As digital transactions become the norm, identity theft cases continue to climb. The Federal Trade Commission reported a 73% year-over-year increase in the number of identity theft cases from 2019 to 2020, and this figure is expected to rise through the years.
With the high number of fraudulent activities, all institutions must take a proactive approach to security. Fortunately, implementing a strong customer identity verification process is an easy way to prevent a crippling cyberattack and other related schemes.
What is Customer Identity Verification?
Customer identity verification refers to the process that organizations use to validate an individual’s information and identity. Institutions that do this successfully have an easier time determining if their clients are the people they claim to be, preventing identity fraud and other related schemes.
A customer identity management system helps institutions stay compliant with regulations and allows managers to assess if a client can pose a risk to the company. Healthcare organizations, banks, and legal entities have the most to benefit from proper authentication given that they handle vast amounts of personal information.. Below are some of the most commonly used methods of customer verification.
1. Biometric analysis
Biometrics systems authenticate customers according to their biological characteristics. Analyzing one’s fingerprint or facial features offers users a high level of convenience because there are no passwords that are needed to remember. In addition, biometric data cannot be easily replicated or stolen, providing enhanced security.
2. Multi-factor authentication
Multi-factor Authentication (MFA) is an authentication method that requires users to provide two or more verification factors to gain access to a system. For example, rather than just letting someone into your system by inputting their password, MFA will ask your users to provide a unique one-time password (OTP) for every session. But while email and SMS OTPs are the most commonly used verification factors, MFA can also make use of authenticator apps, smartcards, and biometrics. All in all, having multiple layers of security will decrease the likelihood of a successful cyberattack.
3. Document verification
Document verification works by scanning official documents like bank statements, passports, or drivers licenses for a range of features like watermarks, stamps, holograms, etc. Furthermore, personal data is shown on these documents such as one’s name, date of birth, and address. These pieces of information can be checked and validated against other data sources.
4. Knowledge-based authentication
This type of authentication verifies the person’s knowledge of the data they initially provided. Organizations who make use of this method would typically require their users to answer a short list of security questions. Specific inquiries such as “Who was your second grade homeroom teacher?” or “What is the name of your first pet?” can only be answered by users and are virtually impossible to steal, significantly decreasing the likelihood of a breach.
5. Online verification
This type of verification uses techniques to determine if a government-issued ID belongs to a user, including artificial intelligence, biometrics, computer vision, and human review. They would typically be asked to provide a photo with the ID to ensure that the person holding it is the same person on the ID.
Primary Benefits
Preventing fraudulent activity is the primary benefit of a robust customer identity verification process. Beyond enhanced security, it offers other benefits such as:
1. Improved client experience
Most companies follow a digital workflow, which means less need for paperwork. The ease of use, especially in identity verification, can simplify onboarding. By removing friction in the application process, your clients will have quicker access to your services, positively impacting their experience with your company.
2. Deters fraud in all forms
The key benefit of acquiring identity and access management services is that it deters fraud. This is especially important for companies in the financial industry since it can prevent malicious schemes such as money laundering.
3. Ensures federal compliance
If customer identification is not implemented correctly, it can violate an individual’s privacy and federal laws. Several data privacy regulations require consent and advance notification to process an individual’s information, like facial recognition and other biometrics. Moreover, failing to verify a person’s identity can lead to unlawful transactions, and may potentially lead to hefty fines and even criminal prosecution.
Instead of assuming you are presented with correct information, consider using a system that obtains verified photos or videos of your customers that would prove their identities.
4. Improves reputation
A good reputation is something that all institutions strive to build. Clients of today only make it a point to transact with reputable organizations so trust-building will be essential to making your clients stay with you for the long haul.
One of the best ways to earn their trust is to ensure that the data they’ve provided to you will be kept confidential. As such, building a strong identity verification process will grant them the assurance they need and is a direct indication that you care about their wellbeing. Ultimately, catering to the needs of your clients will turn them into advocates of your company, improving your reputation in your industry.
5. Transaction monitoring
Customer identity verification adds more than security; it also helps report suspicious transactions. In addition to verifying one’s data, it also enables firms to capture more details such as IP addresses and geolocation. This information can help related entities develop a deeper understanding of an individual’s behavior to determine a transaction’s validity.
Integrate Customer Identity Verification
Fraudulent activity continues to rise so make sure that you’re doing everything you can to keep your company and your clients safe. Integrating identity and access management services such as those from Q5id will give you the best chance at improving operational efficiency and customer satisfaction. If you want to know more about our solutions, contact us now!
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