Everyday, real lives and digital lives continue to blend – and so the need for identity verification processes has never been more critical for businesses. People might not be who they say they are. And cybercriminals are taking advantage of the new reality.
For instance, look at the Buy Now Pay Later (BNPL) space. Fortune reported in 2022 that the San Francisco-based anti-fraud company Sift found that fraud attacks on BNPL have gone up 54% year-over-year. That’s a startling – and deeply concerning – figure. Not only is it a terrible experience for the individual, but a massive risk to businesses gathering personal information, both for their customers and for their reputation.
Let’s not forget that fraud comes with a massive price tag for businesses, as well. A 2022 LexisNexus Risk Solutions study reports that the cost of fraud is significantly up from pre-pandemic levels. Every $1 lost to fraud now costs U.S. financial services firms $4.23 – compared to $3.64 in 2020. That’s a 16.2% increase in just a few short years.
That’s why businesses across various industries – including consumer lending, fintech, and even tenant screening – rely on advanced identity verification services to ensure the authenticity of personal information provided by applicants. It’s a crucial step in the process when determining the financial worth of a potential business partner or individual.
On its surface, identity verification is a simple concept to grasp. You’re verifying the details of who someone claims to be. Straightforward, right? Surprisingly, the world of identity verification is a bit more complex than it seems on the surface, and CRS provides solutions for businesses looking to streamline their approach to the process.
Let’s dig in further.
Understanding Identity Verification: What Is Identity Verification?
Identify verification is a straightforward process that verifies whether a person’s claimed identity aligns with the supporting documentation they provide. Essentially, it scrutinizes official ID documents and supporting Personal Identifiable Information (PII) to confirm that the individual is indeed who they claim to be.
This evidence typically includes officially issued documents and legal paperwork. To determine this, organizations and businesses typically employ identification services to conduct a thorough and highly accurate examination of these documents – a process frequently done remotely through online identity verification methods.
Common Acronyms Explained:
Before going further into the IV process, let’s break down common acronyms.
- IDV: Identity Verification
- KYC: Know Your Customer
- KYB: Know Your Business
The Identity Verification Process: How To Verify Identity?
The process of identity verification confirms an individual’s identity. It involves validating the accuracy of the information provided by an applicant, such as their name, address, date of birth, and other pertinent details.
Additionally, biometric verification – such as fingerprint or facial recognition – is increasingly used for day-to-day operations such as devices or apps. Knowledge-based verification, where individuals answer questions based on their personal history or information (the names of high school teachers, favorite sports teams, etc.), is another method.
Breaking Down Key Features for Identity Verification
IDV is a foundational component in preventing fraud, ensuring compliance, and streamlining onboarding. These different approaches are how to verify someone’s identity through modern solutions.
- Document Verification: Individuals submit official identification documents for scrutiny.
- Biometric Verification: This method relies on unique physical or behavioral traits, like fingerprints or facial recognition.
- Knowledge-Based Verification: Applicants answer questions about their personal history or financial details.
Why Businesses Need Identity Verification
There’s never been a more important time for cybersecurity than now. In fact, a recent JP Morgan survey reports that 65% of organizations reported payment fraud attacks or attempts in 2022. In other words, these staggering statistics suggest that it’s only a matter of time before scammers attempt to hit your business, sensitive data, or financials – if they haven’t already. Do you truly KYC?
By committing to verify the identity of clients is a commitment to a frontline defense against this type of behavior, regardless if you work with consumers or businesses.
The Benefits of Identity Verification for Businesses
There are numerous advantages of efficient identify verification, including the following:
- Stops Financial Crime: Stops suspicious activities and protects your business against data to avoid financial crimes like money laundering or tax evasion.
- Fraud Prevention: Helps businesses spot and prevent fraudulent activities by only accepting validated individuals into signup and application flows.
- Streamlining Onboarding: Simplifies and speeds up the signup process for potential customers by automatically validating and filling in customer information.
- Compliance Requirements: Ensures businesses meet regulatory standards.
Top Identity Verification Solutions for Businesses in 2023
These days, numerous identity verification solutions are available. These tools offer a range of features and capabilities to suit the needs of various businesses. Depending on the needs of your business, it’s worth considering tools with robust fraud detection, seamless integration, and the potential for scalability.
IDV for Consumer Lending
Consumer lending businesses often require robust identity verification solutions to assess the creditworthiness of loan applicants. These tools help verify the identity of borrowers, assess their financial history, and make informed lending decisions. By utilizing the latest identity verification solutions throughout qualification and lending flows, lenders can move the best-fit candidates through the process faster, save money by only pulling credit reports on legitimate candidates, and protect their business by mitigating the risk of fraud attacks.
IDV for Tenant Screening
Tenant screening is crucial for property management and rental businesses. It involves verifying the identity and financial stability of potential tenants to mitigate risks associated with renting to unreliable tenants. Leveraging identity verification tools can streamline the tenant screening process by weeding out fraudulent behavior and speeding things up for responsible renters, ensuring a reliable and secure rental process.
IDV for Commercial Lending
Commercial lending involves significant financial transactions and risk assessments. Identity verification tools play a vital role in the commercial lending sector by verifying the identities of businesses and individuals seeking loans. Comprehensive business verification methods, with IDV and credit data solutions, is a must-have for high-stakes business loans, commercial real estate, and commercial financing. These tools ensure lenders make informed decisions to compliant, stable businesses, while streamlining the application process.
IDV for Credit Monitoring
There’s growing demand for credit monitoring from consumers for better visibility to their credit score. In fact, showing a person’s credit data when they log in to a user portal has become not only a competitive edge, but a matter of maintaining feature parity with the competition. This is especially true for fintechs and finance apps, financial institutions like banks and credit unions, and other consumer finance solutions. However, it’s critical to securely and accurately display sensitive, regulated data like credit scores to your users. Implementing IDV in your credit monitoring process can help achieve this.
Why Businesses Consider CRS for Identity Verification Needs
An all-in-one approach to serving credit data needs brings real business advantage. CRS offers everything you need in one place to unlock the power of credit data and power data-driven financial decisions.
This includes customized credit data bundles – data from various sources via a single credit data API – that meet your business need and fraud prevention solutions – like IDV – to boost the effectiveness and cost-efficiency of credit data solutions. Working alongside our customers every step of the way with expert compliance consulting and guidance is how our customers meet compliance requirements in a fraction of the time and stay compliant to continue leveraging credit data in their businesses long term.
Identity verification can easily be added on to any existing process. It is truly best, though, to look at it as an important piece of a complete lending, screening, or qualification process. One that is supported by the best credit data & IDV bundled solution for your business needs. Because the reality is that identity verification is not merely a business requirement – it’s a safeguard against fraud and a means to ensure regulatory compliance.
Businesses face evolving challenges in the digital landscape, and choosing the right identity verification solution is how to protect your business and foster growth.
Minimize risks. Improve customer experience. Future-proof your business. Learn how CRS provides reliable, comprehensive, and compliant credit data solutions for businesses across industries. Explore CRS credit API solutions to find credit data & fraud prevention in one place. Or, talk to our experts today about the best IDV solution for your business.