Almost anyone who’s signed up for any kind of financial service in the last 1 year must have heard the terms “identity verification” or “identity authentication”. Switching to a digital environment became faster when the pandemic forced the entire world into their homes. Banks, financial services, and other firms have pushed themselves to improve the digital processes. Most of the businesses are closed, the demand for online customer onboarding services and verification services is increasing. The rate of fraud has also increased since most businesses use incomplete online services. This is one of the biggest reasons businesses need identity verification and authentication solutions.
Most of our lives revolve around online solutions, the digital revolution will improve the customer experience of using all kinds of services. Apart from the perks that digital services claim to offer, there are a series of challenges too. One of the biggest challenges that most businesses face is that the stakes are higher compared to offline services. For both customers and businesses, it is important to know who they are interacting with online. Fraudsters can easily assume the identities of customers and businesses to trick one another. With offline operations, both customers and businesses have the luxury of interacting with each other face to face. With the rise of online solutions, identity fraud has become an enormous challenge.
Most of our lives revolve around online solutions, the digital revolution will improve the customer experience of using all kinds of services. Apart from the perks that digital services claim to offer, there are a series of challenges too. One of the biggest challenges that most businesses face is that the stakes are higher compared to offline services. For both customers and businesses, it is important to know who they are interacting with online. Fraudsters can easily assume the identities of customers and businesses to trick one another. With offline operations, both customers and businesses have the luxury of interacting with each other face to face. With the rise of online solutions, identity fraud has become an enormous challenge.
What’s the Need for Understanding Customer Identities?
To mitigate the increased risk of identity fraud in the digital world, knowing whom the businesses are interacting with is crucial. Establishing a customer’s identity sounds easy, but there are a lot of elements in the identity verification industry. Most businesses are just entering the digital environment and they’re unaware of the terminology. Most businesses interchange “identity verification” and “identity authentication”. Both the terms hold different meanings, both serve different purposes, and making a known decision is vital for businesses. To reduce the chances of identity theft and other forms of financial fraud, businesses need to be aware of the difference between identity verification and authentication.
What is Identity Verification?
Identity verification for businesses is pretty simple, they want to learn if the customers are who they claim they are? In the traditional ways, verifying customer identities is simple, businesses just had to verify identity documents with the person standing in front of them. Though verifying documents in person also requires firms to follow a series of checks. Let’s say you’re traveling to another country. The person who checks your passport needs to verify several facts, including if the document presented is authentic or not. If the personal information on the document matches the person who is presenting the document.
Now take that into an online environment, and it’s easy to understand that verifying customer identities online is incredibly tough. However, the basic foundation remains the same, businesses need to verify if a customer that’s trying to sign up is who they claim. The three basic foundations of the business revolve around questions like:
To get through these challenges, DIRO’s online document verification solution offers unique features.
Now take that into an online environment, and it’s easy to understand that verifying customer identities online is incredibly tough. However, the basic foundation remains the same, businesses need to verify if a customer that’s trying to sign up is who they claim. The three basic foundations of the business revolve around questions like:
- Are the documents provided real or fake?
- Is the person providing documents online real?
- Does the document belong to the right person? Or is someone using a fake/stolen document?
To get through these challenges, DIRO’s online document verification solution offers unique features.
- DIRO can verify customer documents instantly, including bank statements, utility bills, and tax return documents, and so on. The technology provides proof of authentication with verifiable credentials.
- DIRO verifies the identity of the customer with strong impersonation checks and automated user consent.
- DIRO verifies documents by capturing information directly from the original web source, which eliminates the use of fake and stolen documents.
What is Identity Authentication?
Now that you know what identity verification is, now is the time to know what identity authentication is and how is it different? Whereas identity verification helps in secure, efficient, and fraud-proof customer onboarding, identity authentication is crucial for identity management. Most businesses stop verifying customer identities once the customers have signed up.
Verifying customer identities is a one time process, however, the authentication process is an ongoing experience. The identity authentication process is tough and customers have to be verified throughout the entire relationship. This part is essential for businesses that revolve around online money transfers and other high stake situations.
There are several ways to do customer authentication. The major part of authentication is that it relies on the knowledge that they have verified a customer before. A strong customer authentication relies on three legs. The first element is “Knowledge” (something only a customer knows, like knowledge-based questions). The second element is “Possession” (something that only the user will have, like a social security number or government issued ID. Third element involved in customer identity authentication is “inherence” (something that a user himself/herself is).
All the three elements have to be independent of each other, any element shouldn’t compromise the reliability of others. With most businesses moving towards the online landscape, there is a tremendous need to authenticate the identity of users.
Verifying customer identities is a one time process, however, the authentication process is an ongoing experience. The identity authentication process is tough and customers have to be verified throughout the entire relationship. This part is essential for businesses that revolve around online money transfers and other high stake situations.
There are several ways to do customer authentication. The major part of authentication is that it relies on the knowledge that they have verified a customer before. A strong customer authentication relies on three legs. The first element is “Knowledge” (something only a customer knows, like knowledge-based questions). The second element is “Possession” (something that only the user will have, like a social security number or government issued ID. Third element involved in customer identity authentication is “inherence” (something that a user himself/herself is).
All the three elements have to be independent of each other, any element shouldn’t compromise the reliability of others. With most businesses moving towards the online landscape, there is a tremendous need to authenticate the identity of users.
Future of Digital Transformation
Understanding the future of digital transformation is crucial for firms to build their online customer identity and authentication processes. By grasping the basic concepts of identity verification and authentication, businesses can reduce the risk of financial or online fraud.
Third-party solutions like DIRO verification technology can make the process easier and more efficient. It helps in reducing fraud and enhancing the customer experience.
Third-party solutions like DIRO verification technology can make the process easier and more efficient. It helps in reducing fraud and enhancing the customer experience.