Digital Identity Checks For Secure & Automated Customer Verification


The digital transformation has speeded up in the last couple of decades. The utilization of digital gadgets has accumulated in recent years. Its further flourishing is subjected to user privacy and data security. Speed and security are two primary demands of modern-day demands. But one can’t be compromised over the other, some online businesses have negotiated security across the speed. 

The case can be more sensitive if a business is dealing with finance (financial institutions). The reason is they are at the potential risk of frauds and scams. The criminal actors always try to proceed with their illegal practices in the financial system. They want to get financial benefits through this. The financial service providers that do not have set any digital identity verification service can face a high rate of crimes.

The loopholes in the compliance show why financial crimes have not decreased yet. It is the duty of the financial services-providing businesses to protect their customers from all types of scams. Also, the customers need to know the prevention tactics.

Securing a customer’s data and account is the regulatory requirement for the finance sector like banks, investment firms, insurance corporations, foreign exchanges, and security firms. The regulatory compliance includes identity verification (KYC) and anti-money laundering screening of all onboarding customers. Additionally, background monitoring creates better trust between a customer and a business. 

Digital Identity Verification Checks

Document Verification 

Under the requirements of global watchdogs, financial institutions need to verify their customers’ identities through documents. So document verification is the first step for identity verification checks. Customers have to upload the image of a government-approved ID document during onboarding (opening a bank online account). This can be a national identity card, international passport, or a driving license. The uploaded image is scanned by OCR and all the required data is extracted from it. 

Below are the validations performed in this step:

  • The authenticity of the uploaded document

  • Personal details (Full name, gender, and date of birth)

  • Document expiry date

  • Tempering Attempts

  • Signs of government issuance

Address Verification

For getting a verified address of a customer, businesses require to use an additional (address) document. It must be issued within the last three months and must have an updated address data. It should be approved by some authentic authority like a bank. The address document can be a utility bill, bank statement, employee letter, or an insurance certificate. The address is extracted from the image.

Knowledge-Based Authentication  

This is known as the “something you know”, KBA checks the identity of a user by asking him some questions. The answers to these questions are recorded while setting up the KBA. The questions can be difficult to answer for other people but not for the actual user. For example, asking the first school attended or mother’s maiden name.

KBA is used as an additional security layer after passwords. A user has to answer the KBA questions for accessing his account.

2-Factor Authentication

After typing the password, if matched, a code is sent to the user’s mobile phone, this method is known as 2-FA. It is a second security step in account authentication. First, the password is matched, and then the code. 

Biometric Authentication

Experts say that biometrics is the future of authentication. There are numerous reasons for this, some of them are discussed below:

  • They are unique - zero duplication

  • Can’t be copied easily

  • Tells the live presence of a user

Among all, facial and fingerprints are mostly used. Now, almost all mobile phones are incorporated with facial recognition technology and fingerprint scanner. Now the users can unlock their mobile phones through fingerprint or facial recognition. It eradicates the trouble of typing passwords. The process is more fast and secure now. Payment apps are also using biometric verification for login security.  

A user just has to verify his face or fingerprint during sign-up and every time he logs in, he will be authenticated by his method.

Wrapping it Up

Digital identities can be verified using any of the above methods. But if a company wants solid security it should go for document verification or biometric authentication. These are the futuristic approaches toward identity verification.

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