Even though the world has moved largely online, organizations still need a way to confirm customers’ and users’ identities to meet regulatory requirements and prevent fraudulent activity.
At the same time, advanced technology like AI and deepfakes allow fraudsters to create hyperrealistic spoof documents, making it even more difficult for human reviewers to detect the subtle nuances that indicate fraud is underway.
Digital verified identity systems are becoming more widely used, helping organizations streamline user sign-ups and transactions in today’s digital environment while upholding strict security standards.
What is Verified Identity?
Verified identity, or identity verification, is a security measure used to confirm a person’s identity. It helps combat fraud and identity theft by ensuring that people are who they claim to be when signing up for a new account, requesting services, making a transaction, or engaging in other types of identity-based interactions.
To verify someone’s identity, the person will need to present a combination of official identity documents, biometrics, or other records to an authorized party for confirmation.
This process has traditionally been conducted in person. However, thanks to ongoing digitization and innovation in identity management solutions, it can now be done online in many cases with automated ID verification software.
Rather than handing over the necessary credentials in a physical form, individuals can upload digital copies with a selfie or other biometric sample to a secure online program, which will use machine learning (ML) and artificial intelligence (AI) to verify the authenticity of a person’s identity documents.
The Importance of Verified Identity
Whether an organization chooses to verify customers’ or users’ identities in person or digitally, completing this process helps support risk management efforts and ensures regulatory compliance.
Here are some of the main reasons why an organization needs to complete identity verification:
- Meet KYC requirements: Financial services institutions and other organizations subject to Know Your Customer (KYC) and anti-money laundering (AML) regulations must have a clear understanding of who their customers are, the sources of their funds, and the line of business they are involved in.
- Prevent identity theft: Robust ID verification measures can help prevent bad actors from posing as someone else to open an account for financial gain or access to sensitive information.
- Detect synthetic fraud: If a fraudster attempts to fabricate a fake identity using real and made-up information, the verified identity process should uncover this.
- Reduce the risk of account takeovers: Fraudsters may attempt to gain control of an existing account, so ID verification during login or account recovery processes can help mitigate the risk of this type of fraud.
- Reinforce age restrictions: Organizations involved in selling age-restricted products or services can use identity verification to prevent minors or other ineligible users from accessing them.
The Benefits of Automated ID Verification
The goal of any verified identity process is to confirm that a person’s claimed identity is their true identity. However, automated ID verification offers this plus additional benefits to the in-person approach, such as:
Near-Instant Results
One clear advantage of automated ID verification over the traditional method is that it can provide results nearly instantaneously, 24/7. Users can upload the necessary information to the system, which will determine whether there’s a match within a few moments.
Customers don’t have to wait for a human reviewer to become available to confirm their identity, leading to a more seamless experience during account onboarding or other identity-related interactions.
This added convenience can help support better conversions, as a lengthy sign-up or purchasing process won’t deter customers. All in all, automated solutions can help improve customer satisfaction, with positive implications for the business’s performance.
Less Resource Intensive
Without requiring staff members to verify identities, they can focus on more strategic, value-added work. Customers can use the automated system when and wherever they need it, though staff members are no longer subject to handling these routine and repetitive tasks.
These systems are often compatible with existing business software and digital systems via API, ensuring a seamless integration without much extra work or infrastructure required.
Lower Risk of Human Error
Identity verification processes completed manually are subject to the human reviewer’s expertise and bias. This opens the organization up to false positives or negatives, which can have detrimental ripple effects throughout the organization.
Instead, leading automated solutions, like AuthenticID, boast an over 99% accuracy rate for counterfeit ID detection. These systems aren’t completely perfect; however, they tend to be much more reliable than human reviewers.
So, not only are they quicker and more convenient for customers and staff members, but they do so without compromising security.
Customizable
Organizations might be concerned that switching to an automated ID verification system will leave them with little control or flexibility over the workflow.
However, many advanced solutions allow organizations to customize the verification workflow to fit their unique risk management needs and customer journey. They may also provide reporting dashboards and analytics to help teams assess their risk exposure and gain fraud-related insights in real time.
Use Cases of Digital Verified Identity Processes
The potential uses of digital identity verification are widespread across various industries. Here are some of the ways this technology may be utilized:
- Healthcare: Patients using telehealth services can verify their identities before an appointment using a digital verification system to prevent unauthorized access to their medical records.
- Financial Services: Institutions subject to KYC and AML regulations can use these tools to streamline new customer onboarding while meeting compliance requirements.
- Education: Digital ID verification allows institutions to administer exams to students online by confirming students’ identities before being admitted to the test.
- Workplace: Companies can use digital ID verification systems to streamline onboarding for new employees who must undergo a background check.
- Government Services: Citizens may be able to access secure online platforms for filing taxes, applying for benefits, and more by verifying their identities using a digital system.
- E-commerce: Online marketplaces may verify a seller’s identity before they’re able to create an account, helping to minimize the risk of scam listings and fraud occurring on the site.