Identity frauds are everywhere in the market, disrupting businesses from the start. Criminals create fake or synthetic identities and register themselves as legitimate customers. This is done by stealing their data either physically or digitally. Online businesses are the primary victim of identity theft. The Insurance Information Institute stated that they received 281,434 identity theft-related complaints in 2020.
To tackle this problem, service businesses are moving towards intelligent identity verification procedures.
Identity Verification – A Need of the Modern Age
The method of validating the personal data of customers is called identity verification. It is checked that the person is the real owner of the given information. The confirmation of the authenticity of name, birth date, and (residential or corporate) address is performed through the identity verification process.
Almost all businesses and financial institutions essentially are required to verify their customers under regulatory compliance. Law enforcement agencies always keep an eye on the customer verification process of business. They also penalize and blacklist businesses over non-compliance with the rules. According to Finblod, a £9,150 amount of fine was imposed on local banks of the USA for not complying with AML/KYC laws.
There are various ways of identity verification, let’s have a look at how the process has evolved over years.
This process is used by banks to verify their customers. They arrange a set of multiple meetings with customers in which they analyze customers’ documents and physical appearance. An employee or a group of banks conducts the verification manually. It involves the signing of papers and giving photocopies of ID documents.
This process of identity verification can sometimes become challenging when done through manual procedures. It takes more financial resources from the banks in the form of salaries. Furthermore, customers are not quite satisfied with these old-school methods as they have to physically visit the premises.
It is usually done for activating ATM cards or confirming an online purchase. In case of ATM card activation, a representative of the bank calls the account holder and asks some questions. He can ask questions related to personal and financial information like:
- What is your name?
- What are your address details?
- What is your ID number?
- What are your account and ATM card number?
There is a high risk of fraudulent verifications in this method. Like all the above information can be accessed by stealing the wallet. This method does not confirm the physical presence of the person, anyone with the above details can verify him.
Online Identity Verification (KYC)
Verifying a person’s identity using an online medium without having a physical interaction is known as knowing your customer. The process is performed by artificially intelligent software. The customer’s live appearance and ID documents are required in this verification. Online banks and other businesses with online services are using KYC.
Here is the process of online identity authentication:
- The customer fills the bio-form on the website
- Then a live picture of the customer holding an ID card is captured
- Authenticity checks are performed on the document
- Required details are extracted from the document and then confirmed
- Facial recognition is performed on the photo ID and live image
- The results i.e. verified or not-verified are shown to the user screen and stored in the database
What is an Identity Verification API?
An Application Programming Interface or API is software that allows two applications to communicate with each other. That being said identity verification API establishes a link between the service provider and the actual client which in this case are businesses or financial institutions that require identity authentication services to meet Know Your Customer (KYC) and Anti Money Laundering (AML) obligations.
Through the application programming interface, essential modules for the identity verification services can be integrated into existing systems that firms already use. Developers can start using the solution with a single API call upon which they are given an authentication key to authorize the request. Once the key is verified, the business can start verifying their customers in real-time regardless of where they are currently present.
Summing It Up
Among all the above verification processes, KYC is the one that can meet modern-day business requirements and customer demands. The process just takes one or two minutes for verification. Businesses should take identity verification services for making their channels safe and sound.