Solving the Puzzle of Global Identity Verification

With customer bases that span the globe and the growing prevalence of online fraud, financial service providers know that effective identity verification (IDV) is imperative. But meeting anti-money laundering (AML) and know your customer (KYC) compliance standards across borders presents a challenge. At a time of widespread digital connection, why are financial businesses still struggling to verify their clients worldwide?

There are lots of moving pieces that constitute a proper global IDV setup, and with that come complexities that need to be handled intelligently. When companies try to build their own global IDV program, it can often lead to vulnerabilities that have been overlooked.

In such a complex and ever-changing environment, there are some core components that any effective global IDV program needs—and some critical factors that companies often overlook.

Core Components of IDV

  1. For starters, there must be a robust and multilayered method of primary verification. This often begins with documentary verification, where government-issued ID is presented in-person or virtually. But there’s also data-based verification, where users provide personal information from official government data sources without needing to show the document itself—for instance, when filling out an online form. Or there’s liveness verification, which takes documentary verification a step further by requiring proof that the individual is real and active. That may involve asking them to take a selfie, then using AI and machine learning to confirm the authenticity of the photo.
  2. Documentation is then cross-checked against official data sources, sometimes with the support of trusted third-party data partners located in the same jurisdiction(s) as the prospective customer(s).
    1. The types of personal information that need to be validated generally include factors such as name, address, date of birth, contact information and a national ID number.
    2. A fallback verification method is also valuable—for instance, having an individual take a selfie and then matching that with images stored in official records or sources.
  3. Beyond the core verification processes, a global IDV program requires a detailed recognition of, and compliance with, the intricacies of regulations in different regions and locales. It also needs powerful fraud detection functionality to reduce the increased risk of identity theft in digital transactions. And, for organizations that need to meet different requirements in different territories, the ability to customize is key. Asking for more information than you need from potential customers will likely turn them away.

Global IDV Challenges

There are several obstacles organizations must overcome when it comes to global IDV. Here are three of the most common.

  1. Regulations vary widely across geographies and jurisdictions. Differences can appear at the municipal, regional or national level, and can be major or minor.
  2. Trustworthy, verifiable data sources and partners outside the U.S. are more difficult to locate than you might think. It is also difficult and time-consuming to continually monitor the quality and accuracy of these resources.
  3. There are also differences in how documentation and personal information is formatted across regions and jurisdictions. If your system doesn’t account for these formatting discrepancies, it can lead to mistakes and inconsistencies—particularly when automating processes.

All of these variables create challenges that can be costly, tedious and time-consuming for companies that need to carry out international IDV—and it can be strenuous for the developers who need to architect these systems.

Often, companies feel their only option is to build their own custom global IDV stack pieced together from a variety of solutions to address all these competing nuances and needs. And because they aren’t experts in global identity verification—and it doesn’t make sense for them to invest the resources to become experts—they try to simplify their stack at the expense of user experience, compliance or fraud prevention. A prime example: Many companies resort to a documentary-only verification process for any country outside the U.S., even when they know those processes can often be unreliable.

It goes without saying that shortcuts and tradeoffs are unacceptable. Customer identification programs (CIPs) are federally mandated and regulated in the U.S., and equivalent policies exist elsewhere.

Switching to a Modern Identity Verification Solution

For years, many technology and solution providers have made it their mission to solve the challenges of international IDV. Here are some questions to ask if you’re considering one of these solutions:

  1. Under your current system, how often does someone on your team have to conduct a manual review? While manual reviews may seem unavoidable, newer IDV solutions have built-in robust machine learning and artificial intelligence functionality to reduce—and possibly even eliminate—manual reviews.
  2. How easy is it to make changes to your review flow? With regulations changing constantly, it’s important to have an ID verification system that does not require developer work every time you need to make an adjustment to your verification process.
  3. Are you losing new users during the signup process because of an onerous or poorly designed IDV system? ID verification is typically one of the first steps new users have to complete when signing up for services. Make sure you have one that helps improve your sign-up conversion rate, rather than hurt it. Even better, look for one that enhances your brand, rather than detracts from your marketing messaging.
  4. Are you using the same ID verification platform globally, or is it a patchwork of different vendors? Using a single platform, when you can, both simplifies geographic expansion and streamlines compliance issues. A single global vendor, for example, can make staying up-to-date internationally far easier than trying to sort out new rules and new data sources on a country-by-country basis. Then there’s cost savings; often, you can negotiate a lower rate with a higher volume of verifications at a single vendor.

With an IDV platform that’s intelligent and developer-friendly, verifying customers all over the world no longer has to be complex, expensive or risky. Start by assessing your needs: Where are there gaps in your current ID verification stack? Then, bring everyone together; implementing a new identity verification solution often means working across teams. What are the pain points for your developers, your risk and compliance teams and even your user acquisition team? You may find that, even if your current IDV process isn’t broken, there’s plenty of room for improvement.

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