Category: Identity

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Understanding Artificial Intelligence & Identity Fraud Solutions

artificial intelligence verification

In December 2020, 4iQ discovered a single file with the personal data of over 1.4 billion people which is the largest database found to date on the dark web. What was even scarier was that none of the passwords were encrypted and the passwords that were tested turned out to be authentic. This is a major issue for all of us. A recent report published by a cyber-security firm stated that almost 80-90% of the people that log in to a retailer’s e-commerce site are hackers stealing PII (personally identifiable information). Unsurprisingly, cybercriminals use techniques that have the least resistance and they simply buy the stolen credentials from data breaches from the dark web to create fake accounts and access internal systems. And obviously, passwords alone aren’t enough. 

Unfortunately, traditional methods of verification such as knowledge-based authentication (KBA) and two-factor authentication/ multi-factor authentication, aren’t enough to keep fraudsters aware of internal systems. Fortunately, the latest AI-based technologies tend to be efficient when it comes to online identity verification.

AI and Online Identity: A New Era

How is it possible for modern companies to evolve beyond usernames and passwords? When verifying identity matters the most (home rental, creating new bank accounts, funds transfer), companies have to add a layer of real-world ID/identity verification to ensure that the person using the username and password is the same person to whom the account belongs to. This is where artificial intelligence comes into play.

Machine learning solutions and deep learning algorithms are slowly changing the industry trends where ID verification delivers a smooth experience that doesn’t compromise a positive customer experience for security. These technologies are being utilized for online ID verification to protect your consumers and businesses against fraud and account takeover.

Artificial intelligence, machine learning, and deep learning solutions are extremely efficient in distinguishing between real and fake documents used by fraudsters. With the growth of technology, it is easy for fraudsters to build fraudulent documents including driver’s licenses, proof of address documents, passports, and so on. These documents are scanned to onboard customers during account opening. AI and Machine Learning solutions can detect even the smallest of discrepancies in the documents, including the presence of genuine microprint text and other features, these solutions can even link the individual to an ID document.

Machine learning creates a more efficient and accurate process compared to relying on an untrained eye to examine and verify an ID document. Over the last four years, there have been hundreds of ID solutions popping out that help in simplifying the overall customer onboarding and verification process.

As customer IDs are physical documents, they tend to face wear and tear and they may even contain manufacturing defects. Plus, the way those documents (driver’s licenses, passports, and ID cards) are captured also possess a challenge while verifying customers. In most cases, the cameras in smartphones and laptops fail to provide the ideal quality for AI-based solutions to read the details on ID documents. In other cases, the user takes blurry photos or clicks a photo in insufficient light. In these cases, which happens more often, the best machine learning solutions are tried and tested.

Solutions Apart from AI-Based Solutions

AI, Machine learning, or deep learning-based solutions are only as good as the algorithms and the data that is fed to them. In case the data is bad, the solutions won’t be able to find out the errors in the documents.

Other solutions help in simplifying the document verification process for KYC and AML compliance. DIRO online document verification software can help in instantly verifying documents by cross-referencing them with private and government sources. DIRO online document verification software can help banks, financial institutions, crypto, and other businesses to easily comply with regulations. The technology helps in eliminating screen scraping, and other tedious tasks from customer onboarding.

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eID Verification Process and Client Onboarding for Financial Institutions

eid verification

eID verification offers endless benefits for financial institutions, but the biggest thing it helps with is eliminating the risk of financial fraud. To streamline the transactions, customer verification, and client onboarding, eIDAS is vital.

It is almost impossible for individuals or business owners to get time out of their schedule to go to banks and financial institutions to open a new bank account or conduct any other kind of banking activity. The hours that banks operate under are not convenient for most and it is tough to go to the bank every other day to sign new documents for mortgages, vehicle loans, or to finance important capital purchases for their businesses.

While limited banking hours can be frustrating, it can also be frustrating for banks as it can disrupt the efficiency of the workflow of financial institutions. Various work processes are delayed while waiting for documentation to be completed.

Having to wait can be extremely costly for banks and financial institutions that are there to make money. This situation has gotten particularly worse since the pandemic, that is why having a fully digital system can be beneficial for banks and other financial institutions. Financial institutions that deal in cross-border transactions especially need to have digital solutions. It is vital that FIs also use electronic ID verification solutions that can help them verify who their customers claim to be. This is where the need for eIDAS becomes more than crucial.

What Is Required for eIDAS?

All the members of the EU are required to follow the guidelines of regulations regarding cross-border transactions. This regulation outlines the legal requirements and standards for procedures used to assure online identification by using several techniques. Section 2.1.2 of eIDAS states all the requirements for “Identity Proofing and Verification (natural person)” as it is applied to three levels of assurance.

  • Assurance level low
  • Assurance level substantial
  • Assurance level high

Bridging the Gap Between eIDAS and AML-Directives

Apart from complying with eIDAS to confirm the identity of their customers, FIs also have to comply with the European Commission’s regulations to tackle threats of money laundering and terror funding. Since the 4th Anti-Money Laundering directive, electronic documents qualify as valid documents for customer authentication and verification. With online document verification software, banks can comply with KYC and AML regulations much faster. This helps save time for both organizations and the customers during the onboarding process. Before the standardization of online documents for customer verification, manual verification, and onboarding used to take up to 2 weeks. 

eIDAS allows for cross-border validity e-identification, thus allowing banks and financial institutions to sell their products and services across nations within the EU.

A Simple Onboarding Workflow

The process of onboarding a new customer and verifying their identity is simple and can be accomplished by using any device capable of internet connectivity. 

  • First, the customer initiates the enrollment procedure using the bank’s website.
  • Then the customer sends information that contains minimal data, including Current first and last name, DOB, and unique identifier.
  • To reduce the risk of fraud, customers may be required to provide additional data including first and family name, place of birth, current address, and gender.
  • To complete due diligence checks, banks, and financial institutions may require additional data according to CDD/KYC rules.
  • If the information is verified during eIDAS, the customer is enrolled, if it isn’t verified banks may consider the person to be illegal, and additional actions may be taken by the financial institutions. 

How DIRO Can Assist in eID Verification?

DIRO’s online document verification software helps banks and financial institutions distinguish between fake, stolen, and authentic documents during the onboarding process. DIRO can help authenticate proof of address documents, online bank account verification and so much more. 

DIRO’s technology can verify over 7,000 document types from all over the globe and provides stronger proof of authentication backed by verifiable credentials. With DIRO, banks, and finance can enhance the customer onboarding and eID verification process.

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Improving Identity Verification Process for the Digital Age

identity verification process

As all of our transactions and other banking activities have moved to a digital space, the need for tighter and more secure ID verification increases. Regulatory bodies worldwide keep pushing the financial industry to adhere to AML and KYC laws more strictly. To ensure security, good customer experience, and proper compliance, firms have to expand their customer verification process. The right steps for ID verification require companies to use digital solutions that get the job done with ease. Innovative solutions and vigilance can ensure less fraud and better compliance. Here’s how an innovative global identity verification process can meet up the needs of the digital era.

Improving Customer Trust

The rush to transform traditional systems into digital systems in 2020 was because of the global pandemic. Across various industries, firms acted as quickly as possible to keep their business operations running. For consumers worldwide, this sudden shift to digital platforms came with some concerns. While 40% of consumers globally are concerned about the safety of their personal information, 60% of consumers prefer convenience over security. To successfully adopt digital measures, companies need to assure their customers that their information is safe from outsiders and insiders. Being able to establish trust leads to improved brand loyalty. 

Providing companies with their personal information is usually a huge step for customers as the cases of data breaches are on the rise. However, in this rapidly changing environment, it is vital for customers to share personal information to use a service. With a certain degree of friction to the customer identification process, companies can build a sense of security in the minds of the customers.

There are some steps that firms all over the globe can take to ensure better security. Solutions like multi-factor authentication and cross-referencing of data can improve the customer experience while reducing the risk of fraud.

Global ID Verification

According to a variety of surveys, it was reported that more than 1 billion people across the globe don’t have solid proof of identity. This lack of information can cause friction in almost everything they want to accomplish. Financial freedom, business ownership, and even simple things like opening a new account can be a hindrance. 

Innovative technological solutions like the use of alternative data can help firms bypass this barrier. This also improves the global identity verification process.

Companies that have to comply with ID verification on every application can make their identity verification process more robust with alternative data solutions. Regardless of the industry type and business size, companies can utilize another layer of data to verify customers. 

Different Needs for Different Businesses

The identity verification process is fickle, regulations are always changing. Different technological solutions are suitable for different organizations. There are a number of techniques to verify customer ID and businesses need to figure out which one suits them the most.

Online document verification, biometrics verification, online ID verification are some techniques used during customer onboarding.

Can Alternative Data Support the Global ID Verification Process?

Digitization is something that’s been a point of focus for most industries for years. Small companies, big organizations, and companies spread over multiple countries need a comprehensive ID verification process. 

Using alternative data does provide an extra layer of information during the customer onboarding process. However, solutions like DIRO online document verification API provides instant customer document verification that improves customer experience, reduces fraud and eliminates the use of stolen/fake documents.

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Identity Theft and Cybercrime: Key Statistics & Facts

cybercrime facts and statistics

Identity theft is without a doubt one of the biggest concerns for consumers. Fraudsters develop and employ new technologies that assist them. Research conducted by the Javelin Strategy & Research in 2019 showed the number of victims of identity fraud fell down to 14.4 million in 2018 as opposed to a staggering figure of 16.7 Million victims in 2017. 

While the figures were lower, the financial impact of 2018’s cases of identity theft is higher. The cases of identity theft and the victim’s fraud cost reached an astonishing $1.7 billion. Slowly, the trend of fraud committed using stolen identities changed. The number of new account frauds started rising as they targeted financial accounts such as retirement accounts, checking accounts, or new accounts. With the implementation of newer technologies and sophisticated methods, fraudsters stay one step ahead of the authentication and identity verification procedures.

With the rise of digital banking, one of the most preferred target areas for identity thieves is mobile banking. The cases of mobile banking takeover reached 680,000 in 2018, which is almost double the number of cases in 2017 (380,000 cases). The use of electronic chip debit and credit cards is reducing fraud year by year. To put that in context, the credit/debit card identity theft’s financial toll 2017 was $16.8 Billion in 2017, which came down to $14.7 billion in 2018.

Identity Theft and Fraud Statistics and Reports

The Federal Trade Commission (FTC) tracks and maintains a record of all the complaints of fraud and identity theft. These records consist of complaints filed to local law enforcement, state authorities, federal authorities, or even private agencies. 

Monitoring and maintaining records helps in understanding the growth or decline in types of frauds and fraud trends. In 2020, FTC received 4.8 million identity theft and fraud reports. The number grew from the total reports of 3.3 million in 2019, the rise in numbers consisted of identity theft reports. 

In 2020, FTC received 1.4 million reports of identity theft as opposed to 651,000 reports in 2019. According to the FTC, 29% of all complaints received by the FTC are for identity theft. About 2.2 million complaints were fraud-related and the remaining complaints out of 4.8 million complaints were miscellaneous. 

Out of all the 4.8 million reports in 2020, the reports for identity theft were the single largest fraud type based on category. The federal stimulus payments program launched by the government in the wake of the Covid-19 pandemic was one of the preferred target areas for criminals. The next biggest type of identity theft was “new credit card account” fraud. The second worst type of identity theft fraud according to FTC was impostor scams with almost half a million reports. 

Out of the 2.2 million fraud-related cases, 34% of reports consisted of financial harm. In 2020, customers reported a total financial loss of around $3.3 Billion which grew from $1.5 Billion in 2019.

Identity Theft Report: 2020

In the last five years, the figures surrounding a variety of frauds have been growing constantly, regardless of the counter strategies implemented by government and private sectors. Here are the top 5 types of identity theft.

Types of Identity TheftNumber of ComplaintsPercentage of Total Fraud
Government benefits applied or received394,32432.0%
Credit card fraud-new account365,59729.7%
Miscellaneous ID theft281,43422.9%
Business/personal loan99,6678.1%
Tax fraud89,3917.3%
Total Figures1,230,413100%

What Is Cybercrime?

As businesses switch to electronic data management and remote working for their day-to-day operations, millions of rows of data are being stored online. This can lead to certain privacy risks, and cause huge financial losses to both businesses and the consumer in case a data breach happens. 

Cybercrimes like extreme data breaches still remain a huge risk for businesses. In January 2021, more than 250 million Microsoft customer details were left unprotected online. In March 2021, the U.S. cybersecurity department launched a set of guidelines that all organizations across all industries should follow in regard to Microsoft’s server weak points. A prediction states that more than 30,000 US-based organizations will be affected if the guidelines are not followed.

Similarly, a breach at Marriott Hotels in 2020 led to the exposure of more than 5 million customer data. MGM Resorts’ data breach in February 2020 exposed the personal information of more than 10 million customers. By the end of 2020, cybercriminals had breached more than 18,000 government agencies using new and undetectable technologies. The government agency breach went on for months without detection until the software program used by government agencies was updated. The information targeted during that breach was confidential corporate information instead of customer data.

One of the most significant data breaches of the last 5 years happened with Equifax Inc. The organization suffered a breach that exposed financial data and social security numbers of more than 145 million people. According to the reports, it was one of the worst breaches as a lot of sensitive data was exposed and stolen. 

Despite all the countermeasures, the cost associated with cybercrimes is rising annually. A joint report by McAfee and the Center for Strategic and International Studies (CSIS) estimated the annual cost of cybercrime to the global economy is $445 Billion per year. 

The average cost of data breaches globally in 2018 was $13 million, which rose from $11.7 million in 2017. To tackle the slowly growing costs, cyber insurance is necessary. Cyber insurance became a mainstream product in the United States in the late 1990s. In 2017, 505 insurers wrote cyber insurance and 545 cyber insurance providers in 2018. Direct premiums from this insurance reached a total of $2 billion from companies that can report premiums for stand-alone and coverage provided as part of the whole insurance package. The same figure in 2017 was just $1.86 billion, this goes to show that more and more people are becoming aware of cybercrimes and insuring themselves against them.

Cybercrime Reports: State and Insurance Premiums Based

As mentioned, the scale of cybercrime is heading upwards annually, resulting in more losses each year. Here’s a proper breakdown of the statistics.

Top 10 States with Cybercrime Victims 2020

StateCybercrime Victims
California69,541
Florida53,793
Texas38,640
New York34,505
Illinois20,185
Pennsylvania18,636
Washington17,229
Nevada16,110
New Jersey14,829
Maryland14,804

Top 10 States with Cybercrime Losses 2020

StateLosses (Millions)
California$621.5
New York$415.8
Texas$313.6
Florida$295.0
Ohio$170.2
Illinois$150.5
Missouri$115.9
Pennsylvania$108.7
Virginia$101.7
Colorado$100.7
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KYC: How Does KYC Complement ID Verification Process?

id verification process

It is crucial for businesses to know their employees and it is even more crucial to know who their customers and clients are. KYC (Know-Your-Customer) is a vital regulation component for any business to reduce fraud. It is a process that helps to identify and verify customers and who they claim to be. 

Especially for organizations that offer their services worldwide and the number of fraud is ever increasing. To mitigate fraud and improve the customer onboarding process, Know Your Customer becomes an important parameter. Out of all online types of fraud, identity fraud is the most common type of fraud. In 2020 itself, FTC received over 150,000 complaints of identity fraud. The number is huge and is on a constant rise, but with the implementation of strict KYC regulations, this can be taken into control. Now that everything is becoming digital, organizations need to rely on online KYC solutions.

KYC Solutions in the Modern Economy

Regardless of the industry type, KYC compliance is essential. The utilization of effective KYC solutions can assist in verifying whether the claims made by customers or clients are legit or not. Verifying the identity of customers is the foundation of all positive and successful business relations. 

KYC compliance helps businesses tackle customer risk, thereby companies can save themselves from potential fraud that can lead to hundreds and thousands of dollars worth of fraud. It also helps in complying with anti-money laundering policies. Moreover, it also helps in maintaining a positive brand image, a better brand image leads to a better user experience. Constant fraud and bad debt records can damage an organization’s reputation. 

KYC compliances are essential for financial institutions, as they can be employed before any kind of lending or online transactions. If we talk about mortgage lending etc, then KYC solutions can help the lenders learn new information about the customer’s job and his/her ability to pay off the loan.

Need for Partnering With Professionals for KYC Solutions

To reduce fraud, financial industries need to tie up with third-party KYC solution providers. It also helps to make sure that companies don’t compromise the safety and security of their business. Third-party KYC solutions providers have ideal solutions that individuals and businesses can employ to comply with the KYC solutions. 

KYC solutions all over the globe utilize national government-issued IDs, advanced technologies, and solutions to scan through and analyze large chunks of data. In the case of B2B services, companies have to ensure that the businesses they are dealing with don’t have a known history of money laundering. Documents provided by customers during the time of onboarding are cross-checked with a variety of databases like government and private databases. 

How does DIRO’s Solution help in Online KYC Compliance?

DIRO’s online document verification API verifies online documents instantly. The technology captures original documents online directly from the source. Verifying online documents using DIRO’s solution is much more secure than sharing and verifying original copies in person and uploading copies of documents online. 

It can help in KYC compliance, reduce onboarding friction, and improve a positive customer experience. The technology can access all banks, utility companies, and government portals with automated user consent and multi-factor impersonation checks.

The utilization of an online document solution from DIRO ensures 100% proof of authentication and the output is a court-admissible document with forensic data. KYC compliance for the financial industry can be completed easily using DIRO’s unique online document verification technology. 

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5 Trends that Ensure Digital Identity Verification is Crucial in Digital Age

digital identity verification trends

Organizations have been making their switch to digital services for a long time, the pandemic brought a drastic change in the trend. One common change is how we access our financial services online. As most people are looking forward to returning their lives to the pre-pandemic era, digital channels and services are necessary. It is evident that the financial services industry and consumers and businesses alike must now open bank accounts, apply for loans and make payments using online and banking channels.

To make the remote banking processes successful, banks and financial industries need a high level of trust between digital services and consumers. Banks interacting with new and old customers need to verify who the customers are they are in a relationship. Financial industries need to follow through with the KYC (Know-Your-Customer) processes. The compliance has to be met with the local regulations and financial industry’s regulations. KYC verification is the process of verifying an individual’s identity online or in real-time during the customer onboarding process. Here are some of the most common digital identity verification trends that show that digital ID verification is vital in the digital age.

Trend 1: Digital ID Verification Offers Incredible Incentives

Since the rise of technology, Identity verification has always been a key focus for businesses that need to comply with KYC regulations and reduces the risk of application fraud. Typically, ID verification happens when a customer offers a valid ID document during the onboarding process. To complete the remote onboarding process, financial institutions have switched to digital ID verification to enable them to complete the onboarding process securely. It is the first digital identity verification trend that enables online ID verification. 

Since the pandemic hit the world, the investments made in digital account opening have doubled globally. So the desire to digitize has always existed, though strict changes had never been made. 

While the basic needs for digitization remain the same, financial institutions now have a much higher need for digital services. Before the pandemic, a lot of Financial Institutions had partially designed digital ID verification methods.

Trend 2: Enabling Digital Identity Verification Requires Secure and Compliance Regulations

Financial services customers have to be able to open an account or access their banking services, but they also want to feel reassured that they have an ideal level of security to protect customer data. Any service that banks and financial institutions choose will have to ensure the solutions contain security, anti-fraud, data privacy, and compliance requirements. 

When choosing the Digital ID verification solutions, the following requirements have to be met:

  • Cross channel ID verification 
  • Does the solution support document ID in countries, states, and provinces that you want to target.
  • Quality Assurance and Due Diligence.
  • Elimination of paper processes and manual verification.
  • Infrastructure, device, and app security

Not all digital ID verification methods are built equal, and different solutions offer different verification results. Solutions like DIRO’s online document verification verifies online documents instantly for verifying customer data. This reduces friction and improves customer onboarding processes. 

Trend 3: Financial Institutions with Already Enabled Digital ID Offers Better Experience

It is obvious that financial institutions that already have perfect digital ID verification solutions are set up to provide a seamless remote customer onboarding process.

Banks and financial institutions that have a proper digital onboarding channel will definitely onboard more customers as opposed to institutions that don’t have the right digital ID solutions. Banks and other institutions need to pick up the pace to set up ideal solutions in place. Covid-19 has exposed the shortcomings of digital banking services and it has created an urgent need for them to put the right solutions in place. 

Trend 4: Digital Identities Will Become More Common In Various Industries

Not just financial institutions, but other industries also need to verify identities. Governments and healthcare providers are trying hard to set up digital identity solutions to reduce the rate of fraud. In the US, The Coronavirus Aid, Relief, and Economic Security Act allocated $349B in aid to small businesses as a part of the Paycheck protection program. It utilized e-signature technology, which enabled its clients to access relief funds easily and securely while protecting the lenders from fraud. 

In the digital age, there is a constant need for individuals and businesses to access crucial financial relief quickly and without the need for face-to-face interactions. Governments and healthcare institutions are expected to set up solutions that can support the needs of the customers. 

Trend 5: The Pandemic Has Seen a Dramatic Rise in Volume of Online Transactions

Since most people have switched to online services after the pandemic, there has been a huge rise in the overall volume of online and cashless transactions. A variety of fraudsters are taking advantage of the chaos and lack of ideal security solutions for increasing the number of frauds. 

There are reports that in the unsecured lending space, both banks and FinTechs lenders saw a huge surge in lending fraud when Covid-19 was declared a pandemic. Almost all kinds of frauds were done as first-party application fraud, third-party application fraud, and synthetic ID fraud. Financial institutions onboarding remote customers need to be vigilant in their onboarding and online ID verification methods. This is needed to reduce phishing scams and fake websites. This is the last digital identity verification trend that suggests the need for digital ID verification.

Conclusion: Digital Identity Verification Trends

The rules and customer behaviors have changed over time. Companies that can fully digitize their account opening, loan application, and financial product sign-up processes are sure to improve the customer base and a frictionless customer onboarding process. As fraud attacks are ever-increasing, there is a high need of establishing trust between remote consumers and financial institutions becoming more important.

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International Client Verification: Verifying Customer Identity Online

international customer onboarding

The growth of digital banking platforms and online solutions is the key for businesses to grow by onboarding international customers. Remote international client onboarding costs businesses the most time and causes the most problems. Banks that extend their services outside of their domestic region, tend to lack the resources for verifying customer data. Complicated KYC and due diligence processes with tough technological solutions lead to an increased customer drop-off rate. 

Even if a customer wants to sign up with an international bank, financial institution, or any other industry, a complicated onboarding process is never worth their time. To complete the process, organizations need to employ seamless online ID and document verification solutions. There’s no way to manually verify international customer data, online document verification is the key to online document verification.

Accurate international addresses and document verification help reduce the cost of manual verification of data. Being able to verify international data means lower costs and an improved rate of customer onboarding. Using technological solutions like DIRO, banks, financial institutions, and other industries can verify customer data in an instant while reducing friction.

Why Is International Customer Verification Needed?

A business can quickly expand its business reach by building strong KYC techniques and strategies. Employing efficient online customer verification solutions can improve the international customer onboarding experience.

According to surveys and reports, 1 out of every 10 customers drops out of the onboarding process because of an overly complex process, distrust in the process, or just poor customer experience. Some businesses don’t even try to venture into unidentified markets because of their lack of ideal solutions. 

To broaden the customer base and improve the brand reputation, it is vital for brands to onboard customers internationally. It is not possible to do so without the use of a proper online identity verification solution.

Benefits of Online Document Verification

  1. Lower Friction

DIRO online document verification solution can be integrated with your website, the user can be asked for ID Information right there. It can provide instant results for verified documents. This means, no friction, no hold-up time, and little to no burden for the users. 

  1. Reduce Administrative Overhead

Having your team manually request and process ID documents is a time-consuming process. This manual process can be bypassed if documents can be verified in an instant using the business website. Manual document verification, however, requires too much friction and can lead to errors as some documents may be too sophisticated to distinguish by the human eye. 

  1. Improve Security of Customer Onboarding

Using physical documents or online copies of a document can open your business to the risk of fraud. Most documents that are used for verification are unencrypted and can be seen by others. DIRO’s document verification technology is backed by multi-factor authentication and strong impersonation checks that can reduce fraud.

How Does DIRO Enhance International Customer Onboarding Experience?

Even after the best technological solutions, verifying international customers during onboarding is incredibly tricky. There are a variety of factors that can cause friction during international customer onboarding.

By employing DIRO’s customer onboarding technology, businesses can verify online documents in an instant. DIRO can verify 5000+ types of documents from all over the globe. The technology provides 100% proof of authentication on verified documents. The proof of authentication can be used as a court-admissible document with forensic data.

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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 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.