In 2023, cybercrime affected 422 million people and 33 billion accounts, with more than 800,000 complaints filed. These breaches resulted in $8 trillion in losses and damages.
Until the numbers sink in, let us draw your attention to why and how cybercrime has become so very common.
First, the how is simple.
Because businesses, organizations, or institutions either failed or skipped the most crucial aspect, and that is, customer identity verification.
However, the why is more complex. Exploring the topic illustrates the importance of businesses incorporating digital identity verification and incorporating identity verification APIs into their systems.
Need some help to understand the complexity? Let’s begin by talking about the first part of this topic. This part will focus on the reasons, purpose, and benefits of customer identity verification.
Later we will dive into understanding the role of identity verification APIs.
Why Customer Identity Verification Matters?
Entities are taking a digital-first approach to appeal to a wider audience. Onboarding more customers means more revenue for them.
This also means more online transactions are happening. This can make people more vulnerable to identity theft, fraud, money laundering, and other illegal activities.
Some of the key reasons why is it necessary to verify customer identity are as follows:
Combatting Fraud
Customer identity verification allows businesses to verify the identity of an individual for sensitive transactions preventing any financial or data loss.
A few customers’ identity verification software also uses machine learning and digitally analyzes behavior to identify and stop fraudulent activity.
Building Customer Trust
A secure and efficient customer verification process builds trust and loyalty. Customers are more likely to return to your business if they believe their personal and financial information is safe.
You can achieve this by implementing strong security measures. Customers value their privacy and expect companies to protect their information. By ensuring the security of their data, you can build trust and loyalty with your customers.
Regulatory Compliance
Some industries, such as finance and healthcare, must comply with laws and regulations to prevent money laundering, fraud, and terrorist funding.
Customer verification services ensure that businesses meet regulatory compliance and mitigate risks. It also helps them avoid any potential fines and legal complications.
Checking Age
This is done to make sure the customer is old enough to buy certain products and services.” Age verification is a crucial aspect in industries such as gaming, online gambling, alcohol, and tobacco.
In 2022, a six-year-old boy racked up $16,000 in in-game purchases while playing Sonic Forces.
Leveraging technology can avert such incidents by authenticating an individual’s identity and age.
Overall, customer identity verification matters for businesses because it helps prevent fraudulent activities, enhances security, meets compliance regulations, builds customer trust, and saves costs.
What Is the Customer Verification Process?
The customer verification process involves confirming the identity of their customers, employees, or partners before granting access to sensitive information or services.
Typically, it means gathering personal information like name, address, date of birth, and government ID, and verifying it with reliable sources.
Companies should use various methods to increase security in the digital world. These methods include real-time verification checks, biometrics such as fingerprint or facial recognition, document scanning, OTP, and multi-factor authentication.
Identity verification APIs can integrate with biometric systems to provide a highly robust verification process.
The customer verification process usually consists of the following steps:
- Gathering Data – The first step involves collecting personally identifiable information (PII) from an individual.
- Verifying the Data – Verify the data by checking it against trusted sources and databases to ensure accuracy and authenticity.
- Identity Verification – After the customer data verification, this step involves matching documents, comparing ID photos, biometric authentication, or confirming identity through other means.
- Risk Assessment – This step checks if the customer could be a risk to the business.
- Granting Access – The system decides whether to grant access, deny, or report the verification process.
Advantages of Customer Identity Verification
There’s a compelling ROI case that can be made for customer ID verification technology. Here are some of the most important advantages:
Reduced Financial Losses – A reliable customer verification API prevents financial losses for businesses by detecting fraudulent transactions. Digital identity verification acts as a protective shield that helps businesses avoid chargebacks and reimbursement costs.
Enhanced Brand Reputation – Effectively verifying customer identity demonstrates a commitment to security, compliance, trust, and customer data protection. Ultimately, elevating customer loyalty and enhancing brand reputation.
Compliance with Regulations – Customer verification services help companies comply with strict regulations like Know Your Customer (KYC) and Anti-Money Laundering (AML). Customer identity verification software also ensures data privacy compliance such as GDPR, CCPA, HIPAA, and more.
Faster Onboarding – Identity verification API accelerates the onboarding process for new customers. Thus, eliminating the need for time-consuming manual checks and paperwork to register or create new accounts.
Reduced Manual Work – Customer data verification when integrated with customer verification API fast-tracks the entire customer journey process. By eliminating manual steps like paper forms or in-person visits, it provides a smooth and convenient experience.
Improved Risk Management – Risk may arise from a company’s non-compliance with laws, guidelines, or regulations. Customer verification services help in assessing the risk posed by a customer.
This may involve checking for fraud, politically involved individuals, sanctioned businesses, or customers on a criminal watchlist.
Tailored Customer Experience – While interacting within the digital ecosystem, security and trust remain the top concerns. Investing soon in identity verification API allows businesses to jumpstart the verification process and deliver enhanced customer experience.
The Role of APIs in Customer Identity Verification
Identity verification APIs can overlap with existing systems to automate the process of checking the identities of new users. The benefits of using a customer verification API include:
- Streamlining Verification Processes – Digital identity verification eliminates the need for tedious manual verification methods and thus prevents delays and errors.
- Real-time Verification – Real-time verification allows businesses to monitor transactions and user behavior up to the minute. This enables early detection of suspicious activities to take prompt action to prevent fraud.
- Enhanced Accuracy and Security – When customers know that their personal and financial data are secured with robust customer identity verification software, it instills a sense of trust and confidence.
- Customization and Scalability – A well-designed customer verification API must be equipped to scale as per the growing needs of the business. It should effectively handle the volume without compromising the performance or security.
Wrapping Up
In today’s digital landscape, customer identity verification is more of a success than just about security. With the rise in online interactions, businesses worldwide must prioritize establishing reliable methods for verifying customer identity. Invest in identity verification API today and take pre-emptive measures to safeguard your business.
