6 Identity Verification Methods

Blog / 6 Identity Verification Methods

Identity Verification is the process of confirming that the identity an individual claims to possess matches their true identity. It is a critical measure to determine whether a person is indeed who they claim to be. In today's digital age, where information is readily accessible and transactions occur at the click of a button, the importance of identity verification in combating identity fraud cannot be emphasized enough. It acts as a robust deterrent against such malicious activities such as identity theft and identity fraud. By implementing stringent verification measures, organizations can ensure that only authorized individuals gain access to sensitive information or services.

6 Identity Verification Methods

Identity verification has various methods and systems. This process may consist of different approaches. Know Your Customer (KYC), and Anti-Money Laundering (AML) rules drive identity verification techniques worldwide. However, each country has its regulations and organizations to impose these rules. For example, the Financial Crimes Enforcement Network (FinCEN) is one of the various agencies responsible for regulating identity verification methods in the United States. These techniques commonly fall into one of the following six categories;

  • Knowledge-based authentication
  • Two-factor authentication
  • Credit bureau-based authentication
  • Database methods
  • Online verification
  • Biometric verification

#1 Knowledge-Based Authentication

Knowledge-based authentication (KBA) verifies a person’s identity by requiring a response to security questions. These questions are generally designed to be simple for that person to answer but difficult for anyone to answer. Like “How many pets do you have?” or “Who was your favorite teacher?”. Additional safeguards for KBA include a requirement to answer the questions within a limited time. The most significant benefit of KBA is that it’s the easiest verification method for users to understand. Its most significant disadvantage is that it’s getting increasingly easy to discover the answers via social networking and other more traditional forms of social engineering.

#2 Two-Factor Authentication

Two-factor or Multi-Factor Authentication are essential tools in the ongoing battle against identity theft and identity fraud. They require your customer to enter a code sent to their email or mobile phone. Because the verification method is common, the process is very recognizable and simple for consumers to understand and apply. Using 2FA or MFA, you can easily verify a consumer’s email address and phone number. This can be important if you need to make sure your customer did not type in their data incorrectly.

Two-factor or multi-factor authentication generally requires users to provide a form of personal identification, also known as a token, in addition to the usual username and password before they can access an account. The token should be something users have memorized, or in their possession, such as a code they have received from the authentication agency. The need for a token creates a powerful deterrence for fraudulent activity. Two-factor authentication is especially useful for creating accounts and resetting passwords. However, this method typically requires users to have their mobile phones with them during the authentication process.

#3 Credit Bureau-Based Authentication

A credit bureau-based authentication method relies on data from one or more of the credit bureaus for identity verification. These companies store a massive amount of credit information on consumers, including name, address, and social security number. Credit-based authentication uses a score to create a definite match without compromising the user’s experience. However, it may not match thin credit files, such as young people and recent immigrants.

#4 Database Methods

Database ID methods use data from a variety of sources to verify someone’s identity card. Database methods are generally used to assess the level of risk a user poses because they significantly reduce the need for manual reviews. The most significant disadvantage of these methods is that they don’t ensure that the person providing the information is the person conducting the transaction, mostly due to the proliferation of false online identities.

#5 Online Verification

Online verification uses techniques to determine if a government-issued id relates to the users, including artificial intelligence, computer vision, and human review. This verification method typically requires users to give a picture of themselves holding an ID, thus ensuring the person on the ID is the same person holding the ID. Online verification is very secure, but some users find submitting an image of their face and ID inconvenient or intrusive.

#6 Biometric Verification

Biometrics can be used for identity verification and authenticate people based on physical characteristics. Biometric techniques are; facial recognition, voice recognition, iris, and retina scanning and fingerprinting. These methods offer a high level of convenience to customers (after the initial setup has occurred) as no passwords need to be remembered, no questions need to be answered, etc.

However, biometrics has some flaws. Biometrics can be stolen. Think about it, and your pictures are all over social media. Your voice can be recorded unknowingly. Databases can be hacked to retrieve fingerprints. And once these types of assets are in the hands of a bad person, it can be even easier to defraud some institutions.

As digital identity becomes more valuable, criminals are finding new ways to exploit it

Where Is It Necessary To Verify Identity?

Identity verification services are used both online and in person to verify national identity cards. These services are used in financial services, e-commerce platforms, social networking websites, and forums to curb illegal activities such as money laundering and identity theft. For example, in a bank, you need to verify your identity to open a bank account. This process is required and provides complete security in the following cases and situations:

  • Finance sector: Banks are especially using identity verification a lot. For example, opening new accounts needsthis process to protect company against identity fraud. Financial procedures of any kind or online sales and purchases also need identity verification.
  • Telecommunications and insurance industries
  • Apps and platforms
  • Government and administration 

Sanction Scanner Request Demo

You Might Also Like