AI’s Love of Complexity Is Perfect Match for Digital Business Verification

Digital identity verification solutions have advanced so far and fast that they’re now a staple within the technology arsenal of most consumer-facing organizations.

With COVID-19 preventing banks, retailers and just about anyone else from doing business face-to-face, it’s impossible for a customer to simply hand over their passport or driver’s license to prove they are who they’re claiming to be. The rise of digital verification tools quickly solved that conundrum – the consumer snaps a quick selfie with passport in hand, artificial intelligence algorithms immediately get to work, and in just a few seconds they’re verified and good to go.

If only the same could be said for business verification. In the world of B2B, such quick and convenient solutions simply don’t exist, forcing organizations to spend hours, sometimes even days, doing research and making calls to understand exactly who they’re doing business with.

“There aren’t any compelling solutions because you have to worry about more than just fraud prevention,” Sudhir Jha, Mastercard SVP and head of Brighterion, an artificial intelligence firm (and Mastercard company) with a focus on payments risk mitigation, explained in a chat with PYMNTS’ Karen Webster. “You also want to check the business’s background to ensure there hasn’t been a lot of lawsuits around it, or something like that. And then, you need to know if this entity shares your corporate philosophy or principles, and what the current level of risk in its portfolio is.”

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In other words, businesses need an identity verification solution that’s far more comprehensive than anything that exists in the consumer world today.

It’s a conundrum Brighterion aims to fix, and it believes it has a ready-made solution in the shape of its AI algorithms.

“AI can be a huge help on the onboarding side for businesses,” Jha said. “I think it may even be more powerful for business verification than it is for consumer verification.”

AI is ideally suited to the task, he said, because establishing an organization’s identity is a much more complex and involved task than simply trying to understand who an individual is. Businesses can be incorporated in various different ways and operate under a different name from their legal identity, for example. They can morph into different entities. Further complicating efforts to understand them is that any publicly available data that might help to solve the mystery is often inconsistent and hard to locate.

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Jha said businesses are often forced to assign multiple people and spend weeks in order to verify an organization they’re planning on working with.

“There’s a lot of complexity, but AI actually loves complexity,” Jha said. “It can make sense of all of the changes that have happened historically, it can piece them together and tell us which are meaningful, which are predictable and normal, and which ones are maybe something that shouldn’t be happening.”

An AI-based business identity verification tool would provide more than just time-saving benefits though. According to Jha, such a tool could also improve a small business’s access to capital. He told Webster that a lot of small businesses fail in their loan applications due to problems such as the availability of data or even small inequities. He said COVID-19 aid distribution, both in the U.S. and in other countries, was extremely uneven due to this and also the number of fraudulent applications.

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“This kind of solution can ensure there is less wastage in any kind of government aid program or bank loan program, so funds can be distributed equitably by applying the same principles as we do for the consumer lending side,” he said.

It’s not banks that Brighterion is looking to do business with first, though. Jha said the company’s immediate focus is on working with supplier networks, at least to begin with. He told Webster there is high demand in the space for a better verification process, because for them the network is their main asset. And if a supplier network can’t build out its network fast enough, then it will struggle to monetize.

“We have only started focusing on this in the last six months, but my sense is that in the next six to nine months this will become a pretty big thing,” Jha said. “This is going to be a game-changer for the entire payments process. If you do the first step right, everything else follows much better.”