How cybersecurity is backed by innovative identity verification solutions?

Fraud – particularly, identity theft – is one of the major threats plaguing the banking sector in the UK. When you realize that financial crimes cost the UK banking industry approximately £1.2 billion, and that every 15 seconds, a new incident of financial fraud was recorded, the sheer scale of this threat becomes evident.

The explosive adoption of online and mobile banking has paved the way for new channels for fraudsters to infiltrate. Unfortunately, banks and other financial institutions are still utilizing outdated procedures of identity verification which are simply insufficient in today’s technologically advanced world.

Considering this, what could be an efficient solution, and how can banks finally be one step ahead of fraudsters when it comes to identity theft?

Rising Danger of Identity Fraud

Identity fraud accelerated after the increased usage of digital payments and online banking. Online channels in particular have become the prime targets for cyber criminals, with incidents of bank transfer frauds reaching a value of £207.8m in the first quarter of 2020.

Data breaches expose huge amounts of PII (Personally Identifiable Information) across the internet, and is the primary contributor to identity theft. With sensitive information in hand, criminals enable themselves to use the breached data to execute crimes such as account takeovers and identity theft.

As increasing vulnerabilities make things easier for criminals, banks are at risk of identity fraud, as they have long employed manual identity verification procedures to verify customer identity. The issue with manual methods is that once sensitive data is stolen, it becomes possible for fraudsters to infiltrate systems and apply for fraudulent claims and benefits.

Additionally, as banks shift towards digital platforms to enhance customers convenience, it makes remote or online identity verification even more burdensome. While third-party breaches might be uncontrollable, banks can invest in AI-powered identity verification solutions to tackle internal system threats.

Identity Verification Solutions

The consequences of identity theft make banks re-analyze their conventional identity verification processes. By using a combination of traditional methods and modern identity verification procedures that are backed by artificial intelligence models, banks can efficiently combat high fraud rates.

Identity verification solutions enable a wide range of checks, including real-time ID document verification, biometric authentication etc. Listed below are the five simple steps in which modern software can verify the identity of customers within seconds:

1. The customers provide their personally identifiable information, such as their name, DoB, email ID, social security number etc.
2. Customers upload their official ID documents, such as a passport, driver’s license or utility bill
3. Through OCR technology or Intelligent OCR technology, the data from the document is automatically extracted and analyzed
4. The data extracted from the document is cross-matched against the information provided by the customer in the first step
5. Verification results are displayed on the screen and the customer is successfully onboarded

With the help of this approach, financial institutions can accurately analyze customer information to make necessary cyber security decisions, assisting the banks in lowering the probability of fraud.

Fraud Prevention and Customer Convenience

The advantages of automated identity verification go beyond reducing identity fraud as it also plays a significant role in enabling banks to fully digitize their products and services to improve customer experience and accelerate revenue growth.

Customers today expect a seamless experience by using online platforms and mobile devices to vail financial services. Opening new bank accounts by physically visiting a branch is not only inconvenient, but time consuming as well. Manual procedures of identity verification can quickly frustrate customers to the point where they could possibly abandon the onboarding process altogether and shift to another bank.

On the contrary, when banks offer remote automated services that effectively verify customer’s identity, without compromising their security, it helps in enhancing the customer experience and leads to a reduction in application abandonment rate.

Summing it Up

The increasing adoption of online banking, alongside the explosive growth in cyber-attacks, is causing new challenges for financial institutions like banks to accurately verify identities. It has, therefore, become apparent that if banks abandon traditional verification methods at the time of customer onboarding, the threat of fraud can be substantially reduced. This way, they can streamline their account opening processes, while also remaining competitive in an ever-evolving market.