Before the world transitioned to digital-first onboarding due to smartphones, high-speed internet, and a pandemic, banks, financial institutions, and other organizations could verify identities by physically comparing a person’s face to a photo ID. Of course, one could barely accept the certification at face value. The identity is still required to be verified by employing a back-end system to compare distinguish identifiers like name, date of birth, and address to detached credit header and utility data.
You can accept applications more quickly when you have the option to process documents remotely, which is wonderful for improving customer service. However, the simplicity of document submission also causes your to-do list to expand. You have a constant headache when you add in the requirement to scan or validate papers before sending them through for processing. Fortunately, there are AI-based solutions that can accomodate with document verification.
The process of establishing a document’s authenticity using features like watermarks is known as document verification. Online document verification is also possible with uploads of official IDs and facial authentication.
Issues Faced By Financial Sectors
When it comes to the digitization of application processing, insurance firms, credit unions, and credit card businesses all confront comparable issues. While this increased revenue for these organizations, it also attracted dishonest characters like thieves, fraudsters, and criminals.
An overview of the problems we observe in the finance sector is given below:
- There is an increase in cybercrime. In 2019, the financial services sector’s average cost per breach was $5.86 million, according to the IBM Security Cost of a Data Breach Report.
- Additionally, an increase in money laundering. Criminals are coming up with new ways to launder money as a result of how simple online banking and cryptocurrency trading are.
- Issues with regulatory compliance multiply. New regulations like KYC (Know Your Customers) and AML (Anti-Money Laundering) have been put in place due to the increase in cybercrime and money laundering schemes, yet many firms lack the technology to comply.
- It’s more difficult to detect identity fraud. Today, it is simpler to steal identifying documents and use them in online fraud. Without facial recognition technology, it can be difficult to verify that a candidate is who they claim to be.
Importance of Document Verification in Financial Institutions
If financial institutions don’t verify the authenticity of the documents they receive, they face the danger of being taken advantage of. Scammers frequently try to trick banks, credit card companies, and lending organizations in order to demand money. They typically achieve this by using a mix of stolen and fraudulent documents.
However, this problem still exists in the banking industry. According to studies, identity fraud has cost the economy an astounding amount of damage in recent years (this figure is generally $13 billion). For government organizations, the pandemic has also increased fraud incidents.
Step of Procedure Involved in Document Validation
The process of document validation involves a number of potential validation tests that scan the ID and assess its veracity by contrasting it with data from a database. The following is an example of one of the validation checks:
Identification documents with photos contain vital data for identification confirmation. The capacity to extract visual data from the ID and match it with internal images is a common feature of these identity verification systems.
On both the front and back of many official forms of identification, there is linked information. In order to confirm that the ID is authentic and that it refers to a specific user, an identity solution must correlate that data.
The ability to scan documents for important data, such as ID numbers, barcodes, etc., and link that data to database information is essential for document ID. These scanners will also detect forged papers using watermarks or other pattern recognition techniques.
The scanned document may be compared to details about thousands of IDs in a national database, depending on the service provider. Verification solutions frequently have access to multiple national databases (or protected versions of these databases) to validate these papers. This is because a scan of a national ID would require verification through government databases. Because more documents verification process typically equate to broader coverage for customers worldwide, several document verification solutions advertise that they can check thousands of different types of documents.
Consumers of today anticipate a simple, low-friction onboarding process with instant account access. A necessity for eye-catching video or numerous selfies creates a difficult situation that threatens abandonment and severely affects the reputation of your brand as document verification grows more popular. Businesses must establish a modern approach to document verification to satisfy user expectations at a time when 84% of consumers feel a positive onboarding experience is just as important as a company’s products and services.
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