients quickly, reducing medical identity theft, maintaining accurate medical records, and avoiding fraudulent attacks.

Government services such as health assistance, surveys, employment schemes and more require trusted ID verification software providers to help them deliver services securely.

A few other sectors using online ID verification services include cryptocurrency, Fintech, telecommunications, gaming, age-restricted businesses, insurance, and more.

The Bottom Line

Transitioning from traditional verification means offering extensive benefits. Customers are compelling identity verification service providers to keep raising the bar and provide the most effective solutions. Amid the evolving trends in the market, companies should update their identity verification process at regular intervals. They should offer a seamless, secure, and quick ID verification process to safeguard the global payments ecosystem against identity theft and other illicit activities.

In the tech advanced era where counterfeiting or stealing identities is highly common, selecting appropriate identity verification method is of utmost importance. It is to check if a person behind the screen is legitimate.

6 Fraud Prevention Methods

Identity verification process is carried out by several methods following distinct approaches.

1. Knowledge based authentication
2. Two-factor authentication
3. Biometric verification
4. Online identity verification
5. Identity database
6. Credit bureau based solutions

 

1. Knowledge based authentication

Have you ever entered your nickname or the name of your favorite dish as a security answer to prove your identity while accessing an online account? Such an identity verification solution is known as knowledge-based authentication. KBA verifies an individual’s identity by asking them to answer previously set security questions. You could also be required to enter answer within a defined time limit, say 1 minute.

The major drawback of using KBA as an identity verification method is its easiness. Anyone close to you, either your friend or relative can make a guess to your security question. Answers could also be discovered through the social networking sites and social engineering. Further, this ID verification solution doesn’t require any government-issued ID documents and lacks authority, reliability.

2. Two-factor authentication

While making online payments or logging in the digital accounts, website prompting you to enter OTP is a usual affair. It is for putting an extra layer of security to your account to prevent a fraudster from logging in.

Two factor authentication requires a customer to enter a code sent to their registered phone number or email address. It is the simplest ID verification method that doesn’t require any specific tech tools or knowledge.

Multi-factor authentication requires customers to provide a username, password and sort of personal identification or token while they’re accessing the account. Token could be anything such as an OTP or code received from the authentication company.

3. Biometric verification

With traditional identity verification methods such as KBA and SMS-based authentication on their way out, online identity verification services hold an immense importance. Biometric verification is the process of uniquely identifying person by matching his/her biometric traits. Customer onboarding is the most common use case for this identity verification method.

Online ID verification services backed with AI-integrated biometric technology facilitate with satisfactory user experience, assured answers and quick identity verification. It includes facial recognition, voice recognition, iris/retina scanning and fingerprints.

For instance, while conducting onboarding process, a customer is required to pass through facial verification. He is asked to upload the photo of government-issued ID document followed by a selfie. While taking a selfie, identity verification providers also enable liveness checks to know the person behind the screen is live. The system then analyze the biometric characteristics against the ID document submitted.

4. Online identity verification

Online identity verification method includes verifying user’s identity by matching their image with identity documents. It checks whether a government-issued ID of a customer really belongs to the user.  Online ID verification employs advanced technologies such as Artificial Intelligence, machine learning, and human review to comply with KYC and AML obligations. This is to ensure the person is who they say they are.

This identity verification method require users to upload a picture of themselves holding their ID document. It is highly secure and facilitates with quick onboarding by extracting data using OCR technology.

5. Identity database

Database identity verification methods include verifying identity of a customer against the user-provided data. This method analyzes personal identity details such as name, address, date of birth to verify a user’s identity.

The data collected from customers is matched to the trusted data sources. Once the data is verified, identity verification software will revert back with accurate results.

6. Credit bureau based solutions

Online identity verification services mainly approaches Experian, Equifax and TransUnion as their credit bureaus. These bureaus consist of a vast database of credit data such as name, address, social security number across different countries. Their repositories of consumer credit data is then utilized for performing identity match of customers.

Final Thoughts

Identity verification services are vital to curb illicit activities for all industries including banks & financial institutions, healthcare, gaming, cryptocurrency and more. Prior integrated ID verification solution APIs, companies must look for the verification method that best match their needs. For instance, industries requiring higher security should opt for biometric verification.