The Identity Fraud Survey by Javelin in 2020 revealed that the estimated cost of identity fraud in 2019 was around $16.9 billion. This cost included the data breaches, penalties from the GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act), and damaged or lost resources. Because of the risks of identity fraud and the associated penalties, digital identity verification has become crucial for the security of any organization.
In most cases, users self-register on a mobile app or website with their mobile number and email. Self-registration is a form of identity proofing. However, only having these two details is not enough. Businesses need to go beyond just self-registration and leverage AI in security for smart and intelligent digital identity verification. Identity proofing is crucial towards verifying the digital identity of users who require access to the system and network.
What does identity proofing mean?
- Identity proofing refers to the process of verifying a user’s identity.
- Identity proofing is not to be confused with normal authentication, which involves a username and password.
- Identity proofing comes before the users enter their credentials into the app in order to login, or along with the normal authentication process.
- It is a crucial aspect of maintaining the security infrastructure of an organization.
- The National Institute of Standards and Technology (NIST) has put forth two definitions which form the basis for identity proofing.
Claimed identity
- It refers to the identity claimed (declared) by a user when he/she registers with the IAM system.
- Claimed identity means who a user claims to be.
Actual identity
- It refers to proving the authenticity of a user’s identity.
- Actual identity means who a user is in reality.
The main objective or purpose behind identity proofing is to ensure that the claimed identity of a user matches with his/her actual identity.
Identity proofing forms the first line of defense for any organization against security attacks.
Drawbacks of the manual identity proofing process
There have been many instances of compliance staff being given the responsibility of identity verification. The manual process has several loopholes. Once customers find out that their data and credentials are being compromised, the reputation of the company will be damaged severely, and they will never trust that company again.
The cost of building a compliance team of manual identity proofing work is extremely expensive, which can cost something as high as $225,000 per year for a 1000-member compliance team.
The manual identity verification process is extremely slow and time-consuming.
It is a fact that all humans get tired after a certain point of time, which is where errors can arise in identity proofing.
With manual ID checks, scaling new markets is a big challenge since that would involve hiring a new team who is well-versed with the local regulations.
Benefits of AI in security and digital identity verification
- Automated digital identity proofing makes the on-boarding process easy and convenient.
- Identity of users can be verified within a couple of minutes.
- Automated identity proofing results in high client-retention rates.
- Secure storage of confidential data without any compromise.
- Use of the latest technologies such as machine learning, OCR (Optical Character Recognition) and MRZ (Machine Readable Zone) are used.
- Scaling up of automated digital identity checks is possible without hiring or deploying large compliance teams.
How do automated KYC solutions work?
- For digital identity verification of a document, the platform first checks the document borders, colors, skew, and brightness.
- It classifies the document on the basis of type, country from which it is issued, and revision.
- Verification of visual identity of the document – security features, font size and style, alignment with template, etc.
- Matching of MRZ code with the type of document to give certain values.
- The decoded MRZ values are matched for validation with the data generated from visual document verification.
- Other checks and scans performed – photograph, signature, barcode, QR code.
- The system asks for a selfie photo, which is verified with the photograph on the identity document.
Different ways in which businesses can automate digital identity proofing
- Integration of identity document capture tool into their applications.
- Biometric tools for capturing the face to match it with the identity documents of the users.
- Automated and deep analysis of the identity files submitted and its comparison with the biometric capture and existing data sets.
- Deep analysis provides real-time results of digital identity verification based on authenticity, validity, and uniformity of the ID proofs analyzed.
Automated digital identity verification has given better results compared to humans. This is because of the use of AI in security. Smart and intelligent machines can work tirelessly and offer unbiased results without any flaws. The combination of AI and security is a powerful one for solving real-world digital identity issues.
