Digital identity is a standardized term for any digital information available on the web about a person. The data is based on the information provided by the person, which may or may not be accurate. Businesses in every industry are moving to online portals. Let it be banking, traveling, shopping; companies are using digital infrastructure to connect people. More online services mean that databases will store more customer data. All of this information available on the web is always on the radar for a potential data breach. It is common to hear these days about mass-scale data breaches regularly.
Incidents of Data Breach
In the past few years, people have become aware of their data they provide to organizations. This change was initiated when back in 2018, the US Senate committee summoned FB, Twitter, and Google CEOs to testify on data misuse. It all came to highlight when Cambridge Analytica [UK Communication Firm] was accused of misusing private data from up to 50 million user profiles. The CEO of Facebook, Mark Zuckerberg, apologized for this situation by mentioning it as a ‘mistake’ and a breach of trust. After that, Facebook updated their privacy policies to prevent similar violations in the future. However, the data breaches have seemed to become a norm, as last year, digital bank customer data was breached through a third party. A US digital banking app DAVE provider told customers that a security breach exposed the personal data of 7.5 million users. When so much data is leaked on the web, it makes it easily accessible to fraudsters who then use it for identity fraud. This clearly indicates that banks need to work with those third parties that have appropriate security infrastructure.
Why are Identity Verification Methods Needed?
Organizations that deal with user data need to shed off traditional identity verification methods, which puts the company and its customers at risk. Digital identity verification is essential as it eliminates your business’s chance of becoming the victim of the most threatening forms of identity fraud. The key to managing the risk is by verifying a person’s true identity. Protecting your business’s reputation and revenue means reducing the risk of fraud. A digital identity verification provider such as iDenfy will help you establish a legitimate online identity of the people trying to access your product or service. Higher security enables a better customer experience as trust is the key to make relationships with your clients stronger. When transactions involving illicit funds or false identities come into the light, these events damage the organizations’ reputation.
What is the need for KYC?
The companies need to opt for modern KYC procedures that include detailed and authenticated information required by financial organizations and other enterprises before conducting business with customers. KYC is the process of a business verifying the identity of its clients. Now, digital identity verification processes have the ability to enhance the authenticity, security, confidentiality, and efficiency of identifying customers. These processes eliminate the minimum weaknesses that use to happen in human control measures. The two rules that have driven identity verification worldwide are Anti-Money Laundering (AML) and Know Your Customer (KYC). There are few basic categories in which identity verification can be done as follows:
- Knowledge-based authentication
- 2-factor authentication
- Database methods
- Online verification
- Biometric verification
– Knowledge-based authentication is one of the conventional authentication methods that is used to date. It verifies the person’s identity by asking a response to security questions. These questions are required to answer within a limited time. Its biggest drawback is that it is easy to discover the answers, and once any unauthorized person gets access to it, they can easily manipulate the user data.
– 2-Factor Authentication requires the user to enter a code sent to their registered email or mobile number. It is a widely known verification method that is quite simple for users to understand. This method requires users to provide a form of personal identification, along with their username and password, before they can access their account. The 2-factor authentication is mainly used for creating accounts and resetting passwords. The only condition for this method is that users need to have their phones with them during the authentication process.
– Database Methods uses data from a variety of sources to verify someone’s identity card. This method is generally used to assess the risk level as they significantly reduce the need for manual reviews. The database method’s biggest disadvantage is that it fails to ensure that the person providing the information is conducting the transaction due to an increase in false identities online.
– Online Verification is the modern way of identifying the individuality of a person. In this method, various techniques are used to determine if a government-issued ID belongs to the user via computer vision, artificial intelligence, and human review. This verification method typically requires users to give their ID proofs with their pictures on them. It is one of the most secure verification processes.
– Biometric Verification method identifies and authenticates people based on their physical characteristics. It is a convenient method, but it has some disadvantages too, as biometrics can be stolen. The databases are hackable, and it’s easy to retrieve the data out of them.
Verdict
It is high time now as companies understand the importance of identity verification of the person to preserve and protect their systems and data from getting hacked. The organizations that deal with user data are at the most risk of getting attacked online by fraudsters. There are many advantages that businesses attain by providing their customers an opportunity to verify their identities online. It saves a lot of time and money. Online identity verification is a fast and seamless process as it is completed within minutes. There is no hassle of standing in queues or being physically present at the place. Mainly it brings peace of mind by knowing that data is being handled securely.