Verifying the identity of a person is more crucial than ever as fraudsters are adopting the newest technologies to stay ahead in their criminal behavior. For businesses, it is important to safeguard their clients and themselves from possible identity theft and financial risks. According to the FTC, more than 1,400,000 cases of identity theft were recorded in 2023. Electronic identity verification is one of the most reliable and finest solutions to this issue.
eIDV is a vital process for financial service providers to make sure people are who they claim to be. This technology verifies their identities in real-time against safe databases. But why is eIDV different, and will it be a big shot? Below, we discuss this verification process.
What is Electronic Identity Verification (eIDV)?
The method of using digital means and cross-checking with authentic sources to confirm the identity of an individual is referred to as eIDV. Electronic Identity Verification in comparison to traditional approaches is more reliable and quicker as it allows real-time verification using a plethora of electronic sources and databases. It is used to verify personal data, such as name, address, and date of birth, serving as the main identity verification method for financial institutions and other regulated organizations.
eIDV is also complying with regulatory requirements such as KYC and AML. Thus, it reduces the risk of fraud and ensures secure internet interactions. It is a safer and more reliable process compared to paper-based KYC procedures as it is based on several crucial data points and yields rapid results. Electronic Identity Verification makes the verification process convenient and easy to use, wherein a user can complete the process using their smartphone as it is entirely automated.
How Does eIDV Work?
- The first step of the electronic identity verification process is the collection of the person’s or company’s name, birthdate, address, and government-issued identity numbers.
- After collection, this data will be compared with a number of reliable data sources. These data sources include government databases, credit bureaus, and other financial institutions.
- Once the data comparison is completed, the system will do a risk assessment. The identity is confirmed if all the details line up. If there is a mismatch, then the system will mark the case for additional examination.
- The system will generate three values, matchm partial, or non-match. Based on this value the service provider will decide whether to reject the application. Mostly, in cases of a partial match or mismatch, the provider may ask for additional details to proceed with the application.
- Finally, when the identity is confirmed the person or the organization can move forward.
Key Technologies Used in eIDV
Electronic identity verification uses a number of technologies including OCR (Optical Character Recognition), AI (Artificial Intelligence), and Biometric Authentication. With OCR technology, eIDV can read and validate data by extracting text from scanned images of documents. Moreover, eIDV can integrate biometric identity verification methods such as voice recognition, fingerprint scanning, and facial recognition. Through these technologies, the system can ensure in real time that the person is genuine and matches the records. In addition, eIDV with AI can help with fast decision-making, inconsistency identification, and big data analysis. With quick decision-making and enhanced accuracy, it can identify patterns of deceitful actions or fake identities.
Difference Between Electronic Identity Verification and Manual Verification
| Aspect | Electronic Identity Verification | Manual Verification |
| Speed & Efficiency | Fast, real-time verification using automation and trusted databases. | Slow process requiring physical document collection, manual review, and third-party validation. |
| Accuracy & Security | Uses advanced algorithms, biometric scanning, AI, and ML to reduce human error and detect fraud. | Prone to human error, making it harder to detect forged or tampered documents. |
| Cost | Higher initial setup cost but lower ongoing expenses due to automation. Requires minimal staff and infrastructure. | High operational costs due to the need for dedicated personnel and time-consuming manual reviews. |
| Scalability | Easily handles large verification volumes with minimal additional resources. Ideal for businesses experiencing growth or seasonal spikes. | Difficult to scale; requires additional staff and resources as verification volumes increase. |
| Customer Experience (CX) | Provides a seamless and convenient experience; customers can verify identities using mobile apps or websites. | Inconvenient for customers; requires physical document submission and long wait times, leading to frustration. |
Benefits of eIDV for organizations
- Reducing Human Error: Manual processes are not only time-consuming but are also prone to mistakes. eIDV is an automated process that leaves no room for any human error. Businesses can take advantage of the eIDV process to lower unnecessary expenses and improve accuracy.
- Cost Efficient: In a similar vein, electronic identity verification is more economical for businesses. Although eIDV usually entails a fee, but this is fee frequently less expensive than the manual processes that require labor expenditures, etc.
- Enhancing Security: One of the significant benefits of electronic identity verification is that it lowers identity theft, new account fraud, and other crimes as it verifies identities against reliable sources instantly. The system ensures that only authorized individuals can have access to the organization’s private information and services.
- Improving Customer Onboarding: Electronic identity verification is more convenient for individuals and businesses than manual inspections. It enhances user experience by enabling users to swiftly confirm their identification from anywhere around the globe.
- Regulatory Standard Compliance: eIDV strictly follows regulatory compliance like KYC and AML. This guarantees that businesses follow the law and steer clear of possible fines and penalties.
Challenges of eIDV
Undoubtedly electronic identity verification is a process coming straightaway from the horse’s mouth, but there are a few potential disadvantages if used improperly. Concerns regarding consumer privacy may arise while using an eIDV system. therefore, businesses need to satisfy compliance standards and protect client information. Additionally, there might be a chance that the system will give a false no-match response.
Therefore, to avoid such complications businesses must collaborate with trustworthy providers whose main priority is data security. Alongside it is important to keep the data updated, to prevent any inconsistencies. A system can’t deliver 100% accuracy at all times. Hence, businesses should coordinate their efforts with reliable providers who place high authority on privacy and data security.
Sectors that benefit from eIDV
- Banking: Electronic identity verification complies with KYC and AML rules, which makes it a go-to verification method for banks and other financial institutions. They use biometrics, document verification, and processes driven by artificial intelligence to authenticate the identities of their customers.
- Healthcare: The healthcare industry can leverage eIDV to protect patient information and streamline the delivery of healthcare. It also plays an important role in the provision of remote services and the observance of privacy requirements.
- eCommerce: Electronic identity verification is utilized by the eCommerce industry to combat fraudulent activity and ensure the safety of transactions. It promotes the trustworthiness of businesses by protecting customers that operate online.
Regulatory Compliance and eIDV
Customer due diligence (CDD), customer identification program (CIP), and continuous monitoring are three main pillars of the eIDV compliance process. To keep accurate risk profiles of customers, it is important to have verification tools like eIDV. To adequately assess customer’s risks verification and screening procedures are necessary.
Whether it’s for due diligence or re-KYC, electronic identity verification is necessary to determine a company’s risk analysis, jurisdictional constraints, and other factors. During the initial stage of engagement and the monitoring process, eIDV is utilized in conjunction with PEP (Politically exposed person) and sanction screening. For a business to maintain a zero trust architecture eIDV can be used to facilitate a user-friendly verification.
eIDV can be used with passive liveness checks for quick processes while prioritizing security. One of many reasons why eIDV is an effective compliant method is that it minimizes friction and maximizes security.
Conclusion
With electronic identity verification, businesses can enhance security, simplify onboarding, and comply with regulations. eIDV is an automated process that lowers the dangers of fraud. Businesses practicing the eIDV process can rest easy knowing their identities are safe.
Businesses face new and different difficulties every day, but our identity verification API puts user experience, security, and compliance first. Try it out for yourself.
FAQ:
Why is eIDV important for businesses?
eIDV enhances security, prevents fraud, ensures regulatory compliance (such as KYC/AML regulations), and improves customer experience by enabling fast and secure identity verification.
How does eIDV prevent fraud?
eIDV detects fake identities, forged documents, and fraudulent transactions using AI, machine learning, and biometric verification. It flags suspicious activities and helps businesses prevent identity theft and financial fraud.
What industries benefit the most from eIDV?
Industries such as finance (banks, fintech), healthcare, e-commerce, gaming, and government services benefit from eIDV, as it ensures compliance, prevents fraud, and enhances user security.
Why is eIDV used for KYC and AML?
eIDV is used for KYC (Know Your Customer) and AML (Anti-Money Laundering) compliance because it helps businesses verify customer identities quickly and accurately while preventing fraud, identity theft, and financial crimes.
How can businesses implement eIDV?
Businesses can integrate eIDV through API-based solutions offered by identity verification providers. These solutions can be embedded into websites or apps, automating identity checks while ensuring compliance with security regulations.
