A Digital Identity (“Digital ID”) system provides a simple and secure way of
proving identities online, which creates the opportunity to improve efficiency and customer
experience while at the same time reducing fraud risk.
Usage of Digital ID was growing steadily within financial services in recent years,
and COVID-19 further highlighted the power of the technology with Digital ID providers
reporting a spike in usage during the pandemic.
A number of companies offer biometric and document verification as services that
can (relatively) easily be integrated into your company’s digital journeys. Their APIs
enable your platform to prompt the user to take a photo of their ID, which are
then passed through automated image analysis (powered by artificial intelligence) to
identify forged, counterfeit, stolen, camouflaged, impostor and compromised documents. When
coupled with a selfie video of the user, the services compare the face
of the person in the video to that on the ID and ‘Liveness’ detection algorithms ensure that
it really is a person in front of the camera and not a photo. Many services also perform
automated Anti Money Laundering and sanction search validation
at the same time, ensuring you really do know your customer before doing business with them.
The use cases for the financial industry are clear. Alongside taking user account
creation and recovery to a next-level of security and ease of use, the process of ID
verification during the application process itself could be radically improved and could
remove the need for certified physical copies of passports and driving licenses. And for
businesses, the reduction in the risk of fraud and commercial risk makes a compelling
business case for the adoption of the technology.
So how do you get started?
1. Identify the right process
Firstly list out all of the points in the customer journey where identity
verification currently takes place. Next, identify new opportunities to enhance your
security and reduce fraud by adding automated identification verification.
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Now look at each of these points and ask yourself the
following questions:
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Is there currently a bottleneck in the user journey
when ID verification takes place?
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If so, what is the impact of that bottleneck on the
customer and the business?
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How could adding Digital ID enhance your product and
service?
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Do you have to perform age verification as part of your
service?
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Is your digital customer journey an out of the box
solution from a core system provider, or was it built as a bespoke application by
your internal development team or an external agency?
2. Validate the business case
With opportunities to leverage Digital ID identified, you can start to outline the
business case. In order to do this you must assess the technical feasibility and order by
priority.
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You can investigate the technical feasibility of
integrating Digital ID into your customer journey with your agency or software
vendor. Firstly, make a rough estimate of the cost and time of integrating Digital
ID with your processes and evaluate
these against their potential value to the business. The lower cost and larger gain
opportunities will be your highest priority, so you should focus on these first.
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Some services also include Anti-Money Laundering checks
as part of their per-lookup fee, so make sure you factor in savings you could make
in those areas as part of your calculations.
3. Identify the right platform
The Digital ID market is undergoing significant investment at the moment, with a
number of new entrants making it highly competitive. All leading vendors offer APIs that
your development team can use to integrate within your digital customer journeys,
so you need to look at the specific features of each tool to ensure they fit your business
requirements.
Most tools offer a similar set of features:
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The ability for customers to take a picture of their
passport or driving license
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Document verification, using advanced AI to detect
fraudulent documents
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Video verification to ensure that the user in front of
the camera matches the face in the document
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“Liveness” detection, to ensure that the person in
front of the camera is a live person and not a picture
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Some also offer automated anti-money laundering checks,
as well as a biometric “single-sign on” service that could be used to supplement or
replace your in house login and authentication systems.
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Most vendors offer a subscription and lookup fee model,
typically between £0.20 and £1.00 per identity verification undertaken. Some offer
free trials that your developers could use to build a Proof of Concept (POC) and
verify the
tool will meet your requirements.
There are many Digital ID platforms now available in the market. Below is a
comparison of some of the leading players.
Onfido
Onfido is one of the more long-standing Digital ID platforms, being founded in 2012
by three former Oxford University students and having established themselves in the
‘reg-tech’ domain.
They offer both biometric and document verification solutions, powered by AI-based
technology which they claim can verify a person’s identity in as little as 15 seconds.
It matches a government-issued ID (for example a driving licence or a passport) to
a person’s facial biometrics and assesses whether it is genuine or fraudulent. Onfido also
offers their corporate clients the ability to match the verification level
to their risk appetite. So for example, if a user is from a high risk area, you might
choose to use a higher verification level, such as Video. But for users from a lower risk
area, you might deem that Selfie (a photograph of the user's face)
is sufficient.
Clients include: Revolut, Zipcar, Biststamp, Bunq, Pockit, Remitly, World Remit
and Coin DCX.
Yoti
Yoti, also founded in London, provides ID services to both individuals and
corporates. In 2017, after a three year build, they launched a free app targeted at
consumers, enabling them to verify their age and identity online.
They believe in putting people in control of their data, with a company or
organisation only being able to verify certain aspect of the users identity (e.g. D.O.B or
address), that the user chooses to share. This supplies the company with the
information
they require, whilst also protecting the consumer’s data and privacy.
Yoti also run some impressive initiatives, for example they make their service free
for charities and as a result of Covid-19, they are providing their platform free for public
health organisations, emergency services and Covid-response initiatives. For
all other businesses, they charge £1 per document scan and £1 per ID verification.
Clients include: NHS, the Government of Jersey, NSPCC, Co-Op and
Synectics Solutions
HooYu
HooYu, founded in 2016 are already making impressive gains in the financial
services sector, with clients such as Natwest, Baanx, Vanquis, Betfred, Equifax and
EasyMoney.
Offering two distinct services, HooYu Idenitfy (the digital ID service) and HooYu
Investigate (the fraud investigation service) they articulate themselves as experts in the
reg-tech sector.
What makes them different is their unique blend of the newer identity technologies,
including document validation, digital footprint analysis, geo-location and facial
biometrics, with traditional methods of customer validation such as database checks
and PEPS & sanctions screening.
They also allow their corporate clients to use a risk-based approach when
determining validation requirements and create ‘risk buckets’ that allow firms to increase
the scope up or down based on the risk that is presented and based on their
unique risk appetite.
The end result of the consumer identity checks are an overall ‘identity
confirmation score’ and ‘identity confirmation report’ which the client can view in the
portal to make a decision.
Passbase
Founded in 2018 in Berlin, Passbase is a self-sovereign digital ID platform that
focuses on developers, being privacy-conscious and putting data security first.
Their USP and flagship claim is speed - they claim that their service can be
integrated to a website or mobile app in less than three minutes and with just seven lines
of code.
Passbase have one of the most transparent pricing structures: after a 30 day free
trial which includes 50 free verifications, there is a monthly subscription cost with
verifications ranging between $1.10 and $1.50 per verification.
In the same way that Yoti are, Passbase are waiving all subscription fees to any
company dedicated to helping individuals get through the Covid-19 pandemic. They are also
providing priority integration support.
Clients include: Linus, Keego, Discontract, Boundless and Nuvven.
Advice
If you'd like some advice on how to get started with Digital ID please fill in our contact form to arrange a consultation.