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.
Now look at each of these points and ask yourself the following questions:
Is there currently a bottleneck in the user journey when ID verification takes place?
If so, what is the impact of that bottleneck on the customer and the business?
How could adding Digital ID enhance your product and service?
Do you have to perform age verification as part of your service?
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.
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.
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:
The ability for customers to take a picture of their passport or driving license
Document verification, using advanced AI to detect fraudulent documents
Video verification to ensure that the user in front of the camera matches the face in the document
“Liveness” detection, to ensure that the person in front of the camera is a live person and not a picture
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.
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 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)
Clients include: Revolut, Zipcar, Biststamp, Bunq, Pockit, Remitly, World Remit and Coin DCX.
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, 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.
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.
If you'd like some advice on how to get started with Digital ID please email the team at email@example.com to arrange a consultation.