Does KBA Have A Place In Online SMB Credit Checks?

As digital identities fast become a part of everyday life, the identity verification market is expected to reach $12.8 billion by 2024. Technology providers are exploring a range of solutions to seamlessly verify customers’ identities, with the biometrics market projected to reach more than $59 billion by 2025. That does not mean older verification methods are obsolete, however: Many companies still rely on knowledge-based authentication (KBA) methods like passwords or security questions, even in areas like business lending — where stringent verification is crucial.

Digital verification is particularly important for governments, which are increasingly adopting digital identity solutions as cost-effective replacements for physical ID documents. Such identity solutions were once exclusively the domain of wealthy, technologically advanced nations, but are spreading to countries like Nigeria and Sierra Leone, which have recently begun harnessing digital channels.

In the October Digital Identity Tracker, PYMNTS explored the latest developments in the world of digital IDs, including the challenges of KBA, new biometric verification methods, and how digital ID initiatives in Africa and Asia are impacting day-to-day life for citizens.

Developments From Around The World Of Digital ID

Government-issued digital identities are not just the realm of sovereign nations. The city of Dublin, Ohio is testing a digital ID program to help its residents access city services, providing each with a QR code that they can scan to verify their identity. The system will allow residents to register for public meetings, upload their information on government websites and gain entry into public facilities, and the city plans to leverage blockchain technology to keep the program secure.

Another form of identity security is biometrics. Going beyond the typical fingerprint or retina scans, technology provider Hitachi has unveiled a new biometrics system that uses a sensor to trace the veins in users’ hands. This system is reportedly harder to spoof than fingerprints, since veins are located inside the body, rather than on the surface. In addition, unlike fingerprints, veins do not change with age. Hitachi first demonstrated the technology in London in September, and plans to officially launch the product in Europe next year.

Initiatives like these are thus contributing to a growing biometrics industry. The market in the Asia-Pacific region is particularly large, with experts predicting it will reach $21.2 billion by 2025 — a staggering amount of growth from its current valuation of $5.4 billion. Industry analysts primarily attribute this growth to the proliferation of mobile devices, which have driven manufacturers to incorporate biometric verification measures in their designs.

For more on these and other digital identity news items, download this month’s Tracker.

How Nav Navigates KBA Challenges

Proper identity verification is imperative when performing credit checks, as the sensitive information contained in them could be devastating in the wrong hands. Nav, a financial management app that helps small businesses access credit reports, leverages KBA to verify its users — but is not without its share of challenges.

For this month’s Feature Story, PYMNTS spoke with Nav Co-founder and Chief Legal Officer Caton Hanson about the benefits and drawbacks of the company’s current authentication procedures, as well as how it plans to improve its verification protocols in the future.

Deep Dive: How Digital ID Initiatives Are Impacting Africa And Asia

The World Bank estimates that there are approximately 1.1 billion individuals worldwide without basic ID credentials, a significant obstacle when attempting to access essential services, such as healthcare or insurance. Seventy-eight percent of them live in Asia and sub-Saharan Africa, where many governments are leveraging digital ID solutions to provide unique identifying data to citizens.

This month’s Deep Dive explores the various initiatives in the regions, ranging from Singapore’s smartphone app for its SingPass ID card to Nigeria’s digital vaccination cards.

About The Tracker

The Digital Identity Tracker, done in collaboration with Jumio, is the go-to monthly resource for updates on trends and changes in the digital ID industry.