Identity verification is now an essential element for today’s businesses, particularly financial institutions. Know Your Customer rule is driving the growth of identity verification methods across the world, even though every country has its regulations to enforce the rules. For instance, the prestigious Financial Crimes Enforcement Network geared towards regulating identity verification methods across the US. These techniques fall into the following categories.
- Credit bureau authentication
- Online verification
- Two-factor authentication
1. Understanding the basics of identity verification
ID Verification is definitely one step beyond identity. But, it is also one step right below authentication. It is a necessary process that helps to ensure that a person’s identity matches the identity that is imagined to be.
Identity refers to a set of different unique characteristics as well as traits related to a single individual. This method becomes important in the web environment where fraud is common.
Identity verification is needed in most offline as well as online processes and procedures, including completing the IRS tax documentation online and opening a checking account.
Now, take a look at a detailed explanation of how different identity verification methods work.
2. Credit Bureau Authentication
The credit bureau-based authentication is a method that relies on data from one of the major credit bureaus. The companies often store a significantly large amount of consumer credit-related information, such as name, social security number, as well as address.
The credit-based authentication applies a score to form a definitive match often without compromising the experience of the user. But, it may fail to match a user’s credit files, especially if they are immigrants or young people.
3. Online Digital Verification
Digital identity verification refers a relatively natural progression in the e-commerce sector.
Besides, it speeds up the authentication process by removing obstacles like geographical boundaries, among others. It is important to note that this method comes with its drawbacks too.
If you are not verifying identity by face, it may intensify the question that has often existed for businesses from the outset of the internet of things. So how do you know a person is whoever they claim to be?
More online services simply imply more consumer data. Then, the more data available in the database, the more you see the mismanagement and misuse appended to it.
You also get to hear about the progressive data breaches in several cases since they seem to be the norm and not the exception.
4. Two-factor authentication
The two-factor authentication is also known as a multi-factor authentication method where a computer user receives access to the device after presenting two pieces of factors to the authentication mechanism. This must be something only the user knows or has. The two-factor authentication is useful in resetting passwords.
Reputation plays an important role in businesses, regardless of size. It is important to stand out as one of the trusted choices for customers among millions of others. That is why experts in the survey relate that consumers are always willing to pay more for brands that offer transparency.