Identity verification is the process of determining whether or not a person is who they claim to be. With so much of our daily business and personal life taking place online, it’s no surprise that digital identity verification has become a standard security measure. But have you ever thought about how it works? Or which methods are the safest? For you to come to your conclusion, let’s look more closely.
What Is Identity Verification?
The process of validating that the individual is who they claim they are and that the information they supply is accurate is known as identity verification. The simplest approach is to look at the person’s identity papers.
Both government agencies and private businesses use identity verification processes to prevent identity theft and fraud, the creation of fraudulent or multiple accounts, and data theft. So, how does it work?
How Does Digital Identity Verification Work?
Digital identity verification focuses on collecting and authenticating personal information, typically at the point of onboarding a new customer to a business, matching it against trusted sources, and testing to determine whether or not it is real, verifiable data. This authentication works by comparing a person’s data, whether a document like a passport, to a verified data, set. Government records, credit references, and even mobile data can be included.
Digital identity verification expedites the verification process, which is necessary in today’s fast-paced digital world, where most transactions are conducted online. Customers nowadays expect and demand the ability to quickly sign up for a product or service and begin using it, so identity verification must not disrupt or impede that customer experience too much.
However, providing a positive customer experience must be balanced with a secure identity verification process that ensures a business is protected and remains fully compliant and individuals are protected from identity fraud. With so much of life now taking place online, more data than ever can be misused if not protected, making the identity verification process critical.
How Do You Verify Identity Digitally?
ID Document Verification
When onboarding new clients, financial institutions use this method to verify that you submitted the government-issued identity documents (passport, ID card, or driver’s license) that are valid. That is why they require you to take a photo of your ID and upload both to their website.
The artificial intelligence software examines the uploaded images to ensure the authenticity of the ID document and that the selfie and the image on the document are both of the same people.
Financial institutions, for example, must ensure that the email address you provided is correct and authentic. They will also require proof that you own the email address.
The service provider will typically send you a test email containing a verification code that you must enter on the service provider’s platform to create an account.
Biometric verification is a more secure method of confirming your identity. These methods include fingerprint scanning, facial recognition, and iris recognition, and they all require the user to be physically present to unlock their accounts.
Some organizations use a biometric selfie to verify identity and prove the user is not a bot or imposter.
Knowledge-Based Authentication (KBA)
This method entails answering security questions, such as setting up a new email account. Because they are usually personal, the email provider assumes you are the only one who knows the answers.
If you forget your email password, the email provider will ask you these questions to ensure that you, the account owner, are the one initiating password recovery.
Mobile App Authentication
This technique involves using reputable authentication programs you download on your smartphone, such as Google Authenticator, Authy, or LastPass. The software creates a time-sensitive code each time you try to access a resource, which you then enter on the service provider’s platform to confirm the login attempt. When you wish to update the master password on your password manager software, for instance, you would do this.
What Are the Benefits of Digital Identity Verification?
- A digital procedure offers a fantastic user experience and can accelerate the growth of digital channels.
- Financial institutions can help reduce fraud by using digital identity verification when a remote application or potential customer is unknown.
- Know-Your-Customer (KYC) requirements can be met with the help of digital identity verification.
- Facial biometric digital identity verification employs facial comparison to ensure that the individual presenting the ID matches the individual on the ID document.
- Everyone can use and access mobile image capture.
- Data extraction directly from the document eliminates the need for manual data entry.
- Documents can be verified in seconds.
Why Is Identity Verification Important?
For successful businesses, identity verification is the key to gaining customer trust. We would be operating in an anonymous world without identity verification; a digital world experiencing increased levels of fraud and criminal activity puts people and businesses at risk.
KYC is a legal requirement for regulated industries and a best practice for all businesses. Before engaging in any transaction that could cause harm or loss to the business or individual, digital identity verification ensures that all parties know who they are dealing with.
Identity Verification Regulations and Standards
Global regulations establish standards for the use of digital identity verification solutions. AML5 and eIDAS, for example, guide European Union countries. AML5 is concerned with anti-money laundering and terrorist financing, whereas eIDAS governs key functions of digital ID verification, such as an electronic signature.
Banks in the US are governed by the Customer Identification Program (CIP), which requires financial institutions to believe that each customer entering a banking relationship is who they claim to be. This was part of the Bank Secrecy Act, amended by the Patriot Act. In 2003, the Patriot Act made CIP mandatory for financial institutions.
Identity Verification’s Future
The digital identity verification industry is shifting toward biometrics as the primary method of verification, which provides a high level of security while reducing the need for a physical ID.
Travelling without a physical passport, paying with a credit card, or renting a car without a physical driver’s license may become the new normal if digital identity verification technologies continue to advance at their current rate. Your smartphone or biometric features may be sufficient.
It is difficult to predict the future of digital identity verification, but one thing is certain: digital identity verification is the future.
Having the ability to properly and thoroughly identify your customers and employees can help protect your business from fraud. In some jurisdictions, a digital agreement is not legally binding unless linked to a secure identity verification process. Reliable verification processes also put customers at ease and open up more opportunities for your company to grow. Digitizing the identification process lowers risk, boosts trust, and ensures legal validity and compliance.
With this solution, you get the added security of stronger identification, which helps you protect high-value agreements and meet compliance requirements without sacrificing the signer experience.