Online Identity Verification – Regulatory Compliance vs User Experience17. December 2021
Online identity verification for financial services is quickly becoming the standard across all continents and countries. Financial services companies that want to become trustworthy and reputable must combine tech-based security with excellent user experience.
However, this is not without its challenges – many users value their privacy and may, in fact, see the identity verification processes as inefficient and time-intensive. In the next sections, we will have a closer look at how financial services companies can improve both security and user experience.
What Is Online Identity Verification?
Online identity verification refers to a process through which a financial services company ensures that the client is the person they claim to be. In other words, the company ensures that the new client is not a criminal, a fraudster, or impersonating someone else for unlawful reasons.
According to a recent report, the mass adoption of digital transformation across industries is forcing companies to reevaluate traditional identity verification services. As a fintech business grows, it is likely to experience more and more regulatory risk from this perspective – both locally and internationally.
Unfortunately, meeting KYC requirements has always been a burden for many companies. The time-intensive process may heavily impact the user experience. On the good side, fintech companies can now outsource this process, streamlining it and ensuring protection against fraud while providing an excellent customer experience.
There are several types of eKYC (Electronic Know Your Customer) in financial services that boast both robust security and user experience. For instance, artificial intelligence-based identification uses a combination of machine-learning methods and biometrics and is the quickest one available, ideal for fintech companies that already focus on innovation and AI-based products.
Benefits and Challenges of Outsourcing Online Identity Verification
Developing the right online identity verification process can be extremely costly. Outsourcing your KYC means that you don’t need to develop the infrastructure or put together a specialized team for it. This means that you can focus more on developing your financial products and services, attracting or retaining clients, and making the business more efficient. Services like IDnow provide secure identity verification platforms suitable for any type of business, regardless of its physical location.
Some of the main benefits of a streamlined, efficient digital identification process include:
- Reduce fraud, scams, and strengthen security;
- Digital identity verification helps companies stay compliant with local and international regulations;
- This automated process usually takes a few seconds, enhancing user experience;
- Digital identity verification removes the need for manual data entry.
When inefficient, identity verification services pose several risks. Some of them include:
- Damaging customer trust if the process is inadequate;
- Poor customer experience if the process takes too long or has inefficient stages;
- An inadequate process can be exploited by criminals, fraudsters, and scammers.
Creating an efficient online identity verification process can be a challenge for many fintech businesses. Fortunately, there are several platforms specialized in creating a safe environment and providing a streamlined process that prevents inefficiencies. In turn, the business retains customer trust, automates the process eliminating manual data entry and human error, and stays compliant with global and local regulations.
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