Why is Identity Verification Important?
Why is Identity Verification Important?
Identity verification has played an integral role in a number of industries such as the financial sector, retail and merchandising, government, and service industry. There are many reasons why businesses require customers to verify their identity. However, fraud prevention tops as the main reason why most entities resort to identity verification.
Electronic Identity Verification has increasingly grown in demand in the past decades, especially in the financial sector. Governments are pressuring businesses and companies to employ stricter measures to prevent fraud, theft, and even terrorist activity funding. Current regulatory frameworks have been amended to comply with governments’ requirements such as the “Customer Due Diligence” rule by the US Treasury Department, to name one. This regulation requires organizations to collect, verify, and save records of identities of proprietors of companies that open accounts with them.
The financial sector isn’t the only industry affected by the increase in demand for digital identity verification. Software providers are another key sector of the online market to look at, as well as online service providers that host multitudes of services or content that customers access on a daily basis. With the digital age developing further, we now see even services such as medical consultations, travel and accommodations, and even legal services now being offered online.
Any organization that provides goods or services to customers online are required by international laws to abide by the minimum standards of identity verification, such as AML5 in the UK and across the European Union, and the Digital Identity Guidelines by NIST in the United States. These regulations serve as technical guidelines for online businesses to abide by in verifying their customers’ identity. This is to prevent fraudulent activity and breaches in company systems where customer data is compromised which has been an ongoing trend in recent years.
Traditionally, face-to-face processes involve an individual physically presenting himself to an institution with their valid identification documents in hand, where the credentials are verified by an authorized employee to verify their identity. This mostly entailed confirming whether the credential (including but not limited to government IDs or other accepted identification documents such as a company ID) presented indeed belonged to the individual carrying it. The process would also typically include making a copy of the credential and requiring the individual to fill out an application form of sorts, and typically sign a waiver disclaiming the company from acquiring such information forcefully or against the individual’s will.
In the digital age, organizations do not necessarily have physical locations where individuals can go to verify their identities, nor do they have authorized employees to verify user credentials. However, online identity verification solutions are widely becoming available such as Q-SERVI, that can verify individuals’ identities through online user identity verification checks, globally with better accuracy and security than that of traditional methods and processes.
Particularly with high-security operations such as in the finance, banking industry, and gaming industries, digital identity verification processes must abide by stringent regulations imposed by national and international law to ensure the credibility of the organization providing services, as well as to provide security to its users against criminal activities such as theft and fraud. This process, more commonly referred to as eKYC, or the e-Know Your Customer process, functions as an online identification check. This process allows organizations to digitally verify customer and user identities remotely to guarantee more effective and secure transactions online.
With technology taking on the role of the human element that verifies user identities, more and more providers seek instead to employ AI-powered third-party verification systems that have proven more efficient and effective ways to digitally verify user identification. Most commonly utilized processes involve users providing their real-world identity and personal details such as full name, address, and phone number. What usually follows is scanning a government-issued ID and submitting the photos that are checked and validated in real-time against a database to prevent fraud.
Once the document is confirmed as valid, apps will require the user to take selfie photos or videos that are checked in real-time to verify that the user is the owner of the presented documents. With this, users of company services online are able to verify their identity digitally, and all that’s needed is an electronic device with internet connectivity and a camera.
Digital identity verification processes allow both users and providers to establish and validate their credibility online where trust is difficult to earn and easy to lose. Users can switch brands at the slightest inconvenience, jumping from one provider to another until they find one that meets their needs – whether they be of brand message, service satisfaction, or even something as seemingly mundane as a company’s colour scheme. One thing, however, is that users nowadays are keener on looking for companies that provide security, especially with the number of nightmare cases where reports of stolen identities and fraudulent credit card charges have plagued the online community.
For this very reason, organizations that provide goods and services online employ digital identity verification processes, oftentimes through third-party providers such as Q-SERVI to expedite the provision of digital identity verification to their users. This allows businesses to minimize the overhead spend for the infrastructure, manpower, and maintenance of systems that are qualified by international standards to digitally verify users’ identities online.
Aside from the obvious benefits, companies also enjoy being the “customer” in these scenarios, where their needs are met by service providers to in turn afford their end customers the security of having their identities be digitally verified online. This also further solidifies trust in the customer-company relationship, which is vital in today’s market since as mentioned, the slightest misstep can cause a company to not only lose an individual customer but to avoid public backlash as well, as is now common in the age of social media.
With times moving faster toward a more exclusively digital landscape, user-centric methods are key. Customers now prefer to work with companies and businesses that are able to conduct transactions online for a more seamless experience, and this is no longer just limited to financial and digital services.
Companies in the current time must be kept abreast with the requirements of international digital identification processes and hold themselves accountable for providing such securities to their users to stay relevant.
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