Digital identity verification - how does it apply to your industry?

Whether for or against, we can all agree that remote identity verification technology has undoubtedly become more widely used during the COVID-19 pandemic. Governments have developed and propagated the use of identity verification technology in order to manage the spread of COVID-19 in their communities, and thus normalised the use of digital solutions to demonstrate identity and vaccination status among the general public.

The pandemic also prompted businesses to broaden their thinking about how to conduct identity verification when in-person verification was not an option - some businesses even needed to develop entirely new processes to onboard and verify customers online. This was understandably difficult for many businesses who didn’t have the resources, staff or capability to create such processes, and instead loosened their fraud controls in an attempt to reduce friction and simplify onboarding for new customers during this tough time.

Those loose fraud controls, when combined with the confusion and dispersion from the pandemic generally, increased government benefits, a boom in online transactions and more sophisticated phishing and scamming schemes, led to fraud becoming a major issue during 2020-2021. IDology found a 53% increase in fraud attempts across nearly every channel in 2020, and of those channels, an 89% increase in mobile fraud attempts.

Identity verification was reported as the biggest challenge to combating fraud, thus driving the expectation of the identity verification market to grow to be valued at $21.9 billion by 2026.

In this article, we take a look more closely at the burgeoning identity verification industry, particularly at how this technology is being used in a number of industries in order to provide clients with increased security, flexibility and convenience.

Financial services and banking

One of the clearest use cases for identity verification is in the financial services and banking industry. Due to the nature of the industry, identity requirements are heavily regulated in order to minimise money laundering and other illegal purposes. Know Your Customer (KYC) and Anti Money Laundering (AML) processes are legislated in most nations in order to verify that new and existing customers are not flagged as being associated with illegal dealings.

Prior to the pandemic, these processes were facilitated largely in-person, requiring customers to bring their identity documents into a branch. When this became difficult with the pandemic restrictions, banks and other financial services looked to digital solutions for identity verification. This includes new solutions that allow customers to scan their identity documents and take a selfie to verify their identity to the financial institution.

As we all become more accustomed to conducting our lives online, we expect digital identity verification to become standard practice for many financial services, from creating a new account to verifying a customer’s identity when accessing existing accounts.

Cryptocurrency

Growth and spread of cryptocurrency activity increased during the pandemic and has become more accepted as a mainstream currency by users and businesses around the world. Governments have taken notice, with some now accepting cryptocurrency as local currency, and others realising that the growth in usage of cryptocurrency brings the need to monitor and regulate digital currencies as they do with traditional currency forms.

With this influx in usage and regulation comes increased need for verification and monitoring. Companies facilitating the setting up of cryptocurrency accounts, digital asset issuers and cryptocurrency exchanges are under increased scrutiny to minimise money laundering and ensure the same high levels of verification as traditional financial services whilst maintaining the flexibility and convenience that cryptocurrency users expect. They are looking to digital identity verification solutions in order to satisfy these needs as these innovative, digital solutions provide them with a way to securely and seamlessly onboard new customers whilst meeting their compliance obligations.

Real estate

Buying and renting properties has traditionally been a manual and administrative process for all parties involved. Real estate agents had to spend time with the client to obtain copies of identification and other documents in order to conduct their required checks and verification prior to rental or sale.

Digital identity verification technology provides all parties with a more convenient and flexible way to provide or collect this identification. This technology speeds up the administrative processes and enables real estate staff to have more time to concentrate on tasks that can’t be completed digitally.

The real estate industry has historically been a traditional and manual industry but the pandemic has offered businesses the opportunity to reconsider how processes can be automated and, in turn, free up valuable time for staff.

Government services, e.g. education and health

Monitoring citizens’ vaccination status has become a top priority for most governments around the world during the pandemic. This kind of monitoring and data can help governments to make informed decisions about the steps they should take to control the spread of COVID-19 in their communities.

Along with this data capturing came the need to equip citizens with evidence of their identity and associated vaccination status to gain access to facilities like shops, workplaces, hospitals, and more. Societies around the world have therefore become rapidly accustomed to this kind of identity and health status verification, and we predict that the breadth of this technology will increase in application for healthcare services over time in order to make access to healthcare more accurate and efficient.

Another government service we see the application of identity verification to is education, particularly in the large-scale examinations at high school and universities. The effective use of identity verification at these locations will enable examiners to quickly and accurately verify the participation of certain students and also allocate results accordingly. Universities in particular are commencing the transition to a wholly digital experience for students, and we believe digital identity verification will become vital for access to its educational services.

Ecommerce and online shopping

Online shopping boomed during the pandemic, even reported to have been two to five times higher than pre-pandemic times. It has continued to grow in usage as customers become accustomed to conducting their transactions online and navigating ecommerce channels with ease and security.

One concern from this boom in online transactions is the equivalent increase in phishing and scams that have targeted transactions and vulnerable customers. Digital identity verification is one solution to this scourge by acting as an extra layer of protection to ensure that the purchaser is indeed the person they say they are prior to the transaction being completed. The incorporation of digital identity verification will help provide customers with safety and security when transacting online.