What are the benefits of digital id and identity verification systems?

According to Capgemini and BNP Paribas - World payments report (2018) Digital payments are growing at an estimated 12.7% annually, and further forecasts suggest that it may reach 726 billion transactions annually by 2020. An estimated 60% of world GDP will be digitalised by 2022. For Complygate who is leading the online digital id and identity verification process, the growth in digital economy requires a better understanding of how individuals and firms are being identified and verified in the world of digital financial marketplace. An understanding of how Complygate digital identity and id verification system works is essential for financial firms to apply the risk-based approach recommended by The Financial Action Task Force (FATF).

Digital ID and Identity verification systems have the ability to enhance the authenticity, security, confidentiality, and efficiency of identifying customers while providing financial services. This can benefit of individuals, financial and professional services firms, and the integrity of the financial services sector. Reliable and independent digital id and Identity verification systems offer compelling value addition for improving individual identification/verification at the time of onboarding and authenticating the identity of customers to authorise account or service access. Moreover, accurate customer identification could enable other customer due diligence (CDD) measures, including effective ongoing due diligence on the business relationship and transaction monitoring.

Minimise weaknesses in human control measures

Conventional methods of conducting customer identification/verification predominantly rely on human control measures like comparing a photograph on a government issued id with the person seeking to open an account or avail services and making a judgment that the identity document is genuine or fake. The front-line people may deficit the tools, training, skill sets, and experience required to reliably identify counterfeit, doctored or stolen documents. The use of reliable digital id and identity verification system can possibly reduce the risk of human error in identifying and verifying the identity of an individual.

Improve customer experience and save costs

Independent and cutting-edge digital id and identity verification system can also provide user-friendly experiences for prospective customers at onboarding stage, and during the entire customer life cycle. Customer consent and satisfaction are important drivers in completing applications and transactions which can lead to customer retention. Lean and accurate verification process for customers, combined with potential efficiency gains for regulated entities, can help lower on-boarding costs drastically.

Transaction monitoring

Digital authentication of customer ID and identity for authorising continued account access may facilitate the identification and reporting of suspicious transactions, as it helps the business establish that the individual accessing an account and requesting transactions today is the same person who accessed the account before, and they are the identified/verified customer who holds that account.

Also depending on user consent and data protection/privacy laws, digital is and identity authentication for authorising account access may enable firms to capture additional information like geolocation, IP address, or the identity of the digital device used to request transactions. This information can help regulated entities develop a more precise understanding of the individual's behaviour as a basis for determining when its financial transactions appear to be suspicious and may assist law enforcement in investigating fraud/crime.

Financial Inclusion

Increasing of technology in financial services sector has raised questions about the importance of independent digital ID and identity verification systems for financial inclusion, especially in communities (Windrush in the UK), where digital ID systems and digital financial services have emerged as core drivers of financial inclusion. The development of robust, outcomes-based digital ID assurance standards can allow financially excluded people who lack access to traditional government identity documents, such as passport and drivers licence can obtain digital IDs at a lower identity assurance level and use them to obtain financial services in appropriate low risk situations.

Firms using Complygate digital ID and Identity Verification System could see up to 90 percent reduction in costs related to customer onboarding. The time taken for identification/verification and other Combating the Financing of Terrorism (CDD) elements can be reduced from days or weeks to minutes. These costs saved could enable regulated entities to allocate compliance resources to other Anti-money Laundering/Combating the Financing of Terrorism (AML/CFT) compliance functions, and also expedite financial inclusion for otherwise excluded or under-served individuals by reducing on-boarding costs.