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In recent years, identity theft has been on the rise. Approximately $5.8 billion got lost to fraud in 2021, based on nearly 1.4 million identity theft reports to the FTC. Based on these statistics, businesses must install robust and reliable digital verification systems to verify customers quickly and accurately.
Identifying customers has evolved, but how does trust factor into this equation, and why are verification systems so important? Fortunately, in the following sections, you’ll learn the benefits of identity verification in organizations. So, let’s dive in.
What is Identity Verification?
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The purpose of identity verification is to verify a person’s identity when opening an account, requesting a loan, or doing other financial operations. Financial institutions assess and monitor customer risk through Know Your Customer (KYC) and anti-money laundering (AML) efforts, which involve identity verification as a security measure at new account openings.
Companies, governments, and financial institutions can verify a person’s identity online using digital verification methods like facial recognition, biometrics, and digital ID documents. Furthermore, software companies can digitally sign their software to verify the source of the product. This code signature might include your name, the company’s name, or a timestamp. It elevates user trust and confidence.
Benefits Of Identity Verification In Organizations
The benefits of identity verification in organizations include:
Avoid Costly Fines
A $1.1 billion fine was imposed on Standard Chartered in April 2019 for violating anti-money laundering laws. As for HSBC, a $1.9 billion fine was levied for aiding Mexican drug cartels in money laundering. These two are examples of organizations that paid astronomical penalties for not adhering to KYC and AML regulations. These colossal sums are beyond the reach of most businesses, so KYC and AML regulations are vital.
By knowing your customer (KYC), companies can collect and verify their business partners’ identities, ensuring that they’re legitimate companies that aren’t involved in illegal activities. Conversely, anti-money laundering (AML) aims to prevent firms and individuals from claiming income acquired illegally as legitimate income. You can protect your reputation and avoid damaging your client’s trust when you adhere to both protocols.
Productivity Improves With Streamlined Processes
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Organizations benefit themselves and their employees when they collect less and frequently recollect candidate information. The background screening partner you select should collect, verify, and populate candidate information into your systems efficiently and avoid candidates having to contact you back and forth.
Incorporating identity verification into your screening package will allow you to collect accurate candidate data upfront before background checks and feed that information into background checks later.
It Validates One’s Credibility
An inherently fickle digital landscape requires trust. Unsatisfied consumers with a product or service can switch to another business if it does not meet their needs. If your brand is not secure, you could lose customers in a world where one can steal your identity for heinous crimes. However, establishing your brand’s reputation and making your customers comfortable can do wonders for your business. Verifying a customer’s identity fast builds trust, which is crucial for any business.
Because of this, most organizations use identity verification companies that check KYC watch lists, customer documents, and face-match selfies. Third-party verification makes the process faster. As a result, companies can continue onboarding their customers without spending precious time fact-checking paperwork.
Boosts Consumer Confidence
Customers often share personal and financial information with companies to facilitate transactions and reduce friction. For instance, some people may allow a website to store their credit card info, so they don’t have to enter it every time they purchase.
Researchers at McKinsey report consumers are also willing to turn away from companies whose privacy practices are untrustworthy. Customers can feel more comfortable with the process when using a secure, transparent, and secure digital verification application, reducing the need to review their personal information manually.
Prevents Frauds
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Any financial transaction must include identity verification, and the absence of it can be risky. Fraud and money laundering are two risks that companies address through risk-based models, in which they employ identity checks before users are allowed to access sensitive information. There is a high likelihood that online retailers will become victims of fraud with the rising fraud cases mentioned above. Imposter scams rank first, followed by online shopping scams.
Imposters pose as representatives of a well-known organization and ask for money. Conversely, an online shopping scam occurs when scammers ship you fake products or receive nothing after you pay. Retailers can verify the identities of both kinds of customers to prevent fraud.
Conclusion
We live in an advanced world. Automating business processes will be a necessity for most businesses soon. Therefore, businesses can benefit from digital transformation and become more competitive. Nevertheless, companies must take care when digitizing their operations. Digital fraudsters lurk everywhere. It will not take them long to exploit a weak system.
You can protect yourself from these fraudsters by verifying your identity. When integrating it into your business, keep your customers in mind. Ensure the platform is accessible through various channels, such as computers and mobile devices. The system should also comply with all security and regulatory requirements. Depending on the jurisdiction, the needs of a business may differ. The fight against fraud and the strengthening of your platform are both reliant on this.
