Customer verification is a need, if not a must, for most companies. Many businesses are required by law to verify customers online. Even in retail situations, shared accountability in intricate and long-term financial transactions requires that both parties know one other’s identities. As a result of today’s highly competitive market, business leaders must do their due diligence to know the most effective methods for identifying their customers. In the following paragraphs, we’ll go through several ways businesses and organisations can use in the digital identity verification of their customers.
Knowledge-Based authentication
Being a common method of customer identification, chances are you have come across it at least once when required to validate your identity. This method of customer identification utilises security questions. The security questions are personalised so that only the intended user knows the answer but is difficult for a stranger to figure out. To make it difficult for hackers and impersonators to figure out the answers to the security question through human or computer programme, timers are often used as an additional safety measure to necessitate users to answer the questions in a limited amount of time.
Users are accustomed to knowledge-based authentication, but the answers to the security questions may be quickly guessed via social media or coaxed out of the consumer using social engineering, making it less secure. Email and text message scams are examples of social engineering in which someone is tricked into disclosing personal information to verify their identity.
Multi-Factor Authentication
For multi-factor authentication, you need at least two distinct pieces of information to verify a user’s digital identity. This verification method relies on the customer revealing something they only know or possess.
To access an account using multi-factor authentication, users are often required to supply a form of personal identity known as a token. This is in addition to the typical username and password. The token can be something only the users know of or possess, such as a code sent to them through email or text. The requirement for a token acts as a potent deterrent, reducing the likelihood of identity fraud occurring. However, users of this approach must have their cell phones with them at all times to complete the authentication procedure.
Online Verification
Online identity verification involves verifying users’ identities using a picture of themselves against a government-issued photo identification document. Users are needed to provide a photo of themselves in the form of a selfie holding their ID document. This identification method has proven to be an effective cybersecurity solution for preventing impersonation and the use of stolen identities. However, it has been reported to be intrusive and inconvenient because it employs both artificial intelligence and biometrics to analyse individuals and their IDs. Not many people are okay with submitting their identity documents and pictures.
Database Methods
This identification method leverages data obtained from offline sources, social media platforms and various other online sources to validate an individual’s identities or assess whether or not they are participating in fraudulent activity. Nevertheless, database identity verification methods are simple to falsify by fabricating digital identities and social media accounts. Due to this downside, this verification method does not comply with KYC (Know Your Customer) or AML (Anti-Money Laundering). Therefore, to enhance its effectiveness in identity verification, it may need to be used in combination with other identity verification methods.
Credit Bureau-Based Authentication
Information about identities of potential and new customers is gleaned from major credit bureaus while doing this type of identification verification. These credit agencies have access to a vast quantity of personal data about individuals that includes name, phone number, address and social security number. This technique of verifying a person’s identification is quick, cheap, and simple to apply, but it also has certain drawbacks. Amidst recent data breaches at credit bureaus, thieves gained access to personal information used to verify one’s identification. Additionally, this form of identification is unsuitable for people with thin credit history, such as recent immigrants, young people and people who haven’t utilised conventional financial services. Customers that fit this description aren’t often listed in the credit agencies’ records.
Biometric Verification
Verifying customers’ identities via biometric data is the best option for organisations. It utilises physical characteristics only inherent to the users, such as fingerprints, voice recognition, retina and iris scanning, facial recognition and liveness detection. In addition to its increased security, biometric verification is highly convenient, easy to use and improve customer experience as they do not need to recall their login details and answers to security questions.
There are, however, certain drawbacks to biometrics. Theft of biometric information is possible. Consider how many people have seen your photos on Instagram or Facebook. You may be recording your own voice without even realising it. You can get fingerprints from databases by hacking into them. And once these assets are in the hands of a criminal, it might be much easier to defraud such institutions.
Conclusion
One or more of the procedures listed above may be used to for identity proofing. Financial institutions, e-commerce companies, and social networking sites employ these strategies to prevent identity theft, money laundering and improve user experience. Even if it’s as basic as opening a bank account, corporations are obligated to adhere to the norms and regulations of each country.
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