Have you ever considered the consequences of entrusting your business dealings to someone who isn’t who they claim to be by accident or negligence? Picture this: you extend a loan, only to discover too late that you’ve been tricked by a fraudster with a stolen identity. The potential for significant financial loss and irreparable damage to your reputation is immense.
This underscores the critical importance of robust identity verification processes, especially to comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) directives. If the concept of identity verification is new to you, don’t worry.
In this blog, we will walk you through the essentials of identity verification, exploring both traditional and digital methods. From understanding its mechanisms to implementing the most effective solutions for your business, we’ve got you covered.
Ready to safeguard your business against identity fraud? Let’s dive in!
What is Identity Verification?
Identity verification is the process of confirming that a person is who they claim to be. It involves verifying the authenticity of identity documents and information provided by an individual when opening a new account or requesting access such as name, date of birth, address, and more.
Identity verification is crucial for compliance with KYC and AML regulations, especially in sectors like finance, healthcare, and gambling. KYC processes verify client identities to ensure they are reliable, while AML aims at detecting suspicious financial activities that could lead to money laundering or fraud.
There are two methods of identity verification: manual and digital. Manual verification involves the physical presence of the individual and their original documents such as ID cards, driver’s licenses, or passports, making it both resource and time-intensive.
In contrast, digital identity proofing simplifies this process by enabling it to be conducted online, which becomes the primary choice as companies increasingly adopt digital platforms. Let’s explore digital identity verification in more detail!
What is Digital Identity Verification?
Digital identity verification is the process of verifying identities with identity verification software. With automated document verification and digital identity checks, such software ensures the legitimacy of the information submitted by an individual.
To achieve this, digital IDV (Identity Verification) utilizes advanced technologies such as artificial intelligence, Optical Character Recognition (OCR) and NLP:
- Artificial Intelligence: AI is used to automate and improve identity verification processes. It enables machines to learn and reason, aiding in tasks like facial recognition, document authentication, and anomaly detection to verify identities accurately and efficiently.
- Optical Character Recognition: OCR converts scanned documents into machine-readable text. It recognizes printed or handwritten characters on IDs, driving licenses, and other documents, facilitating automated data extraction for verification purposes.
- Computer vision: This technology uses AI for tasks like facial recognition and document authentication in identity verification. It replicates human eyes to verify ID photos against live scans, detects document alterations, and ensures the authenticity of IDs like passports.
- Natural Language Processing: NLP helps computers to understand and process text-based information from humans. It helps analyze and extract relevant information from documents ensuring the right extracted fields.
All of these technologies are used in different methods of digital identity verification. In the next section, we are going to deep dive into how they’re integrated into the verification process.
How does Digital Identity Verification Work?
Digital identity verification comes in various forms that serve different purposes. There are three main components of digital identity verification that can be used in combinations depending on your business use case. Let’s explore each of them in detail.
Document Verification
The document verification process entails verifying the submitted documents like ID cards, driver’s licenses, or passports. Identity document verification involves utilizing OCR technology to extract the data from the documents. The extracted information is examined using AI and machine learning algorithms to identify fraudulent documents.
There are different ways fraud detection can be done: cross-checks with internal and external (such as PEP’s list), Machine Readable-Zone (MRZ) verification, or cross-validation between the Visual Inspection Zone (VIZ) and MRZ.
Biometric Verification
Biometric verification process is used to analyze unique biometric features of a person such as facial features to match the person with any of the submitted identity documents.
This often involves the analysis of various dimensions:
- The distance between the eyes
- Width of the nose
- Depth of the eye sockets
- The shape of cheekbones
- The length of the jawline
Additionally, biometric verification can be broken down into two steps within the digital identity verification process:
Liveness detection
To ensure that the person being verified is physically present, liveness detection requires users to perform a series of movements. This method helps to avoid identity spoofing. This process involves the use of two advanced technologies:
- Deep learning algorithms to detect the difference between a live person and a photograph.
- Computer vision to check movement and facial expression.
Selfie verification
To go through the process of selfie verification, the user must take a photo of themselves using their smartphone. The photo is then sent to the system which will compare it to the picture on the identity document that was previously verified.
NFC checks
For identity documents equipped with NFC chips, such as ePassports, NFC checks offer 100% accuracy and, therefore, the highest security. NFC (Near Field Communication) technology reads the chip embedded in the document, extracting the data stored in the chip.
As mentioned before, businesses can utilize these methods in various ways. Let’s explore together how they are employed.
How Do Businesses Perform Identity Verification Checks?
Identity verification checks can be done in multiple ways, relevant to various industries. Let’s take a look into the main ways digital identity verification steps in.
Gambling
Customer onboarding for new players
Digital onboarding is a game changer for organizations of all industries like gambling. Digital identity verification solutions make customer onboarding possible from anywhere.
With digital verification implemented, players can simply upload their IDs via the app. The software then swiftly extracts and authenticates the data, and conducts extra checks like selfie or liveness detection. Once validated, users gain access to the gambling platform. It’s a win-win situation, reducing your workload while making users happy.
Age verification for compliance
Age verification is the process that industries like gambling need to perform. Digital solutions simplify this process by extracting and storing users’ dates of birth from their ID documents.
For instance, in the Netherlands, gambling companies must follow some gambling regulations including age verification. To comply with it, they can use this data to automatically restrict access to underage users, preventing them from bypassing age restrictions. This helps protect minors and ensures following gambling directives across the globe, thus avoiding fines for the business.
Finance
A new bank account opening
In another case, identity verification in the financial industry is crucial for account opening. Banks typically request ID documents and proof of address.
With a digital solution, customers can upload documents online and simplify the process for banks. The software cross-validates documents and verifies the data on them. This also ensures compliance with regulations like KYC and AML, by preventing fraudulent attempts.
HR
Remote authentication of employees
Another use case stems from the growing popularity of remote working environments. Rules like Know Your Employee (KYE) and right-to-work checks entail identifying your employees and verifying certain documents during onboarding or when getting access to the company’s information. For instance, If a business has private data accessible only to certain employees, they can use digital identity verification to simplify this flow and verify employee’s identities.
Liveness detection can be employed to verify the person’s identity and ensure that the individual seeking access to the private information is authorized to do so. With liveness detection, it can be done from any place or at any time!
Healthcare
Onboarding new patients
As employers, healthcare providers need to follow rules such as Know Your Patient (KYP) therefore, verify patients’ identities. New patients must verify their identity with documents like passports and ID cards.
Automated identity verification software for healthcare ensures accurate and efficient processing without manual data entry, reducing errors. This process is crucial for preventing fraud, protecting patient privacy, and maintaining accurate medical records.
Medical health record access
In another use case, patients must prove their identity to access medical records, which should only be available to them and their doctor.
Instead of using emails and passwords, that might pose cybersecurity risks, alternative methods like biometric verification, such as liveness detection, can be used. This involves the patient making a spontaneous head movement to confirm their presence and ensure access to the right person.
As you can see, digital identity verification can easily streamline all processes. But that’s not it! Let’s discover in the next section all the benefits that it can bring to your business.
What are the Benefits of Digital Identity Verification?
Automation, scalability, security… Digital identity comes with many benefits.
- Minimized Data Entry Errors: Automating data entry minimizes the chance of human errors, ensuring a high level of accuracy.
- Enhanced Customer Experience: Provides a seamless and quick verification process for a good customer experience.
- Scalability: Easily handles large volumes of verifications without the need for additional resources.
- Fraud Prevention and Compliance: Helps businesses meet regulatory requirements without extra effort while protecting against fraud.
- Reduced Turnaround Time: Speeds up the process of user onboarding and access management by using real-time verification.
- Remote Verification Capability: Facilitates the global reach of businesses by allowing identity verification from anywhere at any time.
Nice, right? Now that you’re ready to take the next step, we’ll introduce you to the solution that can fit your needs.
How Can You Easily Digitally Verify Identities with Klippa
Identity verification has never been easier with Klippa’s Automated Identity Verification. Identities can be verified in seconds based on some verification requirements you’ve set! Below are all the steps you can select for your verification process:
- Start Verification: The user provides personal documents through a digital platform such as an app or a website. These documents include details such as name, date of birth, and address.
- Document Capture: If document verification is part of the process, the user takes a picture or scan of their identity document. This can be done using a webcam, or smartphone camera, or by uploading a file. The document is then sent to Klippa.
- NFC checks: The user is prompted to scan their identity document if it contains the chip.
- Data Extraction: Klippa extracts relevant information from the provided documents. This includes extracting text from images, verifying the document’s authenticity by using fraud detection automation, and checking for any signs of tampering.
- Biometric Verification: Some companies integrate biometric verification. Klippa offers liveness detection and selfie verification for this purpose. These steps are recommended to avoid identity spoofing.
- Data Comparison: Klippa then compares the extracted data and biometric information against the information provided during user submission. This step ensures accuracy in the verification process.
- Verification Result: Based on the analysis, the software generates a verification result. If the user’s identity is successfully confirmed, they can start using the intended service or continue their transaction. If issues or differences are detected, Klippa flags it for further investigations.
And that’s it! Fast and easy, Klippa helps you all the way through your identity verification process. Ready to take further steps, check the section below!
Conclusion
At Klippa, we understand that complying with regulations and enhancing customer experience is important to your business. By using our automated identity verification powered by AI, you’ll experience fast and accurate digital ID verification.
In a nutshell, Klippa can:
- Verify document authenticity
- Conduct biometric verification such as liveness detection and selfie verification
- Perform NFC checks
- Automatically detect fraud
- Extract data from more than 150 languages
- Classification of data according to your needs (for instance, per language)
- Ensure compliance with GDPR and other privacy regulations with anonymization capabilities.
Curious? We would be happy to talk with you about your use case and see how we can help you streamline your identity verification process. Please contact us or book a demo below.