Common Challenges with Video Chat Identity Verification

Video chat identity verification has become an increasingly popular method for online identity verification. Businesses from all over the world use video calls to verify the identities of consumers before onboarding them.

Video chat ID verification is a convenient way to confirm someone’s identity by comparing their face to a government ID. But while it has advantages, this method also faces some significant challenges.

In this guide, I’ll be walking you through all the said challenges of video chat identity verification. 

What is Video Chat ID Verification?

Video chat identity verification as the name suggests is verifying identities via video. Before you can sign up and use a platform, companies may require users to verify their identities on a video chat.

Generally, the process goes something like this. You’re required to get on a chat with an ID verification agent and present your identity documents. Once verified, you’ll be allowed to use the platform unless there are any other steps in the onboarding process. 

Challenges with Video Chat Identity Verification

Here are all the challenges businesses face when it comes to video chat verification. 

  1. Finding a Balance Between Security and Convenience

As mentioned above, verifying identities via video chat is super convenient for businesses that want to verify identities across the globe. 

Unfortunately, this process can sometimes lead to poor customer experience during customer onboarding. Too lax verification processes can be easily spoofed by fraudsters using deepfakes or stolen IDs. Conversely, overly stringent procedures with excessive questioning or document checks can frustrate legitimate users and lead to drop-off during onboarding.

  1. Technological Limitations

Another challenge with the video chat identity verification process is that it comes with a range of technological limitations. While convenient, video chat isn’t sophisticated enough to fight off fraudulent attacks.

Video chats themselves have limitations. Poor lighting, camera quality, and even user posture can affect the accuracy of facial recognition software. Liveness checks, which aim to ensure a real person is behind the camera, can also be bypassed by sophisticated techniques. Ultimately making video chat ID verification a poor method for verifying & onboarding consumers.

  1. Data Privacy Concerns

Verifying identities on video chat also raises concerns about how data is handled. Collecting and storing personal information like government IDs raises data privacy concerns. Businesses need to comply with regulations like GDPR and CCPA dictate how this data is handled. Not only that, companies also need to comply with regulations while maintaining effective verification measures.

  1. Global Consistency

The effectiveness of video chat verification can vary depending on the region. Government-issued IDs differ significantly across countries, and some areas may lack reliable databases to verify the information presented. Just having a customer hold up their identity document on the video chat isn’t enough for onboarding them. 

Moving Forward: Secure and Seamless Verification

Despite these challenges, video chat verification can still be a valuable tool. Here are some ways to improve its effectiveness:

  • Leveraging AI: Advanced facial recognition algorithms with liveness detection can improve accuracy and reduce fraud.
  • Multi-factor Authentication: Combining video chat with document verification and knowledge-based authentication strengthens the process.
  • Prioritizing User Experience: A streamlined and intuitive verification flow with clear instructions creates a positive user experience.
  • Transparency and Compliance: Clear communication regarding data collection and usage builds trust and adheres to data privacy regulations.

Summing Up

Video chat identity verification is super convenient for businesses that are spread globally. However, with the convenience, comes the challenges. By acknowledging the limitations and implementing best practices, video chat verification can evolve into a more secure and user-friendly solution for online identity proofing.


What is Mobile ID Verification?

In today’s digital landscape, mobile identity verification emerges as a cornerstone of security and convenience. As the world rapidly shifts towards online interactions, understanding what mobile ID verification is and how it works becomes paramount.

Embracing Mobile ID Verification

Mobile ID verification is a cutting-edge method that utilizes smartphones to confirm an individual’s identity. By harnessing the power of mobile technology, this process offers a seamless and efficient way to verify identities remotely. 

Whether it’s for accessing online services, completing financial transactions, or securing sensitive information, mobile identity verification stands at the forefront of modern authentication methods.

How Mobile ID Verification Works?

  1. Capture and Submission: The process begins with the user capturing an image of their government-issued ID using their smartphone camera. This image is then securely submitted to the verification platform.
  1. Document Analysis: Advanced algorithms analyze the submitted ID document to detect authenticity and ensure it meets the required standards. This includes checking for watermarks, holograms, and other security features.
  1. Facial Recognition: To further validate the user’s identity, facial recognition technology is employed. Users are prompted to take a selfie, which is then compared with the photo on their ID document.
  1. Biometric Matching: Sophisticated biometric algorithms compare facial features captured in the selfie with those on the ID document. This ensures a high level of accuracy in confirming the user’s identity.
  1. Verification Result: Based on the analysis of both the ID document and facial recognition, a verification result is generated. This result determines whether the user’s identity has been successfully verified.

Advantages of Mobile ID Verification

  • Convenience: Users can complete the verification process from anywhere, at any time, using their smartphones.
  • Security: Leveraging multiple layers of authentication, including document analysis and facial recognition, ensures robust identity verification.
  • Accessibility: Mobile ID verification eliminates the need for physical ID cards or tokens, making it accessible to individuals worldwide.

Frequently Asked Questions (FAQs)

  • Is mobile ID verification secure?

    Yes, mobile identity verification utilizes advanced encryption and biometric authentication, making it highly secure and reliable.

  • Can mobile ID verification be used for all types of identification documents?

    Mobile identity verification supports a wide range of government-issued IDs, including passports, driver’s licenses, and national IDs.

  • How long does the mobile ID verification process take?

    The duration of the verification process varies depending on several factors, including network speed and document complexity. However, in most cases, it can be completed within minutes.

  • What happens if facial recognition fails during the verification process?

    If facial recognition fails, users may be prompted to retake their selfie or provide additional documentation for further verification.

  • Is mobile identity verification compliant with data privacy regulations?

    Yes, reputable mobile ID verification providers adhere to strict data privacy regulations, ensuring that personal information is handled securely and in compliance with applicable laws.

Transitioning Towards a Digital Future

With the rise of digital transformation, mobile identity verification is poised to become the standard for identity authentication. Its seamless integration with smartphones offers unparalleled convenience and security in a rapidly evolving digital landscape. By embracing this innovative technology, businesses and individuals alike can unlock a world of possibilities while safeguarding against identity fraud and unauthorized access.

In conclusion, mobile ID verification represents a significant leap forward in authentication methods, offering a secure, convenient, and accessible solution for identity verification in an increasingly digital world. As technology continues to advance, embracing mobile identity verification will be essential in shaping a safer and more efficient online environment.


The Definitive Guide to Customer Re-Verification

In an era marked by increasing concerns about identity theft, fraud, and regulatory compliance, customer re-verification is becoming incredibly significant. Over time, reverification has become a key aspect of customer KYC and KYB practices. It helps businesses and customers maintain ongoing trust and security in business relationships. While re-verification is essential, it also poses multiple challenges for businesses.

In this comprehensive guide, we will explore everything you need to know about re-verification.

What is Re-Verification?

Re-verification, as the name suggests, is updating and verifying the information of existing customers. The re-verification process makes sure that the customer information a business has is current and accurate. 

Re-verification is essential in KYC programs and helps businesses understand the nature of the customers they’re dealing with. Updating customer information regularly makes it easy for businesses to align with regulatory requirements and uphold the integrity of business practices.

Re-verification is also crucial in fighting and preventing online identity fraud. Here are all the benefits of re-verification:

  • Prevents Identity Theft – Regularly verifying and updating customer information helps in preventing and fighting identity theft. The process helps businesses ensure that legit individuals are the owners of the account.
  • Compliance with Regulations – A number of industries have regulatory requirements for continuous identity verification. The reverification process helps businesses comply with these regulations.
  • Enhances Security – Re-verification adds another layer of security to the KYC process. It acts as a proactive measure that helps businesses identify and mitigate potential fraud.
  • Strengthen Customer-Business Relationships – Regular verification helps in maintaining trust between customers and businesses.

Essentially, re-verification ensures that the information businesses hold about their customers remains accurate and up-to-date over time.

Challenges of Re-Verifying Customers

The journey of re-verifying customers is fraught with challenges, primarily centered around ensuring the accuracy and comprehensiveness of information. Customer data may have undergone alterations, such as changes in contact details or personal circumstances, complicating the verification process. 

Moreover, the sheer volume of customer data that businesses manage can pose logistical challenges, requiring efficient systems and processes to navigate effectively. Additionally, there’s the challenge of striking a balance between thoroughness and customer experience – businesses must conduct rigorous checks while ensuring minimal disruption to their customers’ interactions.

Why is Re-Verification Important for Businesses?

Re-verification stands as a bulwark against the perils of fraud, money laundering, and identity theft, thereby safeguarding the interests of businesses and customers alike. By regularly updating customer information, businesses fortify their security measures and align with regulatory requisites.

Moreover, it fosters trust and confidence among customers, who feel reassured knowing that their information receives ongoing scrutiny and protection. Furthermore, re-verification aids businesses in maintaining accurate customer profiles, which in turn enables targeted marketing, personalized services, and enhanced customer relationship management.

Types of Re-Verification

  1. Periodic Re-Verification

This involves conducting routine reviews of customer data at predefined intervals, such as annually or biennially, to ensure its currency and accuracy. Periodic reverification helps businesses stay abreast of any changes in customer circumstances and ensures compliance with regulatory requirements.

  1. Trigger-Based ReVerification

Certain events, such as changes in address, significant transactions, or suspicious activities, may prompt businesses to undertake re-verification exercises to mitigate associated risks. Trigger-based reverification enables businesses to respond swiftly to potential red flags and safeguard against fraudulent activities.

  1. Enhanced Due Diligence

In scenarios where heightened risks are associated with specific customers or transactions, businesses may adopt more stringent verification protocols to uphold compliance and mitigate risks effectively. Enhanced due diligence typically involves thorough background checks, additional documentation requirements, and closer scrutiny of transactions.


In summary, re-verification is not merely a regulatory obligation but a crucial safeguard for businesses against fraud and compliance failures. By embracing reverification practices, businesses can maintain the integrity of their operations, foster trust among customers, and navigate regulatory landscapes with confidence.


  • How often should businesses conduct re-verification?

    The frequency of reverification may vary depending on factors such as regulatory requirements, risk assessment, and business policies. However, periodic reviews, typically conducted annually or biennially, are common practice to ensure the accuracy and currency of customer data.

  • What documents are required for re-verification?

    The documents required for re-verification may vary depending on jurisdiction and the type of customer. Generally, businesses may request government-issued identification documents, utility bills, or other proofs of address and identity to verify customer information.

  • What are the consequences of non-compliance with reverification requirements?

    Non-compliance with re-verification requirements can expose businesses to regulatory penalties, reputational damage, and increased risks of fraud and financial losses. It is imperative for businesses to adhere to reverification procedures to ensure compliance and maintain trust among customers.


Biometric Verification

Proving ourselves online has become a relatively recent problem. As the world becomes interconnected, it becomes harder to distinguish between legit users and people who imitate a legit user. Document verification and identity verification methods are essential when high-risk transactions are involved.

ID verification and other similar methods have become necessary for the identity-proofing process.

Several methods exist to verify our identity, including biometric data, faces, fingerprints, eyes, and voice.

What is Biometric Authentication?

Several biometric verification methods allow us to prove who is online. Biometric authentication is commonly used for device security, authenticating online transactions, immigration controls, and patient identification in healthcare.

All biometric recognition solutions use a comparison of the digital representation of a physical or behavioral feature with a previous template.

Biometric systems must operate on pre-determined recognition accuracy and meet the speed and organizational resource requirements.

Advantages of Biometric Verification

Using Biometric verification is different from relying on third-party verification solutions. That doesn’t make biometric authentication inferior to other solutions.

Here are the advantages of Biometric authentication:

1. Fast and Convenient

Some types of biometric authentication are faster than others. Almost all verification can be done within seconds. Biometric verification is a convenient and secure method for protecting against ID fraud.

Biometric authentication is enough and doesn’t require PINs, passwords, KBAs, or other responses. Eliminating the need for remembering passwords. The best part of biometric authentication is that there’s no need to carry credentials.

2. High-Level of Security

Unlike KBA, biometric authentication has no information that hackers can steal. Cyberattacks and data breaches don’t risk the stealing of biometric data. To have a chance at stealing biometric data, hackers have to target specific individuals.

To imitate an individual’s physical characteristics, fraudsters have to sophisticated circumvention of scanners or camera sensors in a biometric system. Stolen and impersonated biometric data can still be verified with liveness checks to ensure the person is legit.

3. Tough to Fake Genuine Presence

Biometric verification is trusted because it’s directly related to the genuine presence of the owner.

The US National Institute of Standards in Technology evaluates and ranks liveness detection technology to ensure that only the best is used. Combining biometric authentication with liveness checks makes biometric systems hard to imitate.

Disadvantages of Biometrics Authentication

It’s not all good when it comes to Biometrics authentication; the solution also has some drawbacks. Such as:

1. False Biometric Matches Can Happen

While it is rare, a false biometrics match can happen. It happens when the biometrics data of two individuals need clarification. Most of the time, it occurs in the case of two similar-looking siblings. If the biometrics data used is incorrectly recorded, then the chances of these mistakes happening increase dramatically.

To reduce the false approval rates in biometrics authentication systems, the system should be able to capture high-quality biometrics data. It should also be able to update biometrics reference data regularly to match with users.

2. Can Reject Legit Users

Instead of giving out false positives, biometrics authentication can reject a legit user. This can happen when a person’s biometric traits change (with age/due to some accident/weight gain or loss). Poor image capture can also cause result in false rejections.

To prevent this, ensure that systems’ sensors capture high-quality biometric samples and templates.

3. Biometrics Bias

Biometrics verification systems run on machine learning algorithms. In past studies, the US National Institute of Standards and Technology showcased that African-American and Asian people experienced 10-100 times higher FAR.

There should be special care to train these algorithms on all-inclusive data sets that don’t discriminate against races and demographics. The best authentication systems should follow ISO standards to ensure no discrimination or disadvantage for any group.

4. Secure and Smooth Digital Experience

Brands are built on trust and excellent customer relationships. A great digital experience and a safe experience matter to businesses and customers. ID verification systems must balance these out and adjust between security and convenience according to the organization’s needs.

Multi-biometrics systems can combine authentication checks against several biometrics features.

It makes sense to layer identity data verification checks to provide an ideal level of speed and security in biometrics authentication. Verify names, date of birth, and addresses alongside biometric verification to establish trust in a person’s identity.

General Verification

How DIRO is Changing the Online Document Verification Landscape?

The rise of digital banking services, ACH payment, and third-party payment providers has changed the face of banking. The needs of customers are an ever-changing concept and to facilitate those needs, the financial industry is trying to offer faster and more secure transactions. To enjoy the benefits that come along with digital banking transactions, banks need to provide better security.

Customers from all over the globe can sign up for digital banking services with strong customer Identity verification solutions. Online documents can help banks and other financial institutions verify customer identities seamlessly and offer security to digital banking procedures. The use of documents to verify customer identities before opening a new account is a very old process. Now that banking has shifted online, so has the document verification process. Verification of online documents is really important for secure digital banking operations. By verifying driver’s licenses, proof of address, utility bills, and proof of income, financial institutions can verify customer identities and reduce red flags.

The FinTech Industry is full of solutions that can offer online document verification. AI-driven document verification solutions aren’t 100% reliable. To bridge the gap between security and transparency, DIRO’s online document verification solution helps organizations achieve that. 

DIRO is an award-winning online document verification technology that captures information directly from the original web source to verify documents. The document it verifies holds a stronger proof of authenticity as opposed to sharing and verifying original copies in person or uploading copies online. Using DIRO’s technology can help you access all banks, utility companies, and government databases with automated user consent and a strong Multi-factor authentication impersonation check.

Some of the major features of DIRO’s online document solution are:

  • Can verify online documents globally.
  • 24/7 live coverage for online document verification.
  • Instant document verification at any time. 
  • 5000+ document types to verify from. 
  • Verified documents can be tamper-proof as documents are provided a Digital fingerprint and uploaded on the blockchain. 

Different Types of Document Verification Methods

The concept of verifying documents for opening a new bank account or signing up for new services is relatively new. There are two types of methods for verifying documents. In the past, banks used to rely on human resources for verifying documents which were slow, tedious, and error-prone.

Here’s a breakdown of types of document verification methods.

1. Manual Document Verification

Verifying customer documents like government-issued identity documents, address proof, income statements, insurance documents, etc. for account opening and signing up for other banking services. Manual document verification relies on human resources to check for details in the documents. Humans can be easily tricked with fake documents created using image doctoring software. 

A business can be easily tricked and harmed by fraudsters using sophisticated technological methods. For humans, there is no way to distinguish between original documents and doctored documents. Manual document verification methods are slow, insecure, and inefficient. 

  • Manual document verification methods are easy to trick.
  • Take up a lot of time and resources for limited results.
  • A slow process that leads to slow customer onboarding.
  • Hard to fulfill KYB & KYC compliance with manual methods.

2. Automatic Document Verification

To bridge all the gaps in manual document verification, automatic or online document verification solutions came into existence. With the right kind of technology banks, financial institutions, and FinTechs can easily verify documents for new account opening and signing up for new services. 

DIRO’s online document verification technology makes it easy for you to verify online documents like driver’s licenses, proof of address, utility bills, student documents, etc. It provides secure, reliable, instant document verification with 100% proof of authentication. The proof of authentication is a court-admissible document with forensic data.

  • Instant document verification for improved customer experience and customer onboarding.
  • Unlike manual verification, you can verify any type of online document globally.
  • 100% proof of authentication. 
  • Captures information directly from the original web source to distinguish between original and fake documents.
  • Provides a digital fingerprint for authentic documents and uploads documents on the blockchain.

What Makes DIRO Different From Competitors?

There are a variety of document verification solutions available in the market, but most of them rely on machine learning and artificial intelligence (AI). Online document verification solutions that are driven by AI aren’t as reliable as claimed. AI-driven document verification solutions can be tricked by fraudsters with a constant feed of false data. AI-based online document verification solutions verify documents by verifying document data. Fraudsters can feed an array of false data that can help to trick solutions into thinking that it’s the real document.

DIRO technology, on the other hand, verifies documents by capturing information directly from the web source. Here’s a comparison of DIRO’s online document verification solution and other verification solutions.

DIROBrand ABrand BBrand C
Instant document verification30-50 seconds for document verificationUp to 1 minute for document verificationUp to 1 minute for document verification 
5000+ types of documents for verification3000+ types of documents for verification3000+ types of documents for verification4500 types of documents for verification
100% proof of authentication No proof of authenticationNo proof of authenticationNo proof of authentication
Verified court-admissible documentsNo court admissible documentsNo court admissible documentsNo court admissible documents
Doesn’t require photos or screenshots for verifying documents. Requires images for document verification.Requires images for document verification.Requires images for document verification.

Conclusion: How DIRO’s Solution is Unique from Others?

Banks, financial institutions, and governments can’t trust photos or screenshots of customer documents as they can be easily doctored using technology. This is the reason why organizations need online document verification solutions that can verify documents instantly, improve the customer onboarding process, and reduce fraud.

DIRO allows customers to provide an original document from any online source like banks, government databases, or private databases for ID verification. DIRO’s innovative solution can be used across banking and other industries.


Understanding Ultimate Beneficial Owner (UBO) Verification

The Ultimate Beneficial Owner (UBO) is someone who owns or controls a business or owns a legal entity. Financial institutions are legally obligated to gather information on UBOs and the amount of risk that is associated with them. Financial businesses need to achieve regulatory compliance and enhance business security to handle risks that come along with UBOs.

Every jurisdiction is allowed to make up its own rules and regulations regarding UBO verification. Before onboarding a business, financial institutions need to verify company details, understand corporate structures, and verify UBO information.

Financial institutions need to verify UBO information to comply with Know Your Customer and Anti-Money Laundering Laws.

In this guide, we’ll be helping you learn UBO requirements and risks across the globe.

UBO Requirements EU

Financial institutions in the EU doing business with commercial entities have to verify UBOs. The AMLD4 regulation was the first-ever regulation that required businesses to verify UBO information. Member states in the EU are now passing new laws to push businesses on UBO verification.

Let’s take the example of Sweden. Swedish legislation requires businesses to report to the Swedish Companies Registration Office about UBOs.

Highlights of Swedish Legislation:

  • Swedish companies, companies that operate in Sweden, and people who administer trusts and other similar legal entities.
  • Defines a beneficial owner as anyone who controls the company directly or through agreements, or someone who has more than 25% ownership stake in the company.
  • Requires beneficial ownership change to be reported as soon as the entity is aware of the change.

While EU member states are allowed to come up with their legislation, they have to comply with 4AMLD. According to the 5th AML Directive, member states have to set up public registers for companies, trusts, and other legal entities. 

In the EU’s 6th AML Directive, there’s a build-up on the rule in AMLD 5. According to the rule, organizations working for these entities can be held criminally liable for not following the rules.

UBO Requirements U.S.A

USA’s FinCEN Customer Due Diligence final rule has a similar beneficial ownership disclosure.

Here’s what FinCEN’s rule guidance has to say “The CDD Rule outlines explicit customer due diligence requirements and imposes a new requirement for these financial institutions to identify and verify the identity of beneficial owners of legal entity customers, subject to certain exclusions and exemptions”.

According to FinCEN, financial institutions include:

  • Banks
  • Broker-dealers
  • Mutual funds
  • Futures commission merchants
  • Commodity brokers.

According to FinCEN, Ultimate Beneficial Owner is someone who owns more than 25% or more of any business/legal entity. Or they can be someone who controls, or manage the entity in any way.

Corporate Transparency Act dictates that “US companies have to report UBO’s full name, DOB, current residence or business address, and identifying number from a passport, or driver’s license to the FinCEN”.

There’s no “in-effect from” date released by FinCEN.

International UBO Standards

Other countries also have agreements that require businesses to collect and share UBO information. In 2003, the FATF set beneficial ownership standards, and in 2012, 198 jurisdictions agreed to stronger FATF standards.

In 2014, the G20 Brisbane Summit emphasized the importance of Ultimate Beneficial Owner transparency and why financial institutions should focus on UBO verification.

The declaration states “Countries should ensure that competent authorities (including law enforcement and prosecutorial authorities, supervisory authorities, tax authorities, and financial intelligence units) have timely access to adequate, accurate, and current information regarding the beneficial ownership of legal persons”.

A 2016 FATF report stated that out of 20 G20 members, only 2 had made substantial efforts to set up UBO requirements. FATF is promoting the use of technologies and procedures that speed the process and help businesses meet the requirements. 

Governments want to put tons of effort so they don’t seem lax when it comes to the war on corruption. Whether it is to collect more tax revenue, prevent terrorist financing, or prevent money laundering. More and more countries are setting up procedures to help businesses manage ownership due diligence.


New Account Verification Rules – What They Hold for Consumers and Financial Institutions

The payments industry is changing faster than ever. Consumers are welcoming a number of changes and adopting the latest technologies. Customers globally are moving towards an online payments landscape instead of relying on cash and checks. There are over 140 online payment methods available globally. The use of online payments is also giving a boost to the already growing eCommerce industry. 

While cash is still the primary method of transaction, soon there will be a drop in global cash usage. This can be credited to instant bank transfers and mobile wallet payments. Some of the market-leading mobile wallet apps are:

  • Google Pay
  • Apple Pay
  • Samsung Pay

Several other contactless payment methods are slowly changing the payments industry. So, it makes sense that the customer bank account verification methods need to change too.

Fraudsters Look for Weak Points

With the rise of digital payments, digital fraud is rising too. The Automated Clearing House is one of the most common targets for fraudsters all over the world. Fraud in the ACH channel is happening throughout global payments. Plus, there is a 40% increase in customers experiencing fraud events at some point in their lives.

ACH transactions are used widely throughout the USA because they are simple to use and affordable. Transaction fees on the ACH channels are lower than card fees and wire transfers. This is why the ACH channel is used all over the USA. This reliance is also attracting fraudsters of all kinds. 

The ACH payment process isn’t compromised. The fraudsters attack the processes that happen before the transaction. Most fraudsters try to get the payments into their accounts instead of the actual account.

These frauds happen with the help of fishing fraud, social engineering attacks, data breaches, and others. These attacks help fraudsters gain the information they need to steal customer identity data. Then, fraudsters can use this information for creating synthetic identities or to do account takeovers.

To protect customers, vendors, and institutions, better methods of account verification need to be employed.

New Account Verification Rules

NACHA, the ACH operating entity, is trying to bring about some changes in the industry. They’ve adopted a new rule that requires financial institutions to go beyond the old standard for providing security to online transactions. To combat account fraud, account validation is becoming a part of the process.

NACHA also stated that they understand the implementation of these rules will have impacts on booth payment originating institutions, and payment receiving institutions. This includes the increased cost as new tools will be needed to be implemented. If banks and financial institutions don’t have the right setup for account verification, they will need to rely on third-party verification software.

These compliance changes offer an opportunity to protect the payments and reduce the risk of fraud. It can also help in reducing non-sufficient fund payments, and user errors. If these new rules are implemented perfectly it can improve the user experience and also improve the brand reputation.

The best bank account verification software offers these results simply and seamlessly. Plus, it can stand tall in the customer’s expectations when doing online transactions. If the process is slow or frustrating, consumers often tend to switch over to some other service provider.

Financial institutions should always focus on improving customer experience while reducing the risk of fraud. It’s a tough path to walk on, but that’s what is expected. If a financial institution can provide a good onboarding experience, it can build a customer reputation.

Making sure that the customer keeps using the account after its opening requires account validation tools that verify data almost instantly. This allows customers to send and receive money with ease.

Bank Account Verification Solution by DIRO

Banks and financial institutions that don’t have any solutions of their own need to rely on third-party services. DIRO online bank account verification solution is the answer. It enables financial institutions to smoothen the customer onboarding process with instant bank account verification.

As the data is cross-verified directly from the issuing source, it also eliminates the use of fake and stolen customer data. Moreover, instant bank verification doesn’t hamper the customer experience, leading to better business-customer relationships.

General Verification

What is Signature Verification?

The widespread use of digital signatures has raised tons of questions. Most of these questions are related to user security. Numerous individuals and businesses see the benefit of transitioning from the traditional method of signing documents. The traditional method requires printing, scanning, hand-signing, and re-scanning of the documents and they are a huge security threat. Overall, they’re unsure how the digital signature verification process works.

The solution is to remove the mystery regarding the digital signature verification process.

How do Digital Signatures Work?

The terms digital signature and electronic signature are often used interchangeably, but they are very different from each other. The first point is understanding the difference between electronic and digital signatures. Digital signatures are a type of highly secure electronic signature, and they have a robust verification process. 

eSignature or Electronic signature on the other hand refers to any virtual mark (Like an image file) that is included in a document to signify approval. Digital signatures work by leveraging an encrypted system that is based on a standard technological framework called Public Key Infrastructure (PKI). Certified authorities provide individuals with a digital certificate, which is stored by them mostly on a USB stick. 

Whenever the individual wants to sign a new document, they’ll have to attach their digital signature to the document using special software. An encrypted “hash” that is specific to that document is then created. The individual that’s sending the document then has to match the digital hash with a public digital certificate, in turn verifying the signature. 

Most digital signature providers use a mathematical algorithm to generate digital signature keys. 

  • Public key
  • Private key

Whenever a signer digitally signs a document, a new cryptographic hash is created for the document. This is done to verify the authenticity and integrity of the document. The recipient of the digital document can decrypt the encrypted hash by using the sender’s public key certificate. Once that is done, a new cryptographic hash is created from the receiver’s end.

While verifying digital signatures, both the cryptographic hash are compared to check their authenticity. If the hashes match, the document is original and it hasn’t been tampered with.

The Role of Digital Signatures

Over time, digital signatures have become a norm for all businesses. In many regions, including parts of North America, the European Union, and APAC, digital signatures are considered legally binding and they hold the same value as traditional document signatures.

In addition to digital document signing, they’re also used for financial transactions, email service providers, and software distribution. Digital signatures are crucial in specific industries where authenticity and integrity of digital identity are important. 

Industry-standard technology known as public key infrastructure makes sure to authenticate a digital signature is valid.

Why Should You Use PKI or PGP with Digital Signatures?

Using digital signatures that are supported by PKI or PGP improves their strength and significantly reduces the possibility of security threats. You can reduce security issues that often come along with transmitting public keys, by simply verifying that the key belongs to the sender, and verifying the identity of the sender. Verifying the identity of the sender is crucial when you’re dealing with a digital signature.

The level of security of the digital signature is completely dependent on how secure the private key is. Without PGP or PKI, proving someone’s identity or revoking a compromised key is next to impossible. If the private key is not well protected, it could allow malicious actors to assume the identity of someone else and go through the process without proper verification. 

By relying on third-party verification services, businesses and individuals can verify digital signatures. This can ensure that the digital signatures are not being used by someone who doesn’t have the authority. 

As paperless, and online transactions are growing day by day, the use of digital signatures can help you protect and secure the integrity of your data. By understanding and using digital signatures, you can protect yourself, the information you share, confidential documents, and transactions. 

How are Electronic Signature Verified?

And how are electronic signatures verified? Numerous legislation like the ESIGN (The Electronic Signature in Global and National Commerce Act), UETA (The Uniform Electronic Transactions Act), and eIDAS (Electronic Identification, Authentication and trust Services) offer the validity of electronic signatures. 

The process for verifying electronic signatures is a lot similar to traditional methods that are used to verify physical pen and ink signatures. Verification is essentially about proving an electronic signature was made by the intended signee by verifying the data, location, and time of the signature. This helps in ensuring that the document wasn’t tampered with. 


Employment Verification: Step-by-Step Guide

There are several instances where companies will be asked or will initiate a request to verify an individual’s work history and other details associated with their current or past employment. This process is known as “employment verification.”

The hiring process is when most companies do verification of employment, and the process includes professional reference checks. Businesses generally receive proof of employment verification requests from third parties. Lenders who receive loan applications, credit card applications tend to do employee document verification to make sure that the person who’s applying isn’t lying about their employment status.

Mortgage lenders also verify your employment by contacting your employer directly and by reviewing the latest income documentation. The borrower has to sign a form authorizing an employer to share their income information with a lender asking about employment verification. At that point, the lender typically calls the employer to obtain the necessary information. There are some steps that you need to take, but there are steps borrowers need to take if they refuse to verify employment. 

Businesses can use multiple methods to verify employment, including getting a “proof of employment verification” letter, paystubs, contacting references, or executing contracts and agreements. In this article, we’ve mapped out the main reasons for employment verification and how companies fulfill the requests, and why employment verification is important.

What’s Verification of Employment?

To approve mortgages, banks need to verify employment. The same goes for businesses looking to hire new employees, or banks verifying employment before onboarding a customer.

The mortgage lender needs to check that you are employed where you say you’re employed. They also have to take your level of income into consideration. This confirms that the borrower can bear their down payments, EMIs, and closing costs. 

Employment Verification: When is it Required?

Now that online job hunting and professional networking sites like LinkedIn are becoming famous, a CV/Resume is more than enough to verify a person’s employment status. However, many potential verifiers can demand better and more formal certification of employment. This happens mostly when a financial transaction is involved. There are several employment verification documents needed to fulfill the request.

1. Lenders Approving a Loan

Lenders that are reviewing loan applications definitely need to verify an individual’s employment status. This helps them in making sure that the individual can make payments on time. Not just employment, employers can also verify the salary details of an employee if a lender requests so. However, companies should be careful to abide by the local laws. Some locations like the State of California and New York City prohibit employers from divulging salary information during the hiring process, but this doesn’t often affect loan requests. Employment verification methods can differ from business to business, but the end result is similar.

2. Property Owners Issuing a Lease

Similar to loan providers, the employment verification requirements of a property owner are to verify an individual’s employment status to make sure they can make payments under the lease. Financial history is also an important part of completing the process. This can be done by acquiring bank statements from the individual.

3. Employers Hiring New Employees

Before handing out an offer to a new employee, companies often check the employee’s employment history. This is done by contacting the references, which also require formal documentation. This step includes asking for employment verification documents. 

4. Work Visa Holders Verifying Employment

To secure a work visa in a country, applicants are required to have secured a job in the country. Similarly, this is necessary during application renewals, if the individual has quit the job or has been let go, the work visa will diminish. Visa holders must inform the office that issues the work permit if they’ve lost their jobs.

Process of Employment Verification

In general, lenders verbally verify the information borrowers share on the Uniform Residential Loan Application. However, they can also choose to get the data via fax, email, or a combination of any number of methods. Lenders use this information to calculate several metrics to determine how likely a borrower is to repay a loan. A change in employment status can have a huge impact on your borrower’s application. 

1. Additional Information

Whenever a lender verifies employment, a lender will frequently ask other questions as well. The basic question a lender may inquire about is the type of employment. Lenders are also interested in verifying the position, salary, and work history. Most lenders only verify the borrower’s current employment, some lenders may also want to confirm previous employment information. This practice is more common for borrowers who have been in their current organization in less than two years. 

2. Verification for Self-Employed Individuals

Those who are self-employed and take on the mortgage have a different type of employment verification. In this situation, lenders need an Internal Revenue Service (IRS) Form 4506-T. This form is a request for “Transcript of Tax Return” which allows the lenders to receive a copy of the borrower’s tax return directly from the IRS. In a self-employed situation, the lender may also have to ask for attestation by a Certified Public Accountant (CPA) to confirm income.

Common Employment Verification Methods

Companies should notify an existing or a past employee that they’ve received an employment verification request. This allows companies to make sure that the request is legit before providing sensitive details to an unknown party. This is also the first step to learn if you’re wondering how to do employment verification. 

1. PoE Letter

A PoE (Proof of Employment) letter is issued by an employer and it acts as a formal confirmation of a current or past employee’s status. PoE letters often include:

  • Employer’s business name and address 
  • The employee’s job title
  • Dates of the current/past employee’s employment
  • List of employee’s responsibilities
  • The employer’s contact information

2. Paystubs

Pay Stubs are often used for employment verification. It provides a record of an employee’s past income from the company. This information is needed when the individual’s applying for a loan, mortgage, or credit card. In some locales, providing a customer’s salary information is against the rules and regulations. 

3. References

Another method of verifying employment is by contacting the references provided by the individual. A reference can help in providing information about the employee’s roles and responsibilities throughout the organization. The reference (usually a manager) can verify if the individual ever used to work with the organization. 

4. Contracts & Agreements

These documents help in proving an employee’s relationship with a company, but most of the contracts and agreements only show that the employee accepted a job offer. One issue with this method is the lack of surety of the individual working with the organization. 

5. Third-Party Services

Businesses that need employment verification in bulk tend to use third-party services to reduce stress from internal resources. These third-party service providers complete the employment verification process on a company’s behalf.

What Information is Legal to Share?

Employment verification is a tricky process as the entity may require details that an employer is prohibited from submitting. As a matter of fact, employers can face huge penalties if they fail to abide by the rules. Health and Salary information is the most sensitive employee information that most businesses aren’t allowed to share. Here’s a deeper insight into what information is legal to share.

1. Health Data

Sharing information about an employee’s health isn’t legal in most areas. There is no way to know what a verifier wants to do with the information. Health and physical appearance-based discrimination hiring is a common practice.

Sharing information about an employee’s disability is a highly frowned upon practice. According to the Americans with Disabilities Act of 1990, sharing information about an individual’s disability is considered illegal. 

Hiring employers can confirm whether the person they’re hiring will be able to fulfill the responsibilities of the position they’re being considered for. 

2. Salary and Earning History

Certain situations such as loan approval require entities to gain insights into the applicant’s earnings. Several locations such as the State of California and NYC prohibit companies from requesting previous salary information during the hiring process. This rule is set in place to protect an employee from having the salary for a new role being compared to the previous compensation. 

How to Respond to Refusal to Verify Employment?

Some employers completely deny a borrower’s request for employment verification, but it can be easy to fix this situation in some cases. You need to clearly explain to the human resource manager why you need to verify the employment of the borrower. Some companies will not provide any information without the verbal or written consent of the employee. There can also be state laws that a company has to follow before handing out an employee’s information.

As an employee, you should talk to your employer about this. You can also tell your potential mortgage lender about your organization’s rules and regulations. Some lenders may be willing to process an application without employment verification as another state’s law prevents them from verifying a certain type of information. 

There are also some cases where an employer will not verify employment for other reasons. If this clashes with your mortgage application process, then you should start searching for a different job.

Conclusion: Employment Verification

A lot of businesses suffer from employee scams and that’s why it’s essential to verify employee information. In high-risk industries such as the financial industry, employment verification is a need rather than a formality. DIRO online document verification can reduce the verification time by 90% while simultaneously providing court-admissible proof of verification.


Customer Verification: Why Do Online Businesses Need to Know Their Customers?

The online landscape is rapidly changing how businesses interact with their customers and vice-versa. Businesses have been realizing quickly how important digital methods of connectivity are. Digital space providers are ever-growing in industries like e-commerce, finance, and social media. Customer needs are evolving and they utilize the newfound convenience of digital methods like online shopping or online banking.

Before the pandemic, not a lot of businesses offered digital services, but the global pandemic shifted their interest toward setting up digital services. Proper customer verification can help reduce fraud and prevent young people from accessing age-sensitive products and services.

Businesses and online merchants have a number of options for addressing the issue to reduce risk, liability, and costs due to fraud and underage purchases.

What is Customer Verification?

Customer verification is a process that’s used by businesses with online products, services, or content to make sure the information provided by the customers is correct. Businesses offering online services also need to verify that the customers are really not using fraudulent documents as a part of identity theft.

A major benefit of customer verification is that it allows businesses to follow through with government laws and regulations. Moreover, customer verification processes help in reducing risks of fraud and costs incurred from fraud arising from incorrect information provided by customers.

At the same time, customer verification also protects users from fraudulent activities that are committed by other users. It also helps in keeping the business’s customer base secure from the risk of identity theft. The customer verification process also allows businesses to make sure that the customer doesn’t pose any risks to the business. Customer verification allows businesses with age-restricted products or services to make sure their customers are old enough for buying the products or services.

This part of customer verification saves businesses against fraud losses, but it also eliminates the costs of delivering products and services to the wrong address. 

Customer verification also helps businesses to comply with KYC and AML regulations to avoid being fined by regulatory bodies.

Why Do Companies Use Customer Verification?

The customer verification process is crucial for businesses that offer online services. If a company doesn’t know who they are dealing with, they can sell products and services, or share confidential information with fraudsters. Doing business with unknown parties is a stepping stone to the risk of fraud. 

Apart from monetary losses and expenses, potential liability to customers, or even regulatory fines, the damage to the reputation of the brand can be extreme. Companies operating in the finance and banking industry have switched to digital methods. With the right digital solutions, users can create a bank account, apply for loans and transfer funds online, and much more. Because of this, governments require banks to comply with strict regulations to prevent fraudsters from exploiting the weak points of online financial systems. 

Banks and other financial institutions are legally obligated to follow through with the KYC guidelines. These guidelines ask businesses to collect vital information about their customers and verify if the information is correct. This prevents cases of identity theft and money laundering.

Businesses that sell online products and services are also required by regulatory bodies and governments to comply with a variety of verification processes. This helps in safeguarding customers from online fraudsters stealing their data and using it for identity theft.

Types of Customer Verification

Government bodies such as the United States and the European Union promote the usage of multi-factor authentication. There are a variety of customer verification methods that businesses use for the verification of customers. 

  1. Multi-Factor Authentication 

Multi-Factor Authentication identifies the identity of the person by using two or more factors regarding who the person is. These two factors are knowledge (something only a customer knows) and possession (something a user has). 

Usually, a business with a chance of higher risks would want to use at least 2 factors to identify its customers. The businesses could ask the users to provide their email or mailing address and age and they’d receive a code while trying to log in to digital services. 

Most customer verification applications only allow one method for customer verification. This allows low-risk businesses to verify their customers easily.

  1. Age Verification

Age verification helps businesses to verify a customer’s age before a shipment or a product is delivered to them. There are third-party solutions that utilize global databases to verify customer age.

  1. KnowKnowledge Based Authentication (KBA)

Knowledge-Based Authentication is a very old method of customer verification and it requires customers and users to submit vital information like their name, mailing address, home address, phone number, age, or email.

Then customers are asked certain questions that they have submitted during account creation for logging in. While KBA is a common method, it’s not the most sophisticated and fraud-proof solution. 

  1. Online Document Verification

Online document verification is one of the most common methods of customer verification. Third-party solutions like DIRO’s online document verification technology help in verifying customers. The technology verifies online documents instantly and offers 100% proof of authentication for documents globally.

Conclusion: How to Verify a Customer Identity

Identity theft is one major problem faced by countless businesses and customers. This is why the need for strict KYC solutions is growing. To reduce online fraud, KYC compliance is needed to verify customer verification.