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Basics of digital onboarding: why you need to know who your customer is

“The human face is, after all, nothing more nor less than a mask.” Dame Agatha Christie, the famous murder-mystery writer, once said.

Our face is just a mask in an ocean of masks, and it only shows what we want to show, not who we really are or how we feel. While this quote refers to the process of how we tend to hide our true emotions, it could also be relevant to customer onboarding.

In the digital age, it is simple for somebody to hide their true self and be anonymous. People can easily create a fake username or personality, or use somebody else’s identity to steal money, for example.

Trust and safety are essential

There is value in knowing exactly who you, as a business, are dealing with. It benefits both your business and the customer. By taking charge of your digital onboarding infrastructure and focussing on trust and safety, you will not only fight against fraud, but also scale the size and trust of your customer base. Trust is a fundamental element of your relationship with customers. Customers must trust that their data is protected.

How can you create trust and safety when digital onboarding?

 Digital identity verification is a way to establish that a person is who they say they are. It offers a way to build quality and safer relationships with strangers online. But customers also don’t want to sit through a lengthy verification process. So, businesses must develop fast onboarding processes without compromising on safety, not to mention compliance for regulated industries.

The good news? It’s possible to create a simple, streamlined customer onboarding experience with automated online identity verification, while also keeping the customer’s information secure.

Regulated versus unregulated industries

There is a legal requirement for regulated industries, such as the financial services and real estate, to adhere to KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations. These rules are there because in the banking industry, for example, there are concerns that criminals are using stolen information to create false identities in order to bypass banking security measures. In addition, a study by Juniper Research found that online payment fraud will rise by $25 billion by 2024.

Regulated industries need some kind of digital identity verification method in place. Non-compliance with AML regulations could result in severe enforcement actions and criminal penalties, but also damage to a company's reputation and a loss of customers due to lack of trust.

Then, there are industries where it’s not required to meet these regulations. However, with these industries, knowing who they are dealing with is at the very core of their existence. Take for example, car rental like Uber, home rental apps like Airbnb or dating apps like Tinder. How safe is it to rent a holiday home or B n’ B out to a stranger? Trust and safety are again the fundamentals here, yet some unregulated industries may not use digital identity verification methods.

Unregulated industries should validate identity too

With the coronavirus situation, there’s no doubt there is going to be a boom of new digital platforms, so it’s important for these business owners to review how they can increase security when customer onboarding. This could be, for example, an app which allows elderly or immobile people to search for a volunteer to help them with shopping or taking their dog out for a walk during the pandemic. The person using the app wants to know that the volunteer can be trusted.

Online marketplaces, freelancer platforms for journalists or designers, taxi apps, and dating sites also need a level of security. There are very high-profile scam cases when it comes to dating apps, for example, which should generate interest for identity verification. In America, for example, the FBI’s 2019 Internet Crime Report states that online dating fraud was the second costliest scam, with losses amounting to almost half a billion US dollars. People are being tricked into sending money by fake profiles.

Even recently, German health authorities attempted to purchase 10 million face masks worth about €15 million from a cloned version of a reputable Deustch website. There has never been a more vital time to know who you are dealing with.

For businesses looking at digitizing their onboarding or integrating digital identity verification into their service, it’s worth considering if you can get more by combining one or more methods from the same provider. For example, you can use facial recognition with registry look-ups, which are used to provide additional information about a user. This can provide a higher level of safety assurance.

Removing the mask

The advantages of a modern identity verification go beyond simply reducing the risks of identity fraud. By establishing a sense of trust, it’s also significant in giving companies the ability to digitize their services to better meet their customers’ needs. In return, driving their company’s growth.



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