Verification of identity

Identity verification is the important process of ensuring that a person is who they say they are when opening a bank account, applying for credit, or going through other financial processes. Although identity verification is an important security measure in combating new account fraud, identity verification also plays a role in financial institutions' efforts to know their customers (KYC) and combat money laundering (AML) to assess and monitor customer risk.

What is digital identity verification?

Digital identity verification brings the concept of identity verification to today's remote control world. With data breaches, account takeover attacks and identity theft on the rise, companies need to identify identity fraud and determine if someone is who they say they are online.

Digital identity verification methods such as biometric verification, facial recognition and digital ID document verification can help businesses, governments and financial institutions verify a person's identity online.

Digital identity verification can be used when the person and their identification document are not physically present. Digital identity verification can also be used to speed up identity verification, z. B. Through the use of e-gates to scan passports at airports.

Digital identity verification is an important step during the account opening and customer onboarding process. By verifying an applicant's identity, financial institutions can ensure that the applicant is not a fraud, criminal, bad actor, or scam artist.

How does an identity verification process work?

There are many different types of digital identity verification and identity verification solutions available. Digital identity verification methods work by using something that the person owns (z. B. a biometric feature of the face or an identity document), compare it with a verified data set (z. B. Data held by governments, such as passport data, or a biometric stored on a user's registered cell phone). Digital identity verification compares the data provided with the verified record to verify that a person is who they say they are.

There are many different methods of digital identity verification, all of which work in different ways. These methods include:

ID Document Verification: Verifies that the ID (z. B. driver's license, passport, government-issued ID) is legitimate.
Biometric verification: uses selfies to determine that the person presenting the ID card is the same person whose portrait appears on the ID card.
Liveness Detection: Determines whether a selfie is real by detecting spoofing attacks such as face masks or photos of photos.
Knowledge-based authentication (KBA): generates "out of wallet" questions based on information in the applicant's personal credit file.
One-time passcode (OTP) verification: transmits a one-time passcode to the applicant via SMS or email during the verification process.
Trusted Identity Network: Uses the applicant's existing credentials with another provider to verify their identity and reduce friction during the account opening and onboarding process.
Database methods: Database methods use data from social media, offline databases, and other sources to verify information submitted by the applicant.

How does the verification of ID documents work?

ID document verification plays an essential role in opening a new bank account, onboarding and financial arrangements. Document verification is a digital identity verification method that verifies that an applicant's ID document (z. B. Passport, identity card, driver's license, etc.) is legitimate.

The goal is to collect, extract, and analyze ID data to authenticate government-issued identity documents. This helps to distinguish what is real and what is fraudulent.

With automated ID document verification, identity documents can be authenticated in real time and within seconds.

Using the built-in camera of a mobile or wearable device, the technology captures an image of the applicant's ID document. Artificial intelligence and advanced authenticity algorithms are then used to analyze the image and create an authenticity score to determine if the ID document is fake or real.

Advanced authenticators include:

Visible security features: Embedded security features such as watermarks or holograms can be detected and their position and appearance analyzed.
Font usage and consistency: fonts are analyzed and compared with standard fonts for a specific document template. The spacing, shape and consistency of letters are used to analyze authenticity.
Detection of rounded corners: Rounded corners can be checked to ensure they are aligned with templates.

What are the benefits of ID document verification?

With ID document verification, a customer's ID documents can be authenticated digitally and in real time, regardless of whether the user is in the branch or at another location.

For financial services providers, technology speeds up the bank account opening, onboarding, lending and funding process, while protecting against fraud and reducing abandonment rates in their digital banking and online banking channels.

How facial biometrics can be used for digital identity verification and fraud prevention?

Face matching uses advanced algorithms to extract biometric data from a facial image – distilling facial features (such as z. B. the position and size of a person's eyes in relation to each other) into a standardized data set. By comparing two records, it can be determined if two images are from the same person. If an image comes from a pre-verified source (z. B. a passport or ID card verified by means of document verification) and the second image is a real-time image taken by the applicant at the time of his application, the facial comparison can be used to prove his presence.

It's also important to note that there is a distinct difference between facial recognition and facial matching. To learn more, read our blog post "Biometric identity verification: the difference between facial recognition and facial matching technology".

What are the benefits of biometric verification?

Verification of an identity document alone is not enough when it comes to establishing a trustworthy online identity profile. Biometric verification using facial comparison provides an additional level of confidence to determine that a remote user is the same person who presented the ID document. The recognition of liveliness, z. B. of a smile, helps detect spoofing attacks such as videos, facial masks, or photos of photos.

How activity recognition works?

Crucial to any facial biometric technology is the ability to detect spoofing and fraudulent behavior. The most common form of spoofing involves presenting a previously obtained static image of a person for comparison with the trusted source image. To counteract this and ensure the presence of the person, a form of Liveness Detection can be used.

Many different methods of liveness detection are available on the market today. The most common form of Liveness Detection instructs the user to perform a series of head movements to prove liveness. More advanced techniques, such as z. B. 3D detection and thermal imaging, require specialized hardware and are not suitable for everyday commercial applications.

What is the purpose of the identity check?

Digital identity verification is used to enable remote onboarding for new account openings and lending, and to improve the customer experience

New customers expect to be able to open an account online. As a result, banks and other financial institutions must offer digital account opening through online and mobile channels.

Financial institutions looking to acquire new customers through digital channels need to figure out how to fully onboard a customer remotely. For many financial institutions, this means adding digital identity verification to their online capabilities. The faster they can achieve this goal, the better they will be able to compete with digitized competitors and new market entrants.

Digital identity verification is used to combat application fraud and detect fake identity documents in real time

Given the scale and impact of fraud, it is critical that financial institutions detect application fraud when opening accounts.Digital identity verification can be used to determine whether a person is really who they say they are or not. Financial institutions can use digital identity verification methods such as facial biometrics to combat fraud by validating a user's identity in real time – regardless of whether the user is online or on their phone.

When a user is unknown (z. B. in the case of a new customer applying for a new account remotely), financial institutions can use facial matching to compare a live image of the applicant to the image on a verified ID document to prove that a user is not fraudulently trying to open an account.

Here you can learn how facial comparison is used to verify the identity of an applicant and to prove the presence of an applicant when opening a digital account:

Document verification is used to check the authenticity of an applicant's passport, ID card or driver's license.
Once the authenticity of the ID document is confirmed, the applicant is asked to take a selfie with their handheld device.
Face matching technology compares the selfie image with the image from the verified ID document to prove that the verified person is really present during the account opening process.

WHITE PAPER

Digital Account Opening: How Banks Can Transform & Protect The Customer Journey

Learn key trends, best practices, and technologies to overcome the challenge of creating a fully digital account opening process, including facial biometrics, e-signature, and machine learning-based fraud analytics in this white paper.

Digital identity verification is used for automated passport control

Another common use case for face comparison is automated passport control ("e-gates"). The process uses ID document verification and facial comparison together to verify the authenticity of the ID document and the presence of the real passport holder in real time. During this process, a trusted source image of the passport holder is compared to the real-time photo of the person trying to get through the gate.

Here you can see how the facial comparison is used to prove a person's presence at passport control:

The user presents his passport for authentication.
A photo of the user is extracted from their passport.
The image is used as a trusted source image.
The automated gate takes a photo of the user.
The facial comparison compares the trustworthy source image (extracted from the passport) with the photograph.
If the trusted source image and the photo match, the user is let through.

What are the advantages of digital identity verification?

A fully digital process provides a great user experience and can drive growth in digital channels.
Digital identity verification can help financial institutions reduce fraud when an unknown applicant/potential customer is in the distance.
Digital identity verification can help financial institutions meet know-you-customer (KYC) requirements.
Biometric digital identity verification uses facial comparison to determine if the person presenting the ID matches the person on the ID document
Mobile image capture is usable and accessible for everyone
Data extraction directly from the document eliminates the need for manual data entry
Documents can be verified in seconds (depending on the provider of

Identity verification regulations and standards

Regulations in countries around the world are setting standards for the use of digital identity verification solutions. For example, AML5 and eIDAS provide guidance for countries in the European Union. AML5 focuses on combating money laundering and terrorist financing, while eIDAS governs essential digital identity verification functions, such as electronic signatures.

In the U.S., banks are regulated by the Customer Identification Program (CIP), which requires financial institutions to have a reasonable belief that each customer entering into a banking relationship is who they say they are. This was implemented as part of the Bank Secrecy Act, which was amended by the Patriot Act. CIP has been a requirement of the Patriot Act for financial institutions since 2003.

The future of identity verification services and digital identity verification

Companies in the United States and around the world that fail to earn consumer trust risk losing that business. Unfortunately, inadequate ID verification services are often easily exploited by fraudsters and undermine consumer confidence. That's why you need layered identity- and risk-based analytics and authentication solutions that leverage machine learning and can tell the difference between a customer and a bad actor – from account opening to ongoing maintenance – and every transaction in between to protect against financial crime.