Ensuring user identity verification is crucial for combating fraud and complying with regulatory standards. However, it can sometimes clash with product teams’ objectives of seamless user onboarding. To strike a balance between growth, compliance, and user experience, here are five essential tips and best practices for designing or improving your online identity verification (IDV) process.
Use Knowledge-Based Authentication
Knowledge-based authentication confirms an individual’s identity by asking them to answer security questions. These questions are typically crafted to be simple for the individual to answer but challenging for others. To enhance security, KBA often includes a time limit for responding to questions.
The primary benefit of KBA is its simplicity, making it easy for users to grasp. However, its main drawback is the growing ease with which answers can be uncovered through social media and traditional social engineering tactics.
Utilize Document Verification
Document verification enables organizations to evaluate the authenticity of documents that establish a customer’s identity, address, or financial status using personally identifiable information (PII). Examples of such documents include utility bills, leases, property titles, or bank statements.
Customers can capture images of these documents with a smartphone and securely upload them to the company’s servers for analysis. Although these additional documents are valuable for identity verification, many consumers may feel reluctant to share such extensive personal information with another company. They may also worry about the potential risks of transmitting sensitive documents over potentially vulnerable networks. A passport scanner can help ease these concerns by providing a more secure and efficient method for document verification.
Use Two-Factor Verification
Two-factor authentication is a widely used alternative to methods that rely on a user’s personal information. When users create an account, a numeric code is sent to one or more of their contact methods to confirm the account and, ideally, their identity.
While this approach is highly effective at blocking scammers from accessing existing accounts, it has limitations when it comes to verifying the identity of new users. For instance, an identity thief may only need access to their victim’s email or phone to exploit two-factor authentication during account creation. Advanced hackers may intercept messages exchanged between your system and the user’s device.
Biometrics
Biometric systems rely on an individual’s unique physical traits. These include fingerprints, facial features, irises, or voice, to confirm identities. While this approach may seem foolproof, it comes with certain challenges.
For example, fingerprints or facial images can be replicated through sources like social media or existing security systems. Some consumers are hesitant to engage with systems that request sensitive personal information, leading to incomplete verifications. However, when combined with other authentication methods, biometrics enhances the verification process, providing an added layer of security and accuracy.
Ensure Your Verification Tools Are Current
Technology and fraud tactics are always advancing, making it essential to keep your verification tools up to date. Frequent updates help your system address emerging threats and maintain an effective customer identity verification process.
Using outdated tools can expose your business to new types of fraud, so staying proactive is key. Conduct regular audits of your verification tools and processes to confirm they are working properly and to pinpoint areas that may need improvement.
Endnote
Evaluating the performance of an IDV solution enables businesses to confirm they are meeting their objectives. By analyzing metrics like customer feedback and ROI, companies can gather meaningful insights into the solution’s effectiveness.
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