Digital Identity Verification and its Pros and Cons

In this age of technological advancement, businesses are increasingly shifting their operations on digital platforms. Digital platforms have modernized business operations, which has led to an increased growth through the development of innovative strategies and successful business models.

Humans are being replaced by computers to increase efficiency and accuracy of the work. Many businesses have considered moving their verification processes on a digital platform to make things easier to manage and handle and prevents scams or unwanted data loss.

It is estimated that by 2024, the Digital Identity Verification industry will reach a staggering figure of $12.8 billion. This rapid growth is primarily due to the increased number of fraudulence cases and security threats and the general awareness among businesses. It is important to understand what Digital Identity Verification actually is.

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KYC and Digital Identity Verification

Digital Identity Verification is a service used by businesses to identify and match their customers’ true identity. It uses personal information such as Name, Date of birth, Address Identification number (SSN), Nationality, Passport, Username, Password and in some cases, Medical history as well. This information is tallied and verified to check if the customer’s information is accurate and the person actually is who he/she claims to be.

KYC or Know Your Customer is a process where a business becomes familiar with its customers and identifies their personal details. It is increasingly used by banks and financial institutions to understand their customers and is a part of digital identity verification. It prevents illegal activities such as identity theft and money laundering etc.

These are different measures of identity verification:

• Face Verification
• Document Verification
• Address Verification
• 2 Factor Authentication
• Consent Verification

Identity Document Verification

Identity document refers to the verification where the customer is asked to display valid government-issued ID documents as proof to complete their verification process. The documents are scrutinized to check their authenticity and legitimacy. KYC, AML and CTF compliance requirements can be met using ID document verification and eIDV. Identity verification services lead to a reduced risk of scam and fraudulent activities.

Identity document verification, like other verification services, is also done using a webcam. After the verification is successful, the customer is directed to the next step.

Although AI systems can detect even minor changes in the documents provided, there is still a minor possibility of error. If an error is missed by the artificial intelligence system, the customer is moved to the next step, where human intelligence is used to further scrutinize the documents and either accept or reject them.

ID verification is not an option for many firms or businesses, rather it is a must. Customer Due Diligence has countless benefits that contribute towards businesses’ long-term prosperity and sustainability. Biometric is the most common form of ID verification used. It includes identification through unique biological traits such as fingerprints, retina and iris scans.

Advantages and Disadvantages of Digital Identity Verification

Advantages:

Simple to use

Identity verification is easy as uploading a digital image or document online. It does not take much effort to get your documents verified.

Fast results

It is a relatively quick process and you get your documents checked online in the blink of an eye instead of waiting for hours to get a response.

Disadvantages:

Not precisely accurate

Although AI technology has improved significantly over the years, however there is still a minor chance of error. It is not completely foolproof. Scammers or criminals can still manage to surpass any control system.

Information not checked in detail

Identity Document Verification only checks for the authenticity of the document itself rather than the personal details written. Without verifying these details, there is a chance that someone with fake documents could pass the test.

It is very important for businesses to understand the concept of customer due diligence and install strong verification mechanisms to prevent identity proofing and data breaching threats.