Digital Identity

Why Digital Identity Verification Is Crucial Post-COVID

Digital Identity Verification Post-COVID

Set in motion by the pandemic, a dangerous chicken-and-egg conundrum is arising, caused by the confluence of store closures, the shift to digital retail and omnipresent cyberthieves.

As recently reported in PYMNTS, “The COVID-19 pandemic has triggered an uptick in digital fraud and identity theft, with 18,235 pandemic-related fraud reports received by the Federal Trade Commission (FTC) since the beginning of the year. The trouble is that the restrictions put into place to help slow the pandemic’s spread have forced brick-and-mortar businesses to close, therefore driving up the demand for digital onboarding solutions.”

And, according to the May 2020 Digital Identity Tracker® done in collaboration with Jumio, “The stay-at-home restrictions and social distancing guidelines imposed to slow the virus’ spread have encumbered many institutions’ legacy onboarding protocols in the financial, medical and even technology sectors. The result is a widespread and chaotic reshuffling as firms of all sizes seek to adapt their analog onboarding systems to incorporate secure digital solutions for remote verification.”

That’s where FinTechs and digital platforms enter the frame, with ingenious uses of biometrics, videoconferencing and more to enable AML/KYC for a post-pandemic business terrain.

Old-School KBA Is … Old

PYMNTS research chronicling the pandemic has shown that people are many times more afraid of dying from COVID-19 than they are about not having a job. They’ve abandoned physical experiences in droves. Few businesses were prepared.

“Digital transformation has been a buzzword for the last few years, as more and more consumers demand online experiences. But as the COVID-19 pandemic has shown us, traditional methods of opening accounts, checking your bank balance and transferring funds by visiting a branch in person are no longer our reality,” Jumio Chief Product Officer Philipp Pointner told PYMNTS. “Branches are closing, people are afraid to leave their homes and most of the world is in some form of lockdown. Businesses are losing potential customers because of their inability to identify customers through online, digital onboarding experiences.”

That fact is “…fueling a spike in demand for digital identity verification solutions that go beyond old-school, knowledge-based authentication (KBA),” the report states. “KBA systems require consumers to manually enter their phone numbers, personal identification numbers (PINs), Social Security numbers and other PII, meaning fraudsters privy to their personal information can access these accounts. Many firms are thus turning to faster, more reliable methods to verify their customers’ digital identities, such as biometric- and document-based authentication.”

Multi-Layered Trust

Digital documents, biometrics and artificial intelligence (AI)-powered verification and authentication are showing up in suites of identity tracking tools, as a multi-layered approach to security has been shown to have multiple benefits.

“The value of document- and biometric-based identity verification extends beyond the onboarding process,” according to the latest Digital Identity Tracker®. “It can also help address the more fundamental issue driving the recent spike in digital identity fraud.”

“Requiring users to provide documentation and biometric scans – both of which are far more difficult to forge or steal than the passwords, PINs and addresses that KBA requires – helps firms ensure that new customers are who they say they are without using information that can be readily purchased on the dark web.”

“Firms that use biometric scanning solutions, document-based verification and AI or ML technology will be better equipped in the fight against fraud both during the pandemic and after it has subsided,” the report states.

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