With a stunning Compound Annual Growth Rate(CAGR) of 15.6%, the global ID Verification market size is set to grow from USD 7.6 billion (2020) to USD 15.8 billion in 5 years. Along with this, the fraud risk accompanying it will also grow. It is only sensible for financial institutions to take precautionary measures to prevent this.
The first and foremost measure is to ensure the right identity verification services. All successful financial institutions and businesses use a legit and established identity verification service. It confirms that the customer or user-provided information is that of the individual they claim to be by associating it with the identity of the genuine person. The documents used for this can be OVDs like driving license, passport or any national issued document.
With the current trying times, it is important to prevent fraud with the help of such service providers. But the real question is how do you know which one is right for you. In the field of competent marketing, finding a competent service is difficult. This article will simplify that for you by giving you the right parameters to consider while selecting a service provider.
Challenges in ID Verification
Mere identity verification has transformed itself into a digital sphere. This is a result of digitization in all aspects of the financial world. One of the principal reasons for this is the undeniable need for financial institutions to ensure safety from potential fraud and damages. This explains their extensive interest in promoting the safe digitization of their processes.
This coupled with novel databases created by government agencies, institutions and many banks for credit score validation. The initial 6 months of 2019 witnessed 3800 incidents of financial fraud and credit score tampering incidents. This was reported by Risk Based Security. This report, when compared to the previous year’s, illuminates alarming facts. Within a span of 12 months, the number of breaches rocketed 54%.
2019 was also the year with the 3 largest financial data breach, with 3.2 billion confidential records exposed. 84.6% of these breeches originated from the business sector alone. Concerns about safety and security, along with the need for convenience in a competitive playing field, have forced financial institutions and companies to embrace digitization. It is true that the risk of fraud is an imminent and lasting threat. So is the fact that there will be no bulletproof solution.
But we can not expect not to take the necessary precautions and actions. This is why the authentication of customers needs more data and layers of validation. To meet such profound validation criteria while maintaining a good and easy experience for the user is difficult for the institution. Users always have a standard expectation for the products and services they get. To go beyond this is what companies need to make them unique.
While facing these challenges another arises in the form of personal data protection. This has become the penultimate need barring only the actual act of verification. It is an immensely volatile task, but nonetheless a mandatory one.
Considerations to keep in mind before choosing a solution?
The solution to the challenges for a financial institution can be simplified in one word- Digitization. But the pragmatic implementation of this is far more complex without a proper guide. There are distinct steps they need to take before finalizing a verification solution from the numerous ones in the market. These require close scrutiny and articulate decisions. The initiatives to consider while making a choice are given below:
- Evaluate the requirements
- Maintain the right balance between User Experience, Safety and Security
- Acknowledge User behaviour and Channels
Evaluate the Requirements
It is quite apparent that not all cases require the same standards of security validation. But for financial institutions the number of use cases requiring stringent security measures is high. A good example is the provision of online loans and how easy it may seem to the user but how complex it is from the service provider’s part. The process requires information relay and verification through multiple data sources.
The solution is to engage the customer with the right questions. This will give the customer a better experience while obtaining the required data. This implies that the institutions should make proper assessments regarding what information they require. This can eliminate unnecessary steps.
We should assume that more information will be more useful and focus on the right information. Such assumptions sometimes create more friction than what we try to avoid.
Maintain the right balance between User Experience, Safety and Security
Balancing the user experience while obtaining the right information with ease is tricky for even the most advanced procedures available. But it is achievable to a highly optimized degree. Some of the factors to consider while forming different steps in the process are:
- Relevance of the data to be obtained
- Mode of obtaining the data
- Easy accessibility
A good example is setting a threshold for facial verification. Since images will have certain differences, there will always remain a minimal unmatch. Thus a minimum threshold is set. If the threshold is too high, even mostly matching images would be rejected. This will ultimately provide a bad user experience.
The solution to the above conundrum is to have a high functioning AI-driven rule engine while setting a pragmatic threshold limit. This will ensure better customer focus and seamless onboarding journeys.
Acknowledge User behaviour and Channels
An omnichannel presence between the user and the interface is primordial. It will help us understand how the journey impacts the user. We will be able to understand the habits and behaviours of the user. These habits include the use of a phone, tablet or desktop. The journey process must be optimised for each different device.
The verification process should be fit for the channels the company uses. If it is incompatible, then the experience will be troublesome. A good feedback system will help understand the customer’s pain points. Once this is done we can implement a better experience by avoiding any potential hurdles.
What are the parameters of the solution?
Before finalising a solution for digital identity verification, we must always consider certain aspects. The most vital parameters are given below:
- The Service Provider’s Technology Quiver
- Processing in Real-Time
- Ensured Compatibility and Compliance
- Efficient Support System
The Service Provider’s Technology Quiver
Multiple forms of solutions are available for identity verification. Each institution requires its own unique set of technological needs. Not every solution provider will be able to meet all the needs of the institution. The development tools to use and methods of integrating 3rd party solutions need consideration.
The service provider’s Software Development Kits(SDKs) or better, Application Programming Interfaces(APIs) should be easy to use and serve a seamless plug and play solution. They should provide products that are understandable to the institution and the user. The identity provider should take care of the underlying technology while maintaining strict regulatory compliance.
Fundamentally, technology should not be a hurdle for the institution as well as the user. It is the responsibility of the provider to make sure of this. Make sure that the services you need are digitally provided.
Processing in Real-Time
Opting for service providers who ensure that most of the processing in real-time is a safer bet in the long run. Not only does this make it harder for any potential fraudsters, but also ensure the right attributes like device location, IP address and avoidance of pre-recorded videos.
The ability to exactly identify the user at the exact moment we require is a boon. The risk of danger is considerably reduced with this feature.
Ensured Compatibility and Compliance
Even though the processing steps vary with each service provider, the regulatory framework demands to have stringent compliance in regards to sensitive and personal information. This is done with proper encryption protocols and interlay with different government and external databases. These can be even international watchlists and credit bureaus.
Verifying and cross-checking the user’s data with the existing databases is essential. This will prevent fraud and validate the credibility of the user. Thus, the relevance of unified data sources is paramount for consideration. A good service provider will keep this a priority.
Updated Support System
The technology involved in digital identity verification systems is evolving. The techniques used by fraudsters to breach these systems are also evolving too. Hence, it is only safe to opt for providers that constantly improve and innovate their services while maintaining newer regulatory standards. They need to keep up with the latest UX and UI trends.
The provider should mandatorily have a live support system for the companies and clients. They should ensure transparent, frequent communication between all parties without any technical difficulties. It will help to investigate the services and products from the provider.
What is the right solution for you?
Now that the parameters to consider while choosing an identity verification service is clear it might seem easier to find an option. But there are numerous identity verification service providers out in the market and only a handful of them are able to maintain exact regulatory compliance and compatibility. Even fewer are able to provide a paragon user experience.
Thus, it might seem arduous to find a service provider who would satisfy all your process demands. You would require an institution with an arsenal of numerous APIs and products.
With a cornucopia of multifaceted APIs, products and service solutions, Signzy has been able to help all our clients in the best ways possible. WIth no-code AI services and smart decision engines, even the back-end operations are smooth with Signzy. With observation and use case histories, even you will conclude the same. If an identity verification service is your need, we can provide the solution through our service.