With an evolving digital landscape, financial services organisations face new challenges in verifying customer identities. Traditional ID verification processes are becoming less feasible and more expensive, leading to a growing demand for better solutions. As a result, the global digital identity verification market is experiencing significant growth. According to a report by Market Research Future, the market is projected to reach USD 17.3 billion by 2025, growing at a CAGR of 17.3% during the forecast period 2019-2025. Finance Magnates, in a recent post, sheds light on how identity verification is transforming financial services.
The article highlights identity solutions as a key enabler of a safe verification process. Leveraging high-end technologies like AI, blockchain, and biometrics, these solutions can mitigate the risk of fraud and identity theft in the digital era.
With the rising incidence of online fraud, robust security measures are essential. According to the Aite-Novarica Group, more than 47% of Americans fell victim to financial identity theft in 2020. In the same year, the Federal Trade Commission (FTC) reported around 4.8M identity theft cases, totalling $4.5B. By employing multi-layered security features, including biometric authentication, document verification, and behavioural analytics, high-end ID verification solutions ensure only authorised users gain access to financial services. The integration of real-time data analysis and machine learning (ML) algorithms helps detect suspicious activities promptly, thwarting potential threats before they escalate. These robust and tamper-proof methods of identity verification make it difficult for malicious actors to counterfeit or manipulate identities.
Moreover, digital identity solutions enhance efficiency by automating the identity verification process. By streamlining various procedures, these solutions reduce the time and resources required to verify identities, enabling financial institutions to process transactions more swiftly and efficiently.
According to the article, adopting digital identity verification also translates to real cost savings for financial institutions. By automating verification processes and eliminating manual reviews, the technology reduces errors and slashes operational costs substantially. It also lowers costs in terms of fines levied when customer data is breached due to the company’s non-compliance with regulations
To curb the onslaught of ever-growing security threats and money laundering cases, financial organisations are obligated to conform to stringent regulations such as Know your Customer (KYC) under the Anti-Money Laundering (AML) framework. Failing to meet these compliance guidelines sometimes results in increasingly steep penalties. For example, in the 2020 fiscal year, financial organisations worldwide were charged $10.6B for non-compliance with regulatory standards. Advanced digital identity verification solutions, such as Yoti digital ID, are devised to meet these regulatory requirements seamlessly. By automating the verification process and cross-referencing customer data against comprehensive databases, financial institutions can ensure compliance without compromising on efficiency.
Digital identity verification has been underscored as the most viable way to streamline the customer onboarding process. These solutions allow customers to verify their identities online without the need for physical document submissions or in-person visits. That, in turn, saves time and fortifies the overall customer experience.
Whilst digital identity verification offers numerous benefits, there are also challenges to address. These include ensuring data privacy and security and avoiding bias in the verification process. Finance Magnates, in the article, thus urges financial organisations to leverage safe and dependable digital identification systems to lock out fraudsters and lower the risk of data breaches or cyberattacks.
Sohela is an electrical engineer and a self-professed writer with a keen interest in all things tech. When she’s not writing killer content pieces, you’ll find her enjoying tempting foods in her favourite restaurants.