Identity Verification And Its Importance For Businesses

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Types of Digital Identity Verification Solutions

There are various types of digital identity verification solutions. It matches the end user’s live selfie or ID document with the government-issued documents. To validate the person’s identity, the submitted data is analyzed against the original data.

Following are the several methods for authenticating digital IDs, each of them works differently. Here are some of the methods:

ID Document Verification 

Checks the end-users ID documents against the government-issued ID documents.

Biometric Verification

The live selfies are analyzed to verify whether the person who appears in the selfie is the same in the ID document.   

Address Verification

Validates the address of end-users by comparing it with the information on their address document.

2 Factor Authentication

Approves the end-users identity by providing an automated code as an authentication factor for verification.

NFC Verification 

Uses the NFC capability of a smartphone to read user’s data from biometric ID documents and validate the identity of the user by authenticating the ID documents and matching the user’s selfie.

What is the Purpose of Identity Verification?

Between 2008 and June 2020, more than 12,000 data breaches were recorded in the United States, contributing to identity fraud. To combat fraud and detect fraudulent ID documents in real-time, digital ID verification is utilized. Because of the serious implications of fraud, it is a legal requirement for businesses to detect fraud when opening an account. Biometrics can help financial organizations prevent fraud by authenticating the end-identification user’s in real-time. One-day account takeovers accounted for 40% of account takeovers. If a user is unknown (for example, a new customer asking for an account), businesses can utilize a live image of the applicant to compare it to an image on a validated government ID document to establish that the user is not a fraudster.

Following is the process to verify an applicant’s identity and existence during the digital account creation:

  • The document verification process is used to determine the authenticity of the applicant’s ID document (driver’s license, ID card, passport).
  • After the applicant’s ID document has been verified, they are required to capture a selfie using their portable device.
  • Facial verification technology compares the live selfie with the government-issued ID document to confirm that the legitimate individual was behind the account opening procedure.

Benefits of Digital ID verification

  • It offers a swift onboarding experience
  • It prevents fraud in case of remote verification of the unknown potential customers
  • It outlines the criteria for organizations to Know Your Customer (KYC)
  • Data from the document is fetched automatically
  • Documents can be verified in a matter of seconds

What are the Standards for ID Verification?

Regulations for the usage of digital identity verification technologies are in place all around the world. AML5 and eIDAS, for example, give rules for European Union countries. AML5 supervises anti-money laundering and terrorist funding activities, whereas eIDAS governs digital ID verification services such as electronic signatures.

Banks in the United States are under the supervision of a Customer Identification Program (CIP). Which requires financial institutions to have reasonable grounds to verify that each customer who had a banking relationship with them is what they claim to be. This was legislated as a portion of the Bank Secrecy Act later changed by the Patriot Act.

Conclusion

Defective ID authentication systems are frequently exploited by thieves, eroding consumer trust. To safeguard financial frauds, you’ll need multilayered identities, risk-based insights, and verification solutions depending on machine learning algorithms that can differentiate between a customer and a perpetrator from account creation to continuous maintenance – and everything in between.

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