Identity Verification

At a minimum, financial institutions and other regulated entities must implement a three-step KYC process.

It consists of the following elements:

1. Establishing the user’s identity (KYC verification).  
2. Screening their financial activity and transactional history to ensure the legitimacy of their behavior (various AML screening and monitoring measures).
3. Continuously assessing their money laundering risks to ensure accurate risk profiles (customer risk assessment).

Unlike the traditional, paper-based ID verification process, which requires the customer to go to a physical branch and provide their ID documents to a specialist face-to-face, a digital ID verification process relies on automation. That means it’s a completely streamlined process that automatically collects and verifies personal information and matches it against trusted sources to ensure the person uploading the document online is real and not a fraud. 

Typically, online platforms accept government-issued IDs as the main proof of identity, such as passports, ID cards, or driver’s licenses. For cross-referencing the information, companies use government records, credit records, and other extra sources, depending on the use case. For example, ID verification can be coupled with address verification, where the user is also asked to confirm their residential address and upload a copy of their utility bill.

Document verification is a type of identity verification process that involves checking the user’s ID document. So, that means the user is asked to upload a copy of their government-issued ID photo as proof of identity. Then, the verification solution, often AI-powered software, automatically extracts personal details from the document and reviews both physical and digital features, such as format, security elements, and the machine-readable zone (MRZ), to confirm that the document isn’t forged or altered.

Selfie verification, also known as biometric identity verification, is the process of using facial biometrics to confirm a user’s identity by asking them to upload a selfie. Typically guided by AI, the process often requires the user to record their face from multiple angles. This approach ensures the person is alive and present, preventing fraud like deepfakes or altered photos. 

Selfie verification is based on a face matching algorithm that compares that the selfies belong to the same person. For example, the one photo that the user submits and the other that the company has on record (if it’s stored in a company’s database) are compared.

Automated ID verification is the go-to option for many online platforms due to the convenience that it offers to customers. Today’s users prefer not to wait in long queues, which puts pressure on businesses. Companies can use automated software to elevate the verification experience and make it as frictionless as possible. 

Most KYC solutions today have customization options, which means that you can adjust the level of friction and add extra checks for high-risk clients while onboarding low-risk users through a simple, few-step verification flow, minimizing the chances of low conversion rates.