In today’s digital world, when nearly all transactions are moving online, establishing trust between businesses and customers is very important. The increasing amount of illicit activities also prompts the need for strong identity verification controls. It is important for businesses to verify that the customers they are onboarding are legitimate and not involved in illegal transactions. So, authenticating the identities of customers is very important. With the transition towards online banking, e-commerce, and cybersecurity, identity authentication services have also moved online to facilitate digital business. The identity authentication market reached a size of about $11.6 billion and is expected to reach $20.8 billion by 2027. However, this growth also raises concerns regarding safety and legitimacy. These procedures are necessary for all industries, including fintechs.
Identity Verification in Fintech Companies
In the digital space, identity authentication has relied on the use of usernames, passwords, and email addresses. However, digital identity verification simplifies this process a little. It allows customers to confirm their identities without going through multiple authentication steps. Traditional methods of verifying identities are time-consuming and costly. Sometimes, they prove to be rather ineffective. Nowadays, fintech companies are deploying cutting-edge technology and digital solutions to enhance their verification processes, thus, improving safety, efficiency, and user experience. These procedures enable customers to access their legal and financial data securely.
How is ID Verification Performed?
Business can perform ID verification via facial recognition. An AI-based software would use the facial features of customers to confirm their identities against the information in databases. Facial traits are unique and hard to manipulate, thus, they cannot be stolen and forged. So, this would ensure the customer’s authenticity. Additionally, knowledge-based authentication is also a method of verification. Authentication of ID can be done by setting up a security question and requiring a response from the user. These are designed to be easy for the customer to answer, but difficult for unauthorized users, and only the customer would know the answers.
Online verification can also be performed. This is done by confirming a customer’s ID against databases. It is also sometimes done by asking customers to upload a picture of themselves holding their ID to confirm whether the ID provided belongs to the particular user. Another method for the validation of identity can be two-factor authentication. This usually requires customers to enter a code on the website. That code is sent to their phones via text or email. This is particularly useful for creating accounts and signing up for a website or program.
Using these procedures, fintech firms can verify the identities of their clients and ensure that they are authentic and do not pose any threat to their business. They then constantly monitor their customers’ activities to ensure that customers are still adhering to their policies.
Advantages of Identity Authentication to Fintech Companies
Digital identity verification for finance is very advantageous for businesses.
Enhanced Customer Service
Digital authentication simplifies the credit application process greatly. By utilizing techniques such as facial recognition, fingerprint scans, and iris identifications, companies can authenticate their customers’ identities within seconds. This also diminishes the need for physical identity proofs. This in turn increases customer satisfaction.
Improved Security
Digital identity verification services greatly enhance security and decrease the risk of fraud. Fintechs can leverage advanced technology to authenticate identification documents, or to identify suspicious activities. They can also perform liveness checks to confirm the individual providing the ID is physically present. This would safeguard both customers and companies.
Access to Untapped Markets
Identity verification services can also help businesses to reach explored markets. Fintech firms can examine a client’s creditworthiness by exploring factors such as their income, payment history, or patterns of their transactions. They can do so by making use of advanced analytics techniques and numerous data sources. So, online global ID verification helps untapped organizations attain credit and develop strong financial profiles, instilling their trust in fintech companies.
Conclusion
Verified identities provide many benefits for fintech companies. Fintech companies have evolved significantly over the past few years with the emergence of new technologies. That being said, the use of advanced digital identity verification techniques has enabled them to develop further. These procedures are very useful in combating financial fraud and identity theft. Therefore, it helps fintech firms maintain their reputation and enable quicker verification, which enables a smooth onboarding process.
