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Are we seeing the end of physical ID? How digital identity verification could help accelerate compliance and combat ID fraud

id fraud SBI 300199450 - Global Banking | Finance

By Benjamin Haas, Senior Sales Director EMEA – IDnow

Picture515 - Global Banking | Finance

Fifty euros is a decent amount of money, but depending on where you live it probably won’t stretch much beyond a meal for two, perhaps a couple of rounds of drinks or maybe a ticket to a popular event.

If you had access to the Dark Web, however, that same amount could get you a fake face ID so realistic it can fool human passport agents.

It’s a bit worrying, particularly when you consider the sort of airport queues we’ve seen on the news this summer. Imagine you’re an immigration official, the biometric passport controls aren’t working, and you’ve got to look through thousands of passports to help clear hours and hours of lines of passengers. With the best will in the world, your diligence is going to be sorely tested, and you can hardly be blamed if you fail to spot a sophisticated fake form of ID.

And these are people that are trained to spot the discrepancies in this sort of documentation. What about those who are only checking IDs as part of a long list of compliance processes, such as in conveyancing?

Why compliance needs to go digital to tackle sophisticated fraud

So, on the one hand we’ve got increasingly sophisticated identity fraud. At the same time, we’ve got manual processes still being deployed when all around them entire organisations are being automated and digitised.

It’s increasingly apparent that compliance processes need to go digital. From onboarding customers for banks faster, to helping speed up the likes of conveyancing, the more systems and services are automated, the better it will be, both for the organisation providing the services and the end-customers using them.

Businesses would benefit from being able to process compliance checks faster. For instance, in conveyancing, either law firms would be able to support more property purchases with the same amount of staff, or redeploy that staff to work on more value-add services for clients while still completing property purchases with the same standard of rigour.

For end customers, it would mean a faster turnaround on services, whether that’s opening new accounts or buying property – particularly attractive when deadlines such as stamp duty changes are looming.

But for that to happen, every aspect of the process needs to move digital. That includes identity verification.

The end of physical ID?

Right now, physical identification, such as passports, driving licenses and ID cards are the cornerstone of ID verification. Whether starting a new job, instructing a solicitor or renting a property, most of the time people have to submit a form of face ID and a proof of address. Depending on the regulatory requirements, that might just mean a copy; it might mean the original documentation, which can hinder the individual’s use of other services. Either way, it is a drawn-out process.

What if we could deploy new ways to verify that someone is who they say they are? More and more of what were once face-to-face interactions are becoming virtual, which calls for new forms of identification. At the same time, businesses have to keep delivering exemplary customer experiences.

It means striking a balance between satisfying evolving know your customer (KYC) and anti-money laundering (AML) checks where we can simultaneously capture KYC data and screen them against thousands of anti-money laundering (AML) lists around the world, all within a secure environment.  This makes transactions and processes as seamless and stress-free, for the individual in question, as possible.

And this is where digital ID verification services come in. Biometrics are absolutely a viable and accepted security feature across the digital landscape. From using your fingerprint, or face to unlock your phone, to e-signatures that are securely stored by ID verification companies to be used across all types of business and financial transactions, biometrics is one of the safest ways to guarantee the authenticity, and liveness of the person involved in the process.

Biometric security uses biological identifiers, such as fingerprints and selfies, to verify that someone is who they say they are. It removes the need to remember passwords or log-in details and is extremely hard to falsify. While checks could be monitored for quality and accuracy processes by humans, machine learning and artificial intelligence would also go through other data to verify identities and prevent ID fraud.

Not just for legacy organisations

Of course, these sorts of digital checks have massive appeal for those businesses that aren’t having to undergo digital transformation, as they are already digital natives. The likes of Fintech and Proptech start-ups can incorporate them into their AML and KYC processes, forgoing the need for any sort of physical or bricks and mortar presence to support face-to-face verification.

Businesses are increasing their use of onboarding verification tools and techniques, which combine artificial intelligence and biometric security to confirm that genuine customers are accepted while fraudulent attempts are rejected. Not only does this improve security by augmenting human agents, but by handing over much of the process to technology, the overall onboarding experience can be accelerated.

Two problems with one solution

Preventing fraud and optimising compliance processes may be two different challenges, but digital identity verification offers a single solution to multiple problems. For example, a number of European countries including Portugal, France, Germany, Switzerland and Austria are implementing changes to laws around NFC technology to enable digital identification verification. France, for example, is leading the way with a new digital service for its citizens to allow them to access services on the government’s online services gateway, a system used by banks and other private sector companies as well as government agencies.

Users only have to complete a single, straightforward application in order to access more than 500 government services instead of a separate onboarding process for each one. This is saving them time and makes for a streamlined, user-friendly experience, with the assurance of high levels of security thanks to the KYC elements drafted into the NFC technology.

By incorporating digital ID verification into their processes, banks, solicitors and other organisations tasked with compliance administration can not only improve their anti-fraud activities, but they can do so in a way that ensures quality and enables a positive customer experience.

Global Banking & Finance Review


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