In today’s digital-first world, our most vital information exists online and in the cloud — making it more difficult than ever to keep it protected. Companies holding that sensitive information have a responsibility to keep it secure and ensure only authorized users are able to access accounts and databases.
In the past, companies have relied on physical identity checks for authorizations, like presenting a photo ID for important bank transactions or when traveling. But today when fewer and fewer transactions are happening face-to-face, companies need to find ways to securely and reliably digitize the ID verification process.
Digitizing this process has become an incredibly important aspect of anti-money laundering (AML) and Know Your Customer (KYC) compliance. Companies that deal in digital transactions or information-sharing must comply with both AML and KYC regulations.
The process of digital ID verification reduces instances of financial crimes, identity fraud and even human trafficking — and helps with AML efforts by providing effective and simple identity proofing starting with the onboarding process.
What Makes Up a Digital Identity?
A digital identity is an electronic collection of identity-verifying information and documents, including:
- Login credentials (username and password)
- Driver’s license or other government-issued photo ID card
- Government ID
- Social Security number
- Selfies and other biometrics
- Bank account information
- Phone number
- Date of birth
Financial services companies may require a combination of the above-listed ID information to verify your identity and ensure you are who you say you are, similar to how face-to-face authorization has been done in the past. The biggest difference is that now financial institutions are relying on digital measures as part of their AML and KYC efforts.
What Does the Digital Identity Verification Process Look Like?
The digital identity verification process compares user-supplied identity documents and biometrics with official documentation that a government agency provides. For example, a user may submit a selfie to verify their identity, and the digital identity verification process will compare it with an official ID document, like a passport.
Common methods of digital identity verification include:
- Biometric verification: This type of identity verification uses unique identifiers to evaluate and establish distinguishing biological traits, such as facial characteristics, fingerprints, voice prints, written signatures, retina patterns and hand and earlobe geometries.
- Liveness detection: Liveness detection uses machine learning to detect whether a biometric source sample (often a selfie) is a fake representation created by artificial intelligence (AI) or if it is a live human.
- ID document verification: This digital identity verification method checks whether a user’s government agency document — like a passport, driver’s license or ID card — is legitimate.
- Knowledge-based authentication: Knowledge-based authentication, or KBA, seeks to prove someone’s identity when they try to access a service via a “secret question.” Common secret questions are the user’s mother’s maiden name, first pet’s name, favorite vacation spot, and so forth.
- One-time passcode verification: This form of ID verification is part of two-factor authentication and sends a one-time password (OTP) to a secondary device. This password can only be used once.
- Phone verification: Phone verification is similar to OTP verification, but instead of texting a code to the user, an automated phone call is placed to give them the code via telephone.
Why Is Digital Identity Verification So Important?
Digital identity verification can benefit both the user and the organization. Here’s how:
Better Accuracy
Manual identification is complicated and prone to errors. People often make mistakes, which can lead to fraudsters or imposters slipping through the cracks. Digital identity verification double- and triple-checks a user’s identity, providing peace of mind that customers are legitimate.
Advancements in the technology used by identity verification services, such as machine learning and AI, can greatly improve accuracy and ensure a better experience for end users.
Streamlined Workflow Automation
A system of identity verification tools streamlines workflow automation and eliminates bottlenecks caused by overwhelmed or busy employees. Rather than waiting to verify identities manually when it fits in your team’s schedule, the process is automatic.
This enables team members to focus on more complex and fulfilling tasks and minimizes approval time for new accounts and users.
Enhanced User Experience
Digital identity verification keeps accounts more secure and enables faster access to user accounts. Users can establish their identity from the comfort of their own home and on their own time, making the entire process easier and less time consuming.
Users are more likely to trust the organization, helping to build confidence and maintain long-term customer relationships.
Where Is Digital Identity Verification Helpful?
A digital identity verification process is most beneficial in industries that are at high risk of fraud, including:
- Financial services organizations: To prevent money laundering, fraud and theft, and to ensure an accurate bank and credit card account opening process, digital identity verification is of the utmost importance in the financial services sector.
- Insurance agencies: Identity verification allows insurance agents to identify exactly who they’re paying claims to and helps prevent insurance fraud.
- Telecommunications: Proper identity verification systems help telecommunications companies authenticate their customers and ensure the holder is the rightful owner.
- Real estate: Identity verification helps ensure safety in real estate transactions by preventing scams, fraud and money laundering by making sure consumers are doing business and transacting with the property’s actual owner, the documents people are submitting are accurate, and buyers and renters are who they say they are.
- E-commerce: During card-not-present e-commerce transactions, it’s critically important to ensure the person making a payment is the card’s rightful owner. ID verification helps this through measures like selfie ID verification, cell phone or email authentication, and age verification.
- Airlines: As the airline industry goes through a digital transformation, online identity verification lets passengers identify themselves digitally and remotely by taking pictures of their government IDs and submitting selfies. This process helps the airline improve the customer check-in experience while lowering costs and fighting fraud.
These organizations often use a variety of identity verification techniques including government ID verification, selfie verification with liveness detection, address verification through supplemental document verification, face matching and/or one-time passwords for ongoing authentication, and more.
Streamline Your Digital Identity Verification Process With Jumio
As fraudsters develop more innovative ways to commit identity theft, digital identity verification is stepping in to allow consumers and organizations to fight back.
This approach provides a streamlined process to enable KYC and simplify ID authentication in order to provide the best user experience. To learn more about how Jumio can help with ID verification, from onboarding to ongoing authentication, contact us today.
