As our daily lives move more online, small, medium and large companies are constantly bombarded with fraud threats. As lifestyle trends change and adapt, companies need to match the digital landscape to keep their businesses safe.
Digital identity verification is one key line of defense for those conducting business online. Solutions for this task are implemented by various industries, from finance and healthcare to e-commerce. Digital identity verification is no longer optional for those conducting business digitally but is essential to ensure secure online transactions.
So, what happens without digital identity verification software? The most pressing risk is fraud. Unverified identities lead to identity theft, where personal information is stolen and misused. The most well-known result of this theft is financial loss and damage to credit scores, but it can also hurt businesses. Due to the threat of fraud, many industries require stringent cyber security requirements, including identity verification software solutions. In spite of this, it’s common for a large company’s security breach to hit front-page news. Scammers and fraudsters will not discriminate when it comes to your business. By not verifying identities, you’re putting your site at risk for security breaches where an unauthorized person gains access to sensitive information.
There are multiple benefits to using an identity verification solution. Finding the one that best fits your needs is a worthwhile use of resources. The system verifies a customer’s identity online, allowing your business to trust that the person making the transaction is who they claim to be. Inversely, customers trust your business more because you operate with added security.
How do online verification solutions improve your company’s efficiency? Using software in this process enables your internal risk agents to focus on more pressing needs rather than wasting time verifying good users from bad. Instead of manually reviewing transactions, you’ll now engage in an automated verification process. The automated verification process also reduces the need for physical documentation. A bonus is that the software complies with identity verification regulations, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements. Therefore, your business receives protection from legal penalties and fines.
In this blog post, we delve into how digital identity verification works, as well as the different methods on how to achieve verification goals, best practices and factors to consider when choosing a provider. Finally, we will offer tips on implementing digital identity verification in your business.
How digital identity verification works
As you implement a digital identity verification solution, it helps to understand how the process works. To begin, a user provides personal information. The software creates multiple data points from the user information, including name, address, date of birth and government-issued identification documents. This information is then verified. To verify, the user gets checked against various databases and sources to confirm legitimacy. The user’s identity is verified using multiple methods, including biometric data, email, phone and social verification. The identity verification solution conducts a risk assessment after compiling the data. The risk assessment determines if the user is likely to commit fraud or identity theft. Once the risk assessment is complete, the system approves or rejects the user. They cannot request the service or complete the transaction they are attempting if denied.
Types of digital identity verification methods
There are six common ways to verify someone’s identity online.
- Biometric verification: This method uses unique biological traits of an individual, such as your fingerprint, iris or face recognition. Certain smartphones use fingerprint or face recognition to verify your identity.
- Document verification: This method uses government-issued identification documents. These can be passports, driver’s licenses or national identity cards.
- Knowledge-based verification: By requesting information that only the person should know, such as their mother’s maiden name, or addresses where they’ve lived, the system verifies a person’s identity.
- Device authentication: This method involves verifying the device, such as a phone or computer, used by the individual. Verification comes through the IP address or browser fingerprint.
- Email verification: This one is prevalent due to emails’ broad acceptance across users. A system uses personal credentials to set up the email account to verify the user for email verification.
- Phone verification: Another typical verification process usually occurs in three steps. The customer creates an account with their phone number and then the user receives a one-time passcode via an SMS or phone call. Finally, the user submits the one-time passcode to obtain verification.
Best practices for digital identity verification
Establishing best practices is essential to optimize your company’s verification process. Here are three best practices we recommend you follow.
- Use multiple identity verification methods. Two-step verification is prevalent across most industries now. To increase security and reliability, using various methods enhances the accuracy of the verification. For example, use both phone and knowledge-based verification.
- Keeping up-to-date with regulations. Stay informed about the latest regulations related to digital identity verification. These include KYC) and AML requirements. Stay current with regulations and ensure your company complies to avoid loss and legal penalties. Using a reputable third-party verification provider assures security, reliability, and compliance.
- To properly verify users, your company compiles a lot of personal data. Your user’s data needs to be protected. Appropriate security measures such as encryption, firewalls and access controls are necessary.
Fraud detection is vital to healthy digital identity verification. Your business quickly detects and prevents fraudulent activity by implementing fraud detection and prevention measures, like real-time monitoring and alerts. And remember, the online world constantly changes. You must continuously improve your process to stay up-to-date with the latest threats and dangers.
Factors to consider when choosing a digital identity verification provider
How do you find the best customer identity verification software for your business? We recommend looking for seven critical factors in a digital identity verification provider.
- Security: You want a provider with robust security measures to protect personal information while preventing fraudulent activity.
- Reliability: Having legitimate customers mistakenly flagged as fraudulent is terrible for business. You want a provider with a proven high level of accuracy to minimize false positives.
- Compliance: Improper compliance and misinterpreting regulations are dangerous for most online businesses. Ensure your provider is current on all laws, like KYC and AML, to avoid legal and regulatory issues.
- User experience: You’re aiming to avoid fraud and scams. However, it’s also essential not to dissuade legitimate customers through stringent verification processes. Choose a provider that offers a user-friendly and streamlined approach to verification.
- Integration: For ease of use, you’ll want the identity verification process to integrate seamlessly into your current systems. Choosing a provider with easy integration will reduce implementation costs and improve efficiency.
- Scalability: As your business grows, so will your identity verification needs. Make sure your provider can meet current and future business needs.
- Reputation: Knowing your provider’s verified and positive track record provides peace of mind when choosing a provider.
Tips for implementing digital identity verification in your business
Before you’ve decided what identity verification software you’d like to use, it’s crucial to implement the system properly to gain the full benefits. Clearly defined requirements for your potential provider are vital. When your team agrees on precise business requirements and goals, it’s easier to decide on the right fit.
Understanding your business and customers is crucial when deciding on your digital identity verification method. Remember, you know how your systems work and your customer’s best. Essential knowledge about your business and customers provides insight into how you’ll implement specific verification and how your customer base will respond. Then, it’s time to test this verification process. You want to confirm that this process works well and thoroughly vet any issues before releasing this to your customer base. A great way to do this is with a small sample of customers who can identify and address potential problems or challenges.
Once you’ve tested the digital identity verification solution, it’s time to communicate with your customers. You’ll maintain trust by being clear and transparent about the verification process, what information you’re collecting, and how it will be used. If customers don’t understand why their data is taken and how it’s used, they’ll lose trust and likely not complete the process. At this stage, it’s all about honest communication for customer buy-in.
Along with clear communication with customers, having well-trained employees is vital. Again, this engenders trust in your customers. Train your review agents on the verification process and how to handle any customer issues or questions that arise.
Once set up, communication and training are complete, it’s time to experience digital identity verification in action. Monitor fraud by confirming fraud detection and preventative measures are adequately set up. Ensure real-time monitoring and alerts work correctly to detect and prevent fraudulent activity. Remember, none of this is a “set it and forget it” type of software. Fraudsters are continually adapting and changing the online environment. Your company must continuously review and improve its process to remain secure, efficient and user-friendly. You’ll want a vendor partner that excels in this area to guide you through the process.
Scammers, fraudsters and thieves work hard to manipulate businesses online. We cannot overstate the importance of implementing cyber protection for your company. A vital piece of this protection is digital identity verification. Your company remains at constant risk without a reliable digital identity verification provider. The above information explains why this is critical to safe business practices and how to find the best provider for your business. If you want to learn more, contact Ekata to see if they’re the right provider for your needs.