Month: May 2021

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How to Verify Bank Accounts For Merchants?

how to verify bank accounts for merchants

The finance industry is full of fraud every step of the way, and merchants’ bank account verification and customers are important. Businesses use some common practices to collect and verify bank account details. The method for verification for merchants’ bank accounts differs from business to business. There are multiple ways to verify bank accounts for merchants, here’s how to verify bank accounts for merchants.

Verification of Merchants Bank Account

Banks & businesses go through countless transactions every day and being able to verify bank information instantly can mitigate the risk of fraud. Each method helps in the merchant funds verification. 

1. Manual Account Collection

One of the simplest methods to collect and complete merchants bank account verification

is to ask the customers or vendors for their bank account information. Without verifying bank information, you are putting your business at unnecessary risk.

You can work without verifying bank account information with trusted identities like law firms. If huge transactions are being made, the ideal choice would be to collect their account information and verify the information. 

2. Voided Checks

Before the rise of digital banking technologies and online services, banks used to verify account details by using a voided check. This method of verification for merchants bank accounts used to work in the old days, but not today. 

A check has all the information needed to make a payment, such as the “account number, the routing number, and the account holder’s name”. This method used to be very efficient in the old days, but with the rise of new technologies, it has become tedious. A merchant requires you to void a check and scan it. Although with sophisticated image doctoring technologies, the scanned image of the check can be changed. In comparison to that, using micro-deposits for bank verification is a much better solution. 

3. Micro Deposit Verification

Micro deposit verification is used by multiple banks and businesses to verify a merchant’s or customer’s bank account information. The process of Micro Deposit verification came into existence with the rise of digital banking. This process requires the bank or businesses to be on hold of a customer’s account information.

The businesses will tell the merchants that they’ll send two different transactions to the bank. The accounts will be verified if the merchant can tell the exact figure that was deposited in their accounts. The most common method is to send two different transactions from two different accounts to the merchant’s bank account for double-checking. Micro deposit is a well-known merchant fund verification method. 

4. Instant Account Verification

The newest and the smoothest process is instant account verification for merchants bank account verification. These solutions enable a direct link into the bank and collect and verify bank account ownership.

The benefit of this method of account verification is that it can be done instantly and offers better fraud detection and prevention. This solution is not widely available as the provider doesn’t offer full coverage across all the banks. While IAV is a better solution to verify merchant bank account information, it is not available everywhere and that’s why Micro Deposit verification is still available in the market. 

Merchants Bank Account Verification with DIRO

Merchant bank account verification is crucial to reducing financial fraud. Although not all the solutions offer fast, secure, and error-free bank account verification. With technological solutions like DIRO online document verification, verifying bank account holder information can be done in an instant. With secure and innovative technology, DIRO provides 100% proof of authentication that can be used as court-admissible documents with forensic data. Businesses can employ DIRO’s online document verification technology to make the workflow streamlined and eliminate the risk of fraud.

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Best Practices for Remote Onboarding: Why Secure Onboarding Is Needed?

Financial institutions all over the globe operate under strict regulations to reduce money laundering and terrorist funding. Complying with global regulations like FATF and EU Anti-Money Laundering Regulations can help in identifying people on sanctioned and politically exposed person lists. Following up with the AML regulations requires huge sums of money from financial institutions. Not being able to comply with FATF and AML regulations can lead the businesses to lose a lot of money, to put that in context, failure to follow the compliance led to fines reaching up to $36B in 2019 alone. 

As demands rise for remote and digital account opening, it becomes harder and harder to detect which identities and documents are real and which are not. There have been instances of financial institutions being tricked with synthetic identity fraud and document fraud. To effectively scale remote customer onboarding while reducing the risk included and ensuring compliance. Financial institutions have taken the assistance of technology ranging from video conferencing to biometric tests to verify remote customers during the due diligence tests. Other technologies like online document verification can assist in secure document verification.

A lot of countries have updated their guidelines regarding customer onboarding. Due to the effects of a global pandemic, customer onboarding has changed a lot. Financial institutions need to follow the best practices for remote customer onboarding.

Best Remote Customer Onboarding Practices

  1. Blend Technology and Human Experience

The remote customer onboarding process can be an opportunity for cybercriminals. Using the remote onboarding process, fraudsters can do all kinds of financial crimes. Financial institutions need to bring a blend of technology and human touch into the remote onboarding process. They need to employ the best technologies to reduce the risk of financial crime. Online identity verification methods can help in making the process frictionless and secure. The use of online identity verification technologies can decrease the abandonment rate.

  1. Online Mobile Banking

We live in an era of smartphones, which means almost all the services need to be available on smartphones. Almost 56% of all website traffic comes from smartphones. As the technologies grow, this trend of website traffic will grow even more. To encourage remote customer onboarding, financial institutions need to offer online mobile banking services. To improve the customer experience during remote customer onboarding, online mobile banking needs to be incorporated into the services.

  1. Improve the Overall Customer Experience

Another best practice to enhance the remote customer onboarding process is to improve the customer experience. The traditional banking process used to take a lot of time and they weren’t secure. If a financial institution wants to encourage more customers to sign up with them, they need to improve the customer experience. 

The remote onboarding process needs to incorporate AI-based techniques and algorithms that can smoothen the remote customer onboarding process. Video-KYC and digital document verification can verify the identity of each customer and offer an enhanced customer experience. 

  1. Know Your Customer (KYC) Verification

KYC allows the identification and verification of customers. KYC process asks for a verification of customer’s identity i.e. personally identifiable information (PII) is checked and verified to meet their regulatory requirements. It also helps in reducing the risk of financial crime, KYC offers various opportunities to reduce the chances of financial fraud and enhance the remote customer onboarding process. 

  1. Anti-Money Laundering Screening

 Just like KYC, AML is also a law-required regulation, AML screening is a crucial part of the business. To comply with AML screening, a person’s identity is verified against sanctioned lists and PEP (Politically Exposed Persons) lists, and other global watchlists. Identity checks in AML screening verify the customer’s identity during the onboarding process and reduce the risk of financial crimes.

Why Is Digital Onboarding Process Transforming Businesses?

Companies operating in the financial sector have benefitted from the digital onboarding technology and its user-friendly framework. Firstly, banking services have become a lot better with the incorporation of digital services. The remote customer onboarding technology has made it easier for customers to sign up with new financial institutions. It turns a complex and long-lasting process into a matter of minutes. Using video identification, AI, and machine learning technologies, the remote customer onboarding process can be improved.

The traditional onboarding process which used to take at least 3 weeks on average, can be done in under 1 minute all thanks to the remote customer onboarding process and technologies. In this digital era, no one has the time to wait for 3 weeks to sign up with a financial organization while competitors in the market are offering real-time identification and onboarding. All these factors allow organizations to reduce their operational costs and increase their customer base with ease.

Solutions such as DIRO’s online document verification technology can easily help in verifying the customer documents such as driver’s license, bank account statements, insurance information, student records and so much more. By utilizing DIRO’s verification technology, you can verify documents instantly from all over the globe and improve the remote customer onboarding process.

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5 Biggest Challenges Faced During Online Identity Verification Process

The whole idea of identity verification has grown past manually verifying each customer one at a time. Just like everything, online technologies have also improved the way the identity verification process works. Verification and management of online customer identities are more flexible than ever. Systems and solutions built especially for online identity verification are crucial to providing authentic proof of identity for accessing and operating in combination with modern banking systems, e-commerce platforms, third-party payment aggregators, and more. Unfortunately, the rise of technology has given birth to the problem with online identity verification.

As AI-based technologies are becoming more streamlined, organizations try to embrace them to reach more people and provide better security. Technology is not only being used by banks, financial institutions, and others, they are also being used by sophisticated criminals. Keeping up with high-security standards and following strict regulations are some of the most common challenges of online identity verification.

Providing smooth onboarding and secure online transactions can be tough. This is one of the most common problems with online identity verification.

Here are 5 Challenges during the ID Verification Process:

Let’s dive into the main and common challenges…

1. Inefficient and Expensive Costly Identity Verification Solutions

As an online solution, online identity verification is still taking its baby steps. Verification of identity comes in multiple variants, and there are multiple methods for how identity is verified. The entire process of verifying identities used to be pretty simple, but as online transactions have grown in both volume and complexity, the process of digital identity verification has expanded into something else altogether.

For unique sources and channels, users are uncomfortable sharing personal information for verification. Basic details like name, address, and government-issued IDs are not good enough to get a complete idea of a person’s identity. To get more personal details about a customer and verify their identity, organizations need to act responsibly and try to bridge the trust gap between technology and trust.

As more and more people enter the identity verification market, and the volatile nature of the industry, the online identity verification process is not stable. This constantly changing market leads to irregularities when it comes to the serviceability and security of identity verification services. 

Businesses that deal in financial transactions are putting in their best efforts to keep up with ever-changing state laws and regulations. These changes in regulations are being done to keep up with the growing data privacy needs. 

To reduce the risks of security breaches and compliance risks, businesses will need to stay ahead of changing industry trends. Organizations also need to understand how to manage confidential data such as customers’ personal information. It is one of the primary problems with online identity verification.

2. Trouble Determining the Accuracy of Identity Verification

Being able to accomplish efficient and frictionless identity verification is the key to building a solid customer base and building trust. To make this happen, it is required to integrate identity verification solutions and engage with large audiences. Fraud prevention using the KYC procedure is extremely important.

To get ahead of this challenge, technology and back-end support have to be updated with time, and using tangible resource investments is crucial to maintaining secure platforms.

3. Data Availability and Management Issues

Cross-referencing even the smallest data point is the most vital part of the identity verification process. This leads to collecting personally identifiable information such as social security numbers. Collecting this array of information is essential for firms, but most customers won’t provide the information as it makes them uneasy. Providing basic information and credit reports can make customers susceptible to risks.

To ensure customers that your organization provides a maximum level of security and risk management. Organizations must provide users with control over data collection methods and how they use personal details for online verification.

To accomplish high security and service standards, companies will need to search for solutions that can provide them with online databases. To do comprehensive identity verification, personal information needs to be cross-checked on these databases.

4. Complying with Data Protection & Privacy Regulations

With the sudden increase in the application of online identity verification, the requirement to comply with regulations is also becoming strict. Organizations will have to keep up with the ever-changing rules and policies. 

While digital technologies are huge enablers of customer-friendly services, this is also leading to concerns about data security. International standards and regulations are catching up with technological advancements and providing a helping hand in protecting data. 

The GDPR came into existence in 2018, since then it has been a guiding system for regulated companies. Similar to GDPR, Anti-Money Laundering Directive 6 has been the central framework for fighting money laundering and terrorist funding. 

These regulations are extremely vital for industries like online gaming, dating, and gambling sites. Usually, these sites contain age-restricted content, and digital identity verification regulations protect minors from financial crimes and identity theft. Not being able to comply with regulations makes it one of the primary challenges of online identity verification.

5. Improving Digital Trust & Customer Experience

Customers can rely on several digital banking services in the current system. High-risk transactions, malicious data collection, and not user-friendly databases are enough to ruin the experience for both new and old customers. Establishing trust in the market and ensuring a high level of trust is crucial to building a long-lasting business operation. Not being able to improve the customer experience is one of the biggest online identity verification problems.

Digital identity management data is based on fighting for the right solution for the users and extending a hand in data management. Online identity verification services need to be built, to make sure that the needs of the customer are being fulfilled. Unless firms learn how to improve customer experience this will remain one of the main online identity verification problems.

How does DIRO’s Document Verification Technology Assist In ID Verification?

The online identity verification landscape is in its first steps, and it is riddled with challenges. For banks, financial institutions, and organizations to verify identities online, it is required to get past those challenges.

DIRO document verification API can verify documents instantly and capture information right from the original web source. Verifying documents is the first step in verifying customer identities. Verified information is placed on the blockchain, which makes the documents immutable and secure.

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How to Avoid Bank Frauds Using Technology?

Want to know how to avoid bank fraud? Well, the first step is to follow the basic old-school step with a blend of technology. Fraud is a worldwide phenomenon that affects all multiple industries and can even have a severe impact on the economy of a country. Banks need to understand how to prevent bank frauds, which they can’t do without employing the right kind of technology. One of the most challenging aspects of the banking sector is to make sure that all online transactions are free from any kind of electronic fraud. Technological advancement and adoption is the only answer to the question of “how to control fraud in banks”.

By utilizing the power of data analytics, banks can detect fraud in their initial step and reduce the negative impacts of significant losses regarding fraud. This is one of the primary methods how to prevent bank fraud.

The present-day studies indicate that false documentation and inadequate training of employees are the reason for 60% of all banking fraud cases. Most of the frauds in banking institutions are detected through customer complaints or some external tip, which is the case with global banking frauds. To mitigate risks, banks need to learn how to prevent online banking fraud. 

Large and small businesses alike are targets of online bank frauds, it is also called ACH fraud or wire fraud. Once cybercriminals can find a weak point in the banking system, they can create a lot of nuisance before being detected finally. 

Banks, financial institutions, and FinTechs need to understand the need for technology so they can reduce the number of frauds they have to suffer through. If you wish to understand how to prevent online banking fraud, then you need to employ technologies such as DIRO’s document verification technology.

Technologies For Online Banking Fraud Prevention

1. Multi-Factor Authentication

The best step is to start with a multi-factor authentication structure to improve the first layer of security. Financial institutions can’t solve all their problems just by using multi-layer authentication, they need to start from somewhere. One of the major mistakes made by financial institutions is to leave everything on a single solution which makes them more open to being compromised.

If financial institutions can set up a solution like combining old-fashioned phone calls for bank authentication with online two-factor authentication, they can reduce the risk of fraud by a lot. In the old days of banking, calendars were put in place for all transactions across multiple accounts. If someone has the same banking and transaction routine, then any sudden changes would be marked as red flags. 

2. Banks Need to Monitor Transactions

In the earlier days of banking, banks used to have daily limits imposed on their users. The banks used to impose the limit on their mainframe processor, along with file limits and batch limits, this limit would help to spot if there was something out of the ordinary. Usually, banks don’t watch out for any activity under $9,000 which makes it easier for criminals to fraud the banks by conducting activities under $9,000. One of the best ways how to prevent bank fraud is to monitor transactions more carefully.

3. Employ Dual & Triple Controls

Dual controls on the corporate side are the minimum they can do to reduce the risk of online fraud. The ideal suggestion is to use triple controls, where one person initiates the transaction, a second person approves the transaction and the third person finishes it.

If organizations don’t have the right kind of resources or people to follow up with the triple controls, then they need to set up ACH transactions. Businesses can confirm using a phone call if the transaction was initiated by a specific person, once that is confirmed, the transaction can be completed. This can be done using a person or by setting up an IVR. Usually, only one person will have the ID and password to call the bank and complete the transaction which adds an extra layer of security.

4. Raise Awareness Towards Fraud

One of the best ways how to control fraud in banks is to keep educating the customers about the ways they can reduce fraud. The rise of online banking has given rise to a lot of online fraud. Banks and other financial institutions can employ all the technology they want but the real solution won’t happen till customers are aware of the threats.

5. DIRO Document Verification Technology

This is one hardcore technological solution to make sure banks, financial institutions, and FinTechs can mitigate the risk of online fraud. Using the technology, organizations can streamline the customer onboarding process and verify documents to reduce online fraud and money laundering. 

DIRO’s document verification technology can verify documents like bank statements, bank account verification, utility bills, address proof, and student records. During the customer onboarding process, banks can verify customer documents to make sure the customers are who they say they are. Money laundering and terrorist funding can be stopped by verifying customers before they can cause any real problems.

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How eID Verification Improves Client Onboarding for Banks and FinTech

It can be very time-consuming for individuals or business owners to take time out of their day to visit banks when they prefer to interact with their Financial institutions online. In this article, we will discuss the benefits of eIDs and streamlining cross-border transactions and how they can improve the client onboarding process. The big challenge for banks and FinTechs is to verify documents to prevent fake and stolen when onboarding new clients. This challenge is common across mortgages, auto lending, or purchases that you may need to start a new business.

Customers who work night shifts can find the limited opening hours of the banks and other financial institutions frustrating. Let’s say you want to sign a document, but you work during the opening hours of the banks. This presents a real challenge and the way to solve it is through more online services.

There are a lot of steps involved in loan approval and the process can easily be delayed while waiting for the customer’s signatures. This waiting period can lead to the bank or financial institution losing the client and makes the entire process inefficient. Instead, if banks can conduct verifications online it could be very beneficial to the customer. This can help especially during cross-border transactions. Online eID verification can reduce the need for customers to travel to distant locations to provide signatures. Whenever document verification can be done online, it can improve the overall level of efficiency.

However, to achieve this, banks and other financial institutions need to put security measures in place. Both the individual and their bank would have to start with an online identification process to ensure that people are who they claim to be. This is where online document verification and European regulations such as eIDAS come into play.

What is eIDV?

eIDV (electronic identity verification) uses publically available data and private databases to verify documents for verifying a person’s claim to whom they say they are. eID verification utilizes personal information like name, DOB, Social Security Number, and address among other types of data. The result of an eID verification could result in the person claiming who they are, a partial match of identity, or a fake or stolen identity.

eID verification is used by banks, brokerage firms, credit card companies, lending, money transfer, and mortgage companies to minimize the risk of financial fraud, and comply with KYC, AML, and CFT regulations. Other sectors that use electronic document verification are:

  • Insurance companies
  • Governments
  • Online gaming 
  • Lawyers
  • Employers
  • Job recruiters 
  • Real estate agents

Use of eIDV in Financial Institutions

Electronic identity verification matches the data that is offered by users to banks and other financial institutions. This information can include name, date of birth, address, and Social Security Number against multiple databases available online.

  • Personal documents can be used as a source of document verification. These documents can be driver’s licenses, passports, birth certificates, and citizenship certificates.
  • Several databases can be used for eID verification such as public and proprietary, credit bureau data, government databases, etc.
  • Data that can be used as a source of verification by financial institutions can include address, postal data, property ownership data, credit bureau data, utility data, government data, etc.

Advantages of eID Verification

There is a certain cost associated with verifying the identity of a person, but it can be much less expensive in the long run to avoid the risk of doing business with individuals who use fake and stolen documents.

eID verification can detect fraud by verifying the passport provided by a customer to verify if a customer is real or not. eIDV can also be used to verify the identities of potential customers and if they are on the international watchlist, politically exposed people list, or on some other lists that can make them a potential risk for banks and other financial institutions.

Electronic identity verification can not only be used to verify documents and customer identities but can also be used to stay up to date with your existing customers. Businesses pay more money for eID verification services that can cross-check databases to authenticate documents and identity.

Why Should Financial Institutions Switch to eIDV?

Electronic identity verification services come with a lot of benefits. Banks, financial institutions, and FinTechs used to spend a lot of time and money verifying identities and documents using manual methods.

With the rise of technology, financial institutions can step away from the collection of POI (Proof of Identity) documents. They can instead conduct this using electronic identity verification by cross-checking information provided by customers during the onboarding process.

eIDV for a Speedy and Secure Customer Onboarding

Using eIDV will improve the customer onboarding process by gathering all the relevant information. The success of electronic identity verification solely relies on cross-checking the data from all available public, private, or government databases.

All the information must match up properly, for example, the name on the customer’s credit card should meet with other documents and the address provided. This improves data security and saves banks and financial institutions from fraudulent applications. To do this ideally, banks and other financial institutions need to have access to billions of data records globally. There are technologies out there that can provide secure eID verification online all while complying with KYC and AML regulations.

How DIRO’s Technology Can Improve the Customer Onboarding Process?

DIRO document verification technology can be used by banks, financial institutions, and FinTechs to verify documents of any kind. DIRO’s technology can capture original documents from the original web source and it can be used to prove whether a document is authentic or not.

Banks, financial institutions, and Fintechs can with user permission access all banks, utility company data, government databases, and private databases and cross-check documents with automated user consent and strong impersonation checks. Using DIRO’s document verification technology, users can access all:

  • Online utility companies for verifying proof of address.
  • Verify personal Online bank data.
  • Online insurance companies to verify coverage.
  • Online government portals for proof of income, tax returns, and more.
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Types of Bank Account Verification Methods & How DIRO Facilitates Account Verification?

types of bank account verification

Verifying a bank account is one of the most crucial parts of minimizing the risks of fraud and scams for a bank, financial organization, or FinTechs. With the technology growing at an incredible pace, ACH transactions are at an all-time high. Bank account verification is crucial during online funds transfers commonly known as ACH transactions as it ensures where the funds are coming from and if they are associated with any malicious activities. 

Many businesses are offering online payments in alternative to payment methods such as credit cards and paper checks. Finding an ideal method of bank verification can be suitable for users as it improves user experience. 

Using the right methods of bank verification will allow you to mitigate the risks of fraud and scams.

Reliable Bank Account Verification Methods

Banks, financial organizations, and other FinTechs need to employ the methods for bank account verification if they intend to keep their brand reputation intact. Here are the best bank account verification methods to keep an eye out for.

1. Use Micro Deposits Verification

Micro-deposits are deposits of less than ten cents transferred from one financial institution to another that can help in verifying if a specific account type is valid or not. If a bank does not offer the feature of online banking or if the users can’t remember their credentials even then they can make micro-deposits for account verification as it is a self-contained process. 

When using micro-deposit verifications, the user will fill in their bank account and routing information. Two small credits are sent to the customer’s account that will be reflected in 1-5 business days. These amounts will confirm that the user can access their own account. 

2. Instant Account Verification Service (IAV)

The fastest method of bank account verification is by using the instant account verification service from the bank itself. Using instant account verification can even improve your overall user experience. With IAV, a user is asked to choose their bank and submit their online banking credentials to verify the account. In just mere seconds, the bank account is verified and the users can start with their banking features.

3. Third-Party Bank Verification Methods

A check verification service or a third-party bank verification service provides businesses, individuals, or other financial institutions with the ability to check the validity of the account. 

Third-party bank account verification can be done using multiple methods such as checking different databases with negative account history, checking to route and account number is valid or not, orax contacting the bank directly to confirm the information.

How does DIRO Improve the Account Verification Process?

DIRO’s technology captures original documents from any web source online. Using DIRO’s technology, users can verify bank account documents (any kind of documents) that can assist banks & FinTechs in verifying bank accounts and reduce the risk of frauds and scams. 

All types of bank account verification can be done in seconds using DIRO bank account verification technology. Even the best bank account verification methods can often fail to verify cleverly fabricated bank documents. DIRO verifies the documents against the original web source to reduce the risk of financial crime.