Exploring how we can solve the issue of trust by securely identifying people online, while providing digital convenience and a seamless customer experience.
Identity and access management (IAM) solutions form an important part of the digital experience - and interestingly, customers aren’t too excited about it. By verifying users, a large number of platforms are able to boost trust, reduce fraudulent activities, increase sales and revenue. The process, however, requires customers to perform multiple steps - entering unwieldy passwords or keying in verification codes sent to an alternate device. This hoop is repeated across other platforms they need to use, making an otherwise seamless experience a cumbersome one for the consumer.
With digital transactions increasing by the day, a strong front-end verification that builds trust and security - while keeping the process friction-free for the user - is essential. It should ensure that the person initiating the transaction is indeed who they claim to be, and reduce fraud significantly by keeping out threat actors.
Securing digital identity trust: Why a combination of biometrics and document verification is needed
Right from onboarding to authenticating users through mobile devices and online channels, enterprises have a pressing need to reduce their physical footprint and enable digital convenience for the user - supported by strong security systems that reduce fraud.
A combination of biometric technology - one that taps into facial recognition and liveness detection, government-issued IDs and supported by technologies like machine learning (ML) and artificial intelligence (AI) are enabling businesses and consumers to adopt digital identities to build trust and security.
How is this done?
1. Ensure the user is a genuine person: This is managed by using a camera to capture the user’s photo and by recording a selfie video for liveness detection.
2. Supported by government documents: Securing the user’s details by verifying it against government-issued IDs or official documents. The verification accuracy is important to reduce the risk of fake identity documents and to ensure the organization is complying with Anti-Money Laundering (AML) and Know Your Customer (KYC) rules.
3. Mitigating risk and fraudulent activities: A combination of other information that include device data and network, depending on the risk appetite of the user, may be used to verify identity credentials and complete other tasks like opening a new account.
4. Streamlining the process to reduce friction and improve the digital experience: The workflow will need to be an efficient and commercially successful one, tying together all the data points and system workflow together, while negating friction and slow processing.
How biometrics drive digital identity solutions - a market that’s valued at $28 billion by 2023
As remote connected devices multiply, identity authentication and fraud solutions will be an increasingly important component for organizations. This gate-keeping is essential if users are to put their trust - and their money - in digital transactions. In the digital space, a data breach could expose sensitive details and personally identifying information such as social security data, passwords and payment card details.
Reports highlighted that over 3.25 billion records were compromised in the United States last year. The number was a steep 356% climb from 2017. Here’s where effective authentication can play a critical role - it can take big bites out of direct fraud, ones that include activities like unauthorized digital transactions, and also tackle downstream fraud, where billions of dollars are lost every year due to data breaches and identity theft.
Robust authentication that taps into biometrics can prevent impersonation and detect if the user is a live, genuine consumer and not synthetic. Why is this important? In a remote user verification setting, it is important to know that the consumer is a live person and not one that’s trying to spoof the system into recognizing it as a genuine user.
Facial recognition technology, when combined with liveness detection, can provide the best protection against fraud and unauthorized transactions. It essentially replaces the human when authenticating users in a remote, digital environment. Instead of an organization’s employee verifying the user against a government-issued ID or document at an offline branch, facial recognition can seamlessly perform the same transaction in a couple of seconds - anywhere and against multiple government documents.
An increasing number of tech companies are certainly upbeat on liveness detection for face recognition and are partnering with several businesses and government bodies to enable face recognition application programming interfaces (APIs). With artificial intelligence powering it, it works smarter than your brain. The biggest win for business and federal governments? All-time high customer satisfaction.
Platforms such as Passbase enable liveness detection authentication through a video selfie format, backed by government ID verification. Better yet, the user gets control over his or her digital identity - and gets to choose what data to share and who to share it with.
Enterprises can authenticate users in a couple of seconds by integrating bank-level identity verification into their websites, apps or checkout with just a few lines of code.
At a time when data breaches across the globe are rising and privacy issues are under the legal scanner, a decentralized solution that leverages facial recognition technology is apt in today’s data-sensitive space.
A universal digital identity like Passbase will enable users to reuse their digital identities across platforms without having to go through the authentication process for every transaction.
“Companies gain access to users’ information in a secure enclave, and avoid the dangers of getting hacked and leaking sensitive information,” Mathias Klenk, CEO and co-founder of Passbase, told TechCrunch earlier this year. Passbase offers ID verification for over 150 countries. To learn more, schedule a live demo.
When it comes to preferred modals, facial recognition dominated as the biometric thought most likely to be on the increase over the next few years, at 38%, followed by multimodal (22%) and iris (11%) – all usurping fingerprint at 9%,” a report published by the Biometrics Institute stated.
Increased adoption of biometrics for user authentication also revolutionizes the way businesses operate. For brick and mortar stores, facial recognition technology can help them identify customers, linking them to their purchase data to improve the user’s experience and drive data-based changes. Better yet, the technology’s API also mitigates the risk of shoplifting and theft. For online platforms, nearly all transactions can be completed by using their facial signatures - a simple step towards a seamless process for the user.
Tackling risk through digital identities
The risk management angle of identity and user verification is important since it’s the deciding factor to confirm:
- Whether a person’s identity is valid and legitimate
- Whether the user can be trusted
- Whether the user is authorized to perform certain tasks like opening a bank account, money transfers or reserving shared spaces.
Identity management solutions can also tap into identity data to improve the accuracy of identity verification - reducing fraud and risk for the organization. This data can be recorded from sources like credit agencies, electoral rolls, government databases, property files and details on utilities like telephone, gas and electricity. Data obtained from governmental entities like OFAC and DFAT can also sift out users.
Key market drivers for digital identity and verification services
Several processes ranging from digital onboarding, age verification, and compliance requirements that include AML and KYC legislation drive the digital identity market. This enables and builds greater trust in the shared, collaborative economy that we are in today.
With fintech organizations and challenger banks like Monzo, N26, Revolut, Monese and Nimbl leading the support for digital identity solutions, the push for a robust digital onboarding and authentication solution is increasing.
"Our physical environments are becoming more interconnected and intelligent. We are getting intelligent cars, homes and shopping experiences depending on the person accessing a service as part of the custom made economy in which we will be interacting and authorizing actions with our Self Sovereign Identity," wrote industry expert Alex Preukschat
Industries that are leading the adoption include financial services and insurance companies, players within the e-commerce space, telecom firms, gaming and retail companies - including age-restricted markets like gambling.
In the financial services sector, the ability to efficiently and securely onboard new users fits in with the strategy of challenger banks which have only a digital presence. In a community that prides itself as being ‘mobile first’ and ‘digital only,’ a secure authentication platform that can also mitigate risk is essential. It's not just challenger banks that are leveraging digital identities for better onboarding. Last month, NatWest became the first big UK bank to enable users to open accounts with a selfie, backed by the applicant's official identity documents.
Organizations need to move away as much as possible from a multi-step process that calls for numerous visits to an offline store or a branch. Instead they need to adopt a digital-first methodology that records and verifies all the necessary information in as few interactions as possible.
Companies need to move beyond legacy approaches to identity verification to combat identity fraud. By evolving from the traditional, single-source identity, the rise of digital identity platforms create real advantages for users. Platforms like Passbase provide users with control over their data and better security.
“By combining traditional identity verification methods with advanced risk analytics, powered by AI and machine learning technologies, organisations can achieve context-aware identity verification,” said Tim Bedard, Director of Security Product Marketing, OneSpan.
“This will allow banks and financial institutions to make security decisions in real-time based on the total risk associated with a new customer. This technique leverages a variety of checks to enable organisations to review and analyse multiple pieces of information from different sources and across multiple digital channels to better manage their risk of fraud,” Bedard remarked.
There's a bigger focus on delivering products that are focused on customer experiences today, making data security and its protection crucial. With international development agencies like the UN and the World Bank focused on providing a digital identity to every person by 2030, digital identities are here to stay - and its future hinges on building digital trust, security and privacy.