What is identity verification and why is it needed?
Over the last few years the relevance of new tools and technologies concerning digital onboarding has significantly increased. One of the most important topics related to this is the identity verification, which is the process of matching the identity that a user claims to have with specific verified data and details related to a real person.
This factor can be extremely useful to improve performances over the Internet user experience by ensuring delicate activities like e-banking or access to private accounts and information, thus it represents a powerful system to prevent criminal actions such as fraud, identity theft or hacking. So, that’s a sensitive point for companies and users in order to face the challenges and the risks related to the digital economy.
Indeed, identity verification is a very interesting key trend: according to data collected in a report published in January 2023, the worldwide identity verification market reached a value of $9.5 billion within 2022 and is expected to grow up to more than $18 billion in the next 5 years by the end of 2027 evaluating almost 15% annual growth rate.
5 methods to process online identity verification
How’s possible to check verified identities? Companies and organizations can mainly rely on five methods to process online identity verification for users and customers. They are:
- Knowledge-based authentication: it is the most basic system to process identity verification and it refers to the typical matching of username and/or email with a password with the addition of one more security level consisting of one or more personal questions which can be correctly answered only by the real person behind that identity – but this only in theory, in fact nowadays it’s easy for digital criminals to steal such information;
- Two-factor authentication: this method is very common and popular and it represents a very good system to verify one’s identity since, in addition to the classic data needed to log into bank or social media accounts, it requires to enter a private short-time expiring code sent on the personal email and/or phone number;
- Database authentication: this method allows users to easily log into accounts and services by verifying their identities through several sources both online and offline, like Google or social media accounts or specific codes related to personal ID or credit cards, but on the other hand it doesn’t give a proper level of security because it’s impossible to learn if the real person related to an identity is the same who’s actually trying to access;
- Online authentication: this is probably the most secure method to verify the identity of a user over the Internet because it requires a person to take a picture holding his/her ID card, thus making absolutely clear that the faces of the individual holding the document and the person appearing on the card are exactly the same – nevertheless, even if this is a very secure authentication method, many people don’t feel comfortable about it;
- Biometric authentication: nowadays it’s very popular to use this highly secure system to process identity verification by using personal physical attributes, such as voice and face recognition, fingerprints and eyes scanning, as it’s easy for users to adopt this method for they don’t need to remember passwords or keep specific codes at hand – by the way, since biometric data are saved into large databases, there’s always the risk that digital criminals find a way to enter into them and leak information.
At the bottom line, it’s highly recommended to rely on a multiple security levels approach to process identity authentication, setting up a combination of these methods in order to prevent digital crimes and ensure users that their data and activities are safe. For example, a very powerful security and identity verification process may consider the combination of knowledge-based systems with the addition of both two-factors and biometric authentications.
How to build trust for your business by optimizing identity verification
Could the optimization of identity verification methods be a big opportunity for business branding? The answer is yes and it represents a natural reaction related to the evolution of the digital economy and the risks it entails.
Indeed, the relevant growth of the worldwide identity verification market is only what comes next after a growing demand for online security and transparency. Companies willing to lead their own markets are those that today care to manage identity verification in digital onboarding, as users address it as a very important matter of trust.
Thus, businesses must be able to build trustworthy quality relationships with their customers, which are basically strangers, yet they must aim to reduce the general risk that digital crimes may occur against themselves or their clients. This is a reason why optimizing identity verification systems in the company’s onboarding processes represents a good way to build trust, especially by:
- Improving customer experience, as verified clients’ identities can be recognized right away making easier and faster for them to use products and services;
- Preventing digital crimes, as companies which periodically care about safeguarding their own business and their customers data implementing or empowering security systems are able to gain and retain trust;
- Complying identity verification solutions to specific regulations like Know Your Customer (KYC), Anti Money Laundering (AML), GDPR and PSD2.
Learning how to manage identity authentication in digital onboarding is already a big deal to thrive trustworthy business activities, yet over the next years will be a key turning point for the whole digital economy.
