How ID Verification Improves the Customer Onboarding Process

Leor Melamedov

ID verification is a non-negotiable part of onboarding new bank customers. Since September 11th, banks have been held to particularly stringent know your customer (KYC) and anti-money laundering requirements, and ID verification plays a significant role in that. When done using the latest technological solutions that minimize inefficiencies and maximize accuracy, ID verification can make the customer onboarding process both more compliant and more effortless.

How ID verification works at financial institutions

Prospective bank customers are held to the highest standards of compliance. Anybody who wishes to open an account at a financial institution in the U.S. is required to bring a form of official ID. This can be a driver’s license, passport, state ID, or another form of ID that’s permitted by the bank. The information in the ID is then compared to publicly available databases containing records of citizens.

In recent years, photo ID verification has risen to prominence. This technology is able to map out facial characteristics, the distance between different facial features, and even skin texture to create a unique “faceprint.” Much like a fingerprint, no two people have the same faceprint, making this a reliable way of determining a person’s identity.

During the onboarding process, a customer will provide the photo ID, and facial recognition software will automatically compare it to millions of police records containing faces linked to identities. Far from being a repository for criminals, it is estimated that around 50% of Americans are in such systems — making it a good way to confirm identity and learn more about the new customer. Information like a criminal record, personal or business relationships, business involvement, and other revealing details can be gleaned just from public databases.

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The next generation of ID verification

While traditional methods of ID verification remain useful and relevant, they may not always be sufficient. The rise of international terrorist financing and increasingly sophisticated schemes such as synthetic identity theft have necessitated more advanced methods of ID verification. It is no longer enough to simply compare a person’s ID to public records because ID can be stolen or forged.

The next generation of ID verification technology also relies on facial recognition, but with a twist. To determine the authenticity of a person’s claimed identity, it requires the customer to provide two images: a form of photo ID, and a selfie taken in live mode. Sometimes, the person will be asked to also hold the ID in their hand as they take the selfie for added authenticity.

Lightico offers such a solution, and here are the simple steps involved:

  1. A financial institution’s call center agent sends a text message containing a link to the customer.
  2. The customer takes a picture of his or her photo ID, and then a selfie using live mode.
  3. The customer uploads both images — the selfie and photo ID — to the interactive session in the text message link.
  4. An AI algorithm scans the two photos, and a match is confirmed or denied.

The advantages of advanced ID verification for onboarding

In today’s world, banks face a two-pronged dilemma: on the one hand, they are expected to conduct accurate and thorough due diligence. This comes in the form of regulatory pressure from government bodies such as The Financial Action Task Force (FATF). On the other hand, they are expected to be digital-first, efficient, and fast. This comes in the form of pressure to be convenient from customers who have no patience for slow, paperwork-heavy processes.

The good news is that technological advances in ID verification make it easy for banks to have their cake and eat it too. AI-based facial recognition takes advantage of the ubiquity of smartphone cameras which now include live mode.

It’s good for customers. Customers increasingly choose to apply for new bank accounts online, whether via a computer or their mobile phone. ID verification can take place using the same channel they choose to complete the process from and avoids burdensome in-person visits, scanners, or printers. This dramatically reduces friction and channel-bouncing, creating a smoother and more positive customer experience.

It’s good for banking agents. Agents no longer need to perform lengthy manual checks and make judgment calls. The job of ID verification is done by a reliable machine, so they can process the customer’s onboarding application faster and with less heavy lifting.

It’s good for banking executives. Once the technology is in place, they don’t need to worry about making sure their agents are properly following compliance protocols because it’s so streamlined and simple. Accuracy is practically 100% and added security layers such as knowledge-based authentication (KBA) and one-time passwords (OTP) ensure that data integrity is maintained and fraud is prevented.

The bottom line

The latest ID verification technology allows financial institutions to onboard customers in a compliant and efficient way. This potent combination of capabilities makes it a winning choice for banks committed to a digital transformation who still want to maintain their security posture. Learn more about Lightico’s ID verification solution and related capabilities at Lightico.com.

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