Shahid Hanif is the Chief Technology Officer and cofounder of ShuftiPro, a biometric identity verification (IDV) solution.
With an ever-expanding consumer base, it’s becoming difficult for businesses to identify every customer. Because of this, bad actors can take advantage of the changing regulations and find ways to steal the identities of the innocents and commit fraudulent acts.
I believe that constant vigilance should be the motto of every organization looking to expand their business and every customer about to open a bank account. As the global market evolves, organizations have a crucial role in embracing innovation to overcome identity verification (IDV) challenges.
Embrace Digital Identity Solutions
The rise of digital platforms has made traditional methods of identity verification redundant. With just a few steps, customers can now upload their documents and get verified easily without much hassle. Embracing digital identity solutions isn’t just convenient for the customers; it also helps businesses to onboard new users quickly, accurately and conveniently.
Digital identity solutions leverage technologies like AI, biometrics and blockchain to provide a foolproof identity verification process. AI can analyze vast amounts of data to detect anomalies and inconsistencies between the provided data and those stored in databases. Biometric authentication adds an extra layer of security and accuracy, enhancing the overall user experience. Additionally, blockchain technology offers a decentralized system for storing and validating identity information.
Moreover, digital identity solutions utilize optical character recognition (OCR) to recognize text in digital images. This enables banks, e-commerce stores, healthcare organizations and insurance companies to verify documents provided to them by customers accurately.
Leverage AI And Machine Learning
AI is the new buzzword that is floating around in the dynamic world of SaaS at the moment. Every enterprise and startup has implemented or has started implementing some AI solution that maximizes efficiency and reduces friction in terms of user experience.
Identity verification solutions can immensely benefit from AI and ML as these technologies can automate data analysis, flag suspicious activities, improve operational efficiency and reduce costs. Also, AI can learn from previous identification processes and detect evolving fraud techniques.
Keep Up With The Regulatory Requirements
Organizations must stay abreast of the changing regulations of the jurisdiction in which they operate and ensure that they comply with the requirements. Failure to comply can lead to reputational damage, loss of customer trust and severe penalties. In 2019, total global penalties for non-compliance with identity verification reached $10 billion. Even well-established banks have faced fines for non-compliance with KYC.
Some of the key regulations to consider are:
- Anti-money laundering (AML) regulations
- U.S. Bank Secrecy Act
- The European Digital Identity Regulation
These regulations place strict requirements on the collection, storage and processing of personal data of users and customers. Therefore, organizations must implement appropriate security measures, obtain consent and provide individuals control over their data.
Implement A Multi-Factor Authentication Approach
The fight against sophisticated fraud techniques often requires more than a single layer of authentication. To address this challenge, the global market has shifted toward a multi-factor authentication approach that provides an extra layer of security and significantly reduces the risk of unauthorized access or fraudulent activities.
This approach may include a combination of document authentication, biometric authentication and behavioral analysis. Document verification entails assessing security features, doing data checks and confirming the legitimacy of identification papers with issuing authorities to authenticate them. As previously mentioned, biometric authentication uses distinctive physical or behavioral traits to ensure identification. Behavioral analysis probes user behavior patterns like typing speed or mouse movement to find abnormalities or suspect activity.
By integrating these verification stages, organizations may significantly lower the risk of identity theft, account takeover and other fraudulent activity.
Prioritize UX And Accessibility
Organizations must prioritize user experience and accessibility while maintaining strong security measures. Lengthy or complex verification processes irritate users, resulting in abandoned transactions or a wrong impression of the company.
Businesses should aim for an effortless verification procedure that reduces friction while upholding the required security precautions to maximize customer experience. This may be done by employing strategies including auto-filling user data, providing user-friendly interfaces and giving real-time feedback on the verification status.
Businesses should also consider the requirements of people who could encounter difficulties throughout the verification process, such as those who are disabled or have restricted access to a particular technology. Several verification options, such as knowledge-based questions or video verification, may increase diversity and guarantee accessibility for a broader range of people.
Stakeholders need to consider IDV as not a static procedure but something that comes into play at all touchpoints between customers and businesses. Companies can gain massively by personalizing the user experience, and IDV could also take a leaf out of this playbook. In short, IDV must cater to all unique customers and users.
Build Trust with Your Customers
Identity verification can build trust between businesses and their customers. A trustworthy company is comfortable with all the anti-money laundering policies of their country’s financial institutions.
This is most beneficial to banks as they can lend money without any increased risk if they can identify the previous history of the borrower through their identity verification processes.
Final Word
Identity verification is essential to building confidence and reducing fraud in the dynamic global economy. Organizations can successfully navigate the difficulties and seize the opportunities presented by the developing global market by adopting digital identity solutions implementing multi-factor authentication, adhering to regulatory requirements, utilizing AI and ML, and prioritizing user experience.
Businesses must proactively modify their identity verification processes to meet changing risks and consumer expectations as technology progresses. Organizations may safeguard their business operations, increase consumer trust and prosper in the fast-moving, globally interconnected market by following the steps outlined here to implement a robust identity verification strategy.
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