In the finance world, everything’s gone digital. If you’re still trying to verify customers’ identity by asking where they lived ten years ago, or making them jump through manual hoops like sending small “test” transactions to verify a linked account, you’re falling behind.

How you verify identifications and authenticate customers has a big impact on acquisition. Online bank account enrollment has an abandonment rate of 19%, with rates increasing the longer an application takes. The more time it takes a customer to complete onboarding, the higher the chance they’ll take their efforts somewhere else.

Skimping on robust ID verification and authentication isn’t an option. With fraud at an all-time high and AML and KYC compliance a must, it’s understandable that financial institutions tread carefully when it comes to identifying their customers.

Fortunately, a few fintechs are finding ways to help financial institutions ensure security and compliance without sacrificing speed for customers.

The Rise of Identity Verification Platforms

Today’s customers are accustomed to quick, friction-free, mobile experiences. Historically, ID verification in finance hasn’t met that expectation. New tech companies have stepped up to help, using customers’ mobile cameras and other tools to automatically verify IDs and flag potential fraudsters.

It’s one thing to verify that a person’s face matches the photo on their ID, but it’s also important to authenticate that the ID is valid and government-issued. Additionally, it’s critical to make sure that the photo a user submits is taken in the moment and wasn’t obtained at an earlier time or procured by a bot. Ensuring that someone is completing a verification process in-person is called “liveness”.

Some of the platforms helping financial service providers streamline their ID verification and authentication include:

• Jumio. Jumio uses AI, biometrics, machine learning, and certified liveness detection to quickly verify customers and block fraudsters while meeting KYC & AML compliance requirements. Jumio powers clients like AirBnB, HSBC, WeWork, and United Airlines.

• Onfido. Onfido also uses AI to assess whether government-issued IDs are genuine or fraudulent using photos of ID cards, then compares the IDs against facial biometrics from a selfie taken in real-time by the customer. Once verified, users are authorized to link bank accounts and access their data within the app. Onfido is behind ID verification for First Bank, TBI Bank, and Revolut.

• Vouched. Meeting the needs of employers as well as benefits, healthcare, and financial services providers, Vouched’s identification tools detect fraud in real-time without creating friction for customers. The platform uses APIs rather than knowledge-based ID verification, leveraging facial recognition, authenticity, and data matching.

These ID solution providers and others leverage additional data like a user’s IP address, geolocation, social reputation, and more to determine whether someone is who they say they are. National registries are also proving useful in flagging identities which have been reported stolen or belong to someone who is deceased.

Comprehensive Solutions: Verification and Authentication Go Beyond Onboarding

ID verification and authentication play a critical role in financial service onboarding. Banks and other service providers need to know that customers are who they say they are before creating a financial relationship.

Streamlined identity verification can help improve the experience of other key moments in a financial customer’s journey: 

• High-value transactions. Whether transfers, loans, or lines of credit, high-value transactions should trigger a process that ensures the requested activity is initiated by your actual customer, and not someone else. This is as simple as requiring a new selfie at the transaction request, which facial recognition technology automatically approves.

• Reduce abandonment. When applying for loans or credit, customers often abandon processes that take too long. With near-instant ID verification, that isn’t a problem.

• Security. Ensuring that every account belongs to a verified customer and that each sign-in is authenticated increases security for the app and your organization overall. Keep out fraudsters and bad actors to protect everyone who comes in contact with those accounts.

• Compliance. AML compliance and KYC verification prevent illicit activity, and governmental bodies are invested in making sure financial service providers meet requirements. AML/KYC regulations are complex, but compliance doesn’t have to be. With the help of ID verification technology, finance organizations can surpass requirements for added security.

In the arms race for digital security, modern authentication and identity technology allows financial service providers and their customers to stay one step ahead of the fraudsters.