How Identity Verification Tools Shield Against Fraud

The identity verification process is crucial for all organisations, particularly those in the financial services. Gaining certainty around customers’ personal identity and ensuring information security is an essential verification process in protecting privacy and maintaining legal compliance.

Recent data suggests the value of global digital identity checks in 2023 was $61 billion, with forecasts of a rise to $71 billion in 2024. Infractions on data security mean that iron-safe identity verification solutions are required to eliminate the possibility of identity fraud.

Contents

• What are identity verification software tools?
• What is an example of an identity verification tool?
• Why use identity verification tools?
• How does identity verification work?
• Growing importance of identity verification tools.

What Are Identity Verification Software Tools?

As online obligations, such as financial onboarding, have grown so have incidences of identity fraud. This landscape has influenced the development of identity verification technologies that meet KYC (Know Your Customer) and AML (Anti-Money Laundering) compliance requirements while protecting organisations and individuals from fraud.

Put simply, identity verification tools are software solutions that help businesses easily and safely onboard customers using automated workflows that support regulatory compliance. WIthout these technologies, the digital universe would not be able to operate securely.

ID verification tools prove a person’s information, such as name or address, are correct. Identity verification can also be used to certify purchases on sites that require personal identification for financial online transactions.

In these scenarios, the software proves real customer ID's through the use of data like log-ins, passwords and device IP addresses without the customer having to insert new information.

What Is An Example Of An Identity Verification Tool?

As identity verification has become synonymous with our digital transactions, there is a coterie of tools we all use every day. Financial organisations often make substantial investments in identity verification technologies to secure their systems from cybersecurity threats.

Multi-factor authentication tools are vital in the battle against identity theft. They work by requiring a customer to enter a code sent by email or message to prove identity. As with two-factor authentication methods, customers have to log in with passwords or authorised codes as well as this system so that multiple layers of authentication are achieved.

It is clear from recent research that these types of digital identity verification have surged over recent years. The use of two-factor authentication increased by 51% from 2017 to 2021, demonstrating the efficacy of this specific technology.

The dominance of two-factor authentication also aligns with the fact that institutions in the financial sector report that traditional secure authentication methods are not as effective in eliminating identity fraud. In fact, 38% of financial companies confirm lower confidence in older authentication methods due to increased fraudulent activity. 

Why Use Identity Verification Tools?

Customers want to know they are digitally secure when sharing personal information online. It’s also notable that organisations with augmented fraud-prevention facilities are capable of minimising financial losses, boosting customer confidence and positioning effectively in terms of regulatory requirements.

Businesses that want to provide a fast, smooth customer experience for customers will no doubt want to make the most of these technologies. Studies have shown that 32% of UK consumers have considered abandoning opening a new account due to complex identity checks.

In order to reduce elevated customer abandonment rates, financial companies that integrate multi-factor authentication, biometrics and document verification in transparent forms are more likely to improve customer satisfaction levels and minimise customer churn.

For more information, see our recent blog post, '5 Powerful Benefits of Identity Verification'.

Growing Importance Of Identity Verification Tools

It’s true to say that authentication solutions are capable of providing identity verification for different sets of customers with diverse circumstances. Some may not have passports and driving licences, or other forms of document verification.

In these cases, identity verification tools that use multiple data sources to prove individual identity can empower customers to access financial services, some for the first time. This can be particularly helpful with younger customers, some who may not have lengthy credit histories due to their age.

Plus, with 1.4 million cases of fraud during the first six months of 2023, the need for comprehensively secure financial systems has never been so acute. Effective identity verification solutions help companies to reassure customers their information is safe and to align with regulatory compliance requirements.

Leverage Identity Verification Tools In Your Business

Staying ahead of the competition is important, but eliminating the possibility of fraudulent activity is essential to ensure your business thrives and customers are happy.

Deliver a full-spectrum digital service for your customers with our bespoke payment management solutions. Interbacs has tailor-made solutions that suit your needs. As one of the first Bacs-approved bureaus in the UK, we offer a reassuringly professional and innovative approach.

Discover how Interpass can transform the security standards of your organisation through our insights, or book a free demo with our friendly expert team today.