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Why Do We Need Identity Verification in this Modern Era?
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11/30/2020
Technological improvements have altered the way we lead our lives. Technology is directly or indirectly linked with almost every activity we perform, leading to considerable changes.

Like everything else, technology also has its pros and cons, which completely depends on the way it is used. Because of the technological improvements in cyberspace, criminals have assumed unique methods to practice fraud and cause damage to individuals as well as businesses. 

Need for Security

We are generally so concerned about securing our personal data that we use different software and features in our devices to increase our security. When it comes to our banking information and other sensitive data, it is essential to increase the security measures so that it does not fall into the wrong hands. Fraudsters and criminals are regularly looking for newer ways to disrupt the system with their evil schemes. According to a report by the Federal Trade Commission (FTC), in 2018 about 3 million identity theft complaints were received in 2018, out of which 1.4 million were related to fraud. In 25 percent of those cases, money loss was reported. In the same year, a loss of $1.48 billion was reported in fraud complaints, an increase of $406 million from a year earlier. These frauds have caused serious harm to individuals, businesses and the system. 

Various government and financial institutions are collaboratively working to impede the attacks of fraudsters and criminals across the globe. Keeping in mind the emerging threat, financial regulators have introduced KYC compliances that all financial institutions and banks are instructed to follow. According to the KYC (Know Your Customer) guidelines, all financial institutions have to verify the identity of individuals they come across during their operations. These individuals mostly consist of their customers and employees. Although these regulations are majorly designed for financial institutions and banks, nevertheless, businesses are also encouraged to adhere to these instructions for better security measures. Methods of identity verification have evolved over a period of time, according to the changing requirements. Below are described some of the ways how the identity authentication process has developed.

Traditional Identity Verification 

Most of the traditional methods of identity verification are unsafe and provide opportunities for fraudsters. Therefore, most of them had to be replaced by newer methods. Some of the traditional identity verification methods that are ineffective now are described below:

Passwords

Passwords are insecure because they are difficult to memorize and are sometimes easily guessed by criminals. 

SMS-based Authentication

This is a common form of authentication but the SMS codes are sometimes easily intercepted by hackers through phishing attacks.

Token-based Authentication

The token used for verification must be carried at all times and is non-transferable. There are also chances of tokens being stolen or misplaced, so this method is also insecure. 

Biometrics

These are more secure compared to the other methods of verification, they are still vulnerable to attacks from innovative hackers and fraudsters.

Modern Identity Verification

Modern tech companies are persistently trying to come up with new inventions to automate existing identity verification solutions. Many have adopted cutting-edge Artificial Intelligence and video selfie technology to link the identity of the user with the associated account. This technology is fast, trustworthy, and secure, and has stopped imposters from gaining access to the system. There are many ways AI is used to verify identity. Some of them are listed below:

Face Verification

The use of artificial intelligence systems to detect facial features for verification purposes.

Document Verification

The use of artificial intelligence systems to detect the authenticity of various documents to manage fraud.

Address Verification

The use of artificial intelligence technology to verify addresses from the documents to minimize the threat of fraudsters.

2 Factor Authentication

The use of multi-step verification to enhance the protection of your accounts by adding another security layer, usually involving your mobile phone.

Consent Verification

The use of handwritten user consent to onboard only legitimate customers.

It needs to be kept in mind that fraud prevention is not easy. It takes lots of energy, expertise, and technology to take measures for its control. Law enforcement agencies, along with global regulators are working day and night to invent newer ways to fight this menace of fraud once and for all.

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