Identity verification is one of the most important factors when it comes to onboarding customers and businesses. Financial institutions need to know if a person is actually who they claim to be. This needs to be done before approving loans, opening bank accounts, or going through any other financial processes.
Identity verification also plays a vital role in Know Your Customer (KYC) and Anti-Money Laundering (AML) efforts.
What is Digital Identity Verification?
Digital Identity verification is basically verifying a user’s identity online/remotely. With the increasing number of account takeover attacks, data breaches, and ID theft cases, businesses need to detect ID fraud and determine whether the person applying for a service is legit.
Digital identity verification can be done using biometric verification, face recognition, and online document verification. Entities can rely on these technologies to speed up the ID verification process and significantly reduce the risk of fraud.
Digital ID verification is a key step of the account opening and customer onboarding process. The aim of the entire process is to uncover which customer is legit and which one is a fraudster pretending to be a legit user.
How Does the Identity Verification Process Work?
ID document verification plays a vital role in all financial processes. Document verification is the process of checking whether the applicant’s ID documents are legitimate or not.
The end goal is to capture, extract, and analyze ID data to authenticate government-issued ID documents. This helps companies identify between fake and legitimate users.
Most companies today use in-built cameras on smartphones to capture the photo of an applicant’s ID document. Then the photo is verified using AI technologies or other online document verification technologies.
Major authentication factors include:
- Visible Security Features - Embedded security features in documents such as holograms, watermarks, etc. can be detected to verify a document.
- Font Usage and Consistency - Online document verification solutions analyze fonts and consistency on the document. This includes measuring spacing, shape, and consistency of letters.
- Rounded Corner Detection - Document verification solutions check rounded corners to ensure they align with the design template.
Benefits of Identity Document Verification
ID document verification allows businesses to prevent onboarding fraudsters. Moreover, ID document verification allows banks and businesses to verify who a customer is in real time.
For financial services providers, verifying customers' ID digitally speeds up the onboarding process, lending, and financing. This also allows businesses to protect themselves against fraud and it reduces abandonment rates in digital banking.
Use of Facial Biometrics for Digital ID Verification
Facial comparison relies on advanced algorithms to extract biometric data from an image. It extracts identifying features of a person’s face (placement of their eyes, bone structure, and more) into a standard dataset.
Comparing two datasets against each other can help in verifying the identity of a user. If one image is from a pre-verified source (passport, driver’s license, etc,) it can be used as the base for verification.
The pre-verified photo is used for verification of the real-time photograph clicked by the applicant at the time of their onboarding.
Individuals often get confused between facial recognition and facial comparison. Both of them are different technologies and serve different purposes.
How does Liveness Detection Work?
A facial biometric check is virtually worthless if it's not able to detect spoofing and fraudulent behavior. The most common method of spoofing is presenting a static picture of an individual for comparison against the trusted source image.
To prevent this from happening, facial biometrics checks must include liveness detection as well.
There are lot of different methods of liveness detection that financial institutions can rely on. The most common method is - instructing the applicant to carry out a series of head movements to prove liveness.
What is Identity Verification Used for?
Digital identity verification empowers businesses to enable remote onboarding for new account opening and lending processes. It also improves the customer experience as they don’t have to physically visit a bank to complete the process.
Customers want a seamless account opening process. This is why digital identity verification is becoming the need of the hour.
Financial institutions that want to win new customers using digital channels also need to figure out the most secure way to onboard customers. For a number of institutions, this means adding another layer of verification during the onboarding process.
Digital ID verification prevents banking fraud and it even detects the use of fake documents in real-time.
Summing Up - Future of Digital Identity Verification
Organizations around the world need to maintain a healthy balance between security and pleasant customer experiences. Unfortunately, inadequate ID verification services are easily exploited by fraudsters and reduce customer’s trust in an institution’s service.
Moving forward, customers need to take a multi-layered approach and risk-based analysis for authenticating customers. Businesses should also look forward to using machine learning and AI technologies that can make onboarding more secure and customer-friendly.
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