Why Identity Verification is Vital Investment for the Banking Industry
By Alexandra Veneck
Without a doubt, ID verification is a vital investment for the banking industry. In recent years, banks have had to strictly comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements to ensure the safety of both the bank and its customers. And with the latest technologies that minimize inefficiencies and maximize accuracy, ID verification plays a significant role in that. In fact, one of the most important uses of ID verification is for customer onboarding with new account openings.
How Identity Verification Works at Financial Institutions
When someone wishes to open an account at a bank, it requires lots of documentation to allow for background checks. Prospective bank customers are held to the highest standards of compliance because the bank does not know anything about them or if they can be trusted. So, when opening a new account in the US, customers are required to bring an official form of ID such as a driver’s license, passport, state ID, or any other form of ID that is accepted by the bank. The ID is then compared to publicly available databases with records of citizens.
With growing technology, there has been a rise in electronic ID verification in replacement of in-person verification. So, photo ID verification is becoming more valuable. When using photo ID verification, Lightico’s software compares a photo ID to a real-time selfie of the person. This is done with different AI technology and biometrics to identify and authenticate the individual with their unique biological characteristics. Similar to a fingerprint, everyone has their own unique faceprint, making this a reliable way of determining a person’s identity.
After the photo ID is compared to the actual person, many platforms also use facial recognition software to compare it to millions of police records with faces linked to identities. In fact, there is a 50% chance that your photo is in at least one database used in police facial-recognition systems. With all this data readily available, it ensures it is a reliable way to confirm identity and learn more about the prospective customer. Using such databases, banks can find people’s criminal record, personal or business relationships, business involvement, and other related information.
Why is Identity Verification Necessary?
With the ongoing pandemic, the ways of banking, or any industry as a matter of fact, will never be the same. The drive to go digital is even stronger since both customers and employees are not able to leave their homes as much, so people are spending more time online. With the high US unemployment rate, along with most of the country working from home, fraudsters view this as the perfect opportunity to illegally obtain money. As a result, it is vital to make sure the people you are talking to online are who they claim to be.
What people tend to not realize is that there are more fraud cases out there than you think. In fact, people are using COVID-19 to their advantage, causing a tremendous increase in the number of virtual fraud cases. People are scamming others into donating money, providing personal information, or lying about having a cure for the virus. Due to the sudden rise in fraudulent behavior, the FBI established a COVID-19 Working Group. The group consists of FBI representatives from all 56 field offices and 500 participants from the Department of Justice.
By May 28, 2020, the Internet Crime Complaint Center (IC3) had received about 320,000 complaints -- almost the same amount of complaints received in all of 2019, which was about 400,000. About 75% of the complaints were with regard to frauds and swindles. In fact, since the pandemic, most of the increases in fraud are related to banking, as well as other industries.
To ensure the safety of both the customers and the bank, more and more are beginning to require some sort of photo identification after an eSignature. As the future of ID verification continues to evolve, the customer onboarding process continues to need extra security.
How Does Identity Verification Work?
There are many different software solutions available for businesses to use for ID verification. With Lightico’s ID verification solution, there is a fully digital process to confirm a person’s identity in real-time. Here’s how it works:
Customer receives a text message with a link to a secure session with a request for photo ID.
Customer uses their cell phone camera to take a photo of their ID (drivers license, passport, etc)
Customer takes a live selfie to be compared to the ID provided. This will immediately be used to confirm that the person on the phone and the person on the photo ID are the same.
Customer ID and photo is matched and verified
The Bottom Line
The newest forms of ID verification technology help financial institutions onboard customers in an efficient and safe manner. Dealing with money is very serious and cannot be taken lightly. With such high-tech technology, banks and their customers can feel safe and secure with electronic ID verification. Learn more about Lightico’s ID verification solution and related capabilities at Lightico.com.
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