How Digital Identity Verification Systems Help Make the Internet Safer

Introduction

Have you ever been concerned about how a bank can confirm that the person opening the account online is indeed the same person they claim to be, and not somebody in another country pretending to be that individual? Digital identity verification systems are what solves this problem. Think of them as the internet’s digital bouncer; they verify identities, scan faces, and let only the appropriate people into the establishment.

In layman’s terms, we will simplify what digital identity verification systems do, why they are essential, and where they are headed.

What Is a Digital Identity Verification System?
Definitions and Basic Functions

A digital identity verification system is a software framework that allows for a person to be identified as the same person that they state they are, all done online. Digital identity verification has replaced the traditional “check your ID at the counter” procedure with more intelligent digital checks.

Instead of an actual employee checking the photograph on your ID against your physical attributes; today, software can quickly evaluate an applicant’s identification documents using digital file scans, perform biological evaluations using biometric characteristics, and compare the above-mentioned verification with the corresponding data stored in multiple databases within seconds.

The Difference in Identity Verification: Digital vs. Traditional Identity Verification

A traditional identity verification process typically involves an individual manually verifying your ID by visually matching the photograph on the ID to your likeness and possibly asking a few questions. A digital verification process is automated and layered, which includes checking multiple signals in real-time, such as the authenticity of the documents and biometric match as well as the usual behavior of the device.

Digital Identity Verification is Important for Daily Transactions
We are all capable of conducting financial transactions with banks or applying for loans online, in addition to signing contracts and accessing our healthcare through the internet. While the convenience of these transactions is obviously an advantage of online transactions, it can also expose you to significant risks if identity verification methods are weak.

Without robust identity verification methods, fraudsters can easily utilize online services to commit fraud.

Identity Fraud is Commonplace — Use Digital Verification to Protect Yourself
Fraudulent identity activity is no longer an isolated incident; with the growth of stolen credentials, forged IDs, and deepfakes, identity fraudulently use is escalating. Digital verification systems provide protection against these types of risks because they not only check for accuracy but also analyze patterns of behavior to identify when deceitful activity has occurred.

Digital Identity Verification Systems in Action

Data Collection Stage

In this stage, the digital identity verification system will collect the individual’s identity data which may include:

Government identification document images

A selfie or live photo of you

Your address details

Device metadata

This will be the “evidence gathering” stage of the verification process

Document Verification Stage

In the document verification stage, the digital identity verification system will assess if the government identification document is valid by checking for the following:

Document Security

Whether the document has been tampered with

The document has the appropriate document type, format and characteristics

The document has the appropriate embedded document security codes

Most fraudulent document submissions will be rejected at this stage

Biometric Identification Stage

At this stage, your identity is compared with the identification documents and your biometric data. Your identity on the live selfie or video must match your identity on the identification documents.

Facial Recognition

At this stage, the digital identity verification system will compare the government identification document photo with the live selfie or video to determine if there is a personal match based on facial geometry — the distances between the features of the face, such as the eyes, nose and jawline — not just on facial appearance.

Fingerprint and Iris Verification

The digital identity verification system uses fingerprint and/or iris scanning for additional verification of identity, primarily in high-security environments.

Technologies used for verifying identity

By using artificial intelligence and machine learning, most of the contemporary verification systems have the ability to learn through the analysis of millions of data sets, which is how they can recognize fraud patterns that humans might not.

The machines are constantly improving as they continue to learn from their past performance

Optical character recognition allows systems to automatically read text from the documents they receive. This means that they can extract relevant data from names, dates, and numbers with no manual entry required.

Liveness detection is designed to eliminate items being used in an attempt to impersonate a person via biometric information, by asking the user to prove they are alive via inputting different types of biometric information, such as by closing one eye or by staring in one direction.

Digital Identity Verification Methods
Document-Based Verification

Users provide an identification document, and the verification system analyzes it for correctness and retrieves the relevant data.

Commonly used, easy to implement.

Biometric Verification

Identifies individuals based on their biological features (e.g. facial image and fingerprint) and is more reliable than documents alone because they are hard to forge and more secure.

Database Verification

Compares the identifying information of the user against a reputable (government/institutional) database (e.g. performing a credit check on the user).

Two-Factor and Multi-Factor Verification

Provides verification of the user’s identity (using 1st step) plus providing additional verification (i.e., sending a verification code to a user’s mobile phone) increases the level of security to the user.

The addition of multiple methods of verification increases the security for the user.

Industries That Use Digital Identity Verification
Financial & Banking Services

Financial services utilize digital identity verification to onboard new customers, process loan applications, and help prevent instances of fraudulent activity.

E-Commerce / Marketplaces

Marketplaces utilize digital identity verification services to verify the identity of all buyers and sellers to reduce instances of fraud.

Healthcare

Healthcare entities use digital identity verification to confirm the identity of patients receiving orders of Prescription Drugs or records before any action is taken.

Government Services

Citizens can access government services from anywhere using their digital identification (ID).

Benefits of Digital Identity Verification Systems
Reduced Fraud

Automated verification systems are able to identify documents that are fraudulent and the identity of the user attempting to utilize fraudulent documents in a timely manner.

Faster Onboarding

Onboarding for new customers that used to take days, can now be completed in minutes or seconds.

Improved User Experience

No paperwork, no need to visit a physical branch office, only complete a few simple user guided steps.

Risks and Challenges In Digital Identity Verification
Privacy Issues

People are concerned about their biometric information being used and how their biometric information is being stored.

Transparency is Very Important.

Security Breaches

Identity Data Is Worth Money And If Secured So If Not Secured Will Cause Problems.

Bias and False Positives in Systematic Processes

No System Is Perfect. With A Poorly Trained Model There Is A Chance That The User’s Identity Can Be Mispresented.

Testing Continuously Is Very Important.

Compliance And Regulatory Requirements
Know Your Customer (KYC) And Anti-Money Laundering (AML)

Both KYC and AML Laws Require Financial Institutions To Verify Strongly The Identity Of Their Customers.

Data Protection Laws

Regulatory Agencies require that Personal Data is Secure and Stored and Used as Limited as Possible

Compliance is required to operate in the Fintech Industry.

The Future Of Digital Identity Verification
Decentralized Identities

Users Will Soon Have Control Over Their Data Using Digital Wallets.

Behavioral Biometrics

Systems Will Confirm How You Move/Type/Swipe Instead Of Just How You Appear On The Watch List (I.e., Visual).

Passwordless Authentication

Pass Wordless Authentication Is Becoming A More Common Practice. The Use Of Biometics and Device Trust Is Replacing The Use of Username/Password.

How To Select The Correct System
Accuracy Versus Speed

Higher Accuracy Develops A User’s Trust and Helps Reduce Fraud If User does not trust fraud will occur (better user experience). Therefore, The Sweet Spot is Where Accuracy and Speed Are Balanced.

Integration Capabilities

The Verification System Should Integrate Into Existing Applications and Workflows.

Cost vs Value

Low-Cost Verification Systems Will End Up Costing More; This Happens As A Result of Inadequate Security That Leads to Fraudulent Activity. Thus Value Has More Importance Than Cost.

Tips for Implementing Identity Verification Successfully

Implement layered verification

Encrypt all stored data

Maintain transparency with your users

Conduct bias/error testing

Regularly update your models

Think of digital identity as a piece of digital gold — store it with the highest level of protection.

To conclude

digital identity verification platforms are now the trust framework supporting the progression of digital capabilities. As so much more of our lives occur on screens, demonstrating our digital identities is as significant via an identity verification process as presenting an identification card at a physical location. The best digital identity verification solutions utilize AI, biometrics, and various levels of verification that create a seamless, secure and user-friendly experience when verifying identity. These solutions will continue to develop into an easy/safe identity verification experience.