What is identity verification and how does it work?

Identity verification is the concept of proving that an identity is a real one. It’s about proving a person is who they say they are and that it’s a real person behind the actions. It’s commonly used in financial processes, such as opening a bank account, and it allows you to do business with or provide services to that person because his or her identity is verified.

In most places around the world, identity verification uses data such as name, DOB and address to prove an identity is real. We do this because, without it, we can’t trust that someone is a real identity, exposing businesses to exposed risk.

Identity verification is an important part of Know Your Customer (KYC), Customer Due Diligence (CDD) or age verification, which is outlined in money laundering regulations and industry guidance globally. So, let’s go through what identity verification is and why it’s so important for preventing fraud and building trust.

What is digital identity verification?

Digital identity verification is the process of proving that an identity is real without ever having to meet someone face-to-face. It confirms that a person is who they say they are and that the personal information they have provided isn’t fake or stolen (identity fraud). By layering technology digital identity verification also helps ensure that it is actually a person behind the screen and not fake identities – now much more easily created with the rise of criminal technology

To verify someone’s identity, we can take names, date of birth (DOB), addresses and other relevant identifiers and make sure that they also exist in a digital format on a trusted data set. These can be credit bureaus, official government documents or mobile operator databases. Verification is strengthened by applying negative data sets (attributes that cannot be associated with this identity) and other innovative types of data to increase confidence in that identity.

How does digital Identity verification work?

Digital identity verification focuses on collecting and verifying this personal information, typically at the point of onboarding a new customer to a business and matching it against trusted sources and testing to ensure it is real, verifiable data or not. This works by comparing the data a person sends over, whether that’s a document such as a passport or biometric data such as a picture of their face and comparing that against a verified data set. This can include government records, credit references or even mobile data.

Digital identity verification speeds up the verification process, which is necessary for the fast pace of a digital world in which the majority of our transactions take place online. Customers nowadays expect and demand to be able to sign up for a product or service quickly and start using it immediately, so identity verification must not interrupt or impede that customer experience too much.   

Delivering a smooth customer experience, however, has to be balanced with a secure identity verification process that ensures a business is safeguarded and remains fully compliant and individuals are protected from identity fraud. With so much of life now online, there is more data than ever before that can be misused if not protected, so the identity verification process is crucial.

Data Verification

There are different approaches to digital identity verification.  Data-oriented digital identity verification involves the matching of personal data – name, DOB, address and sometimes national ID numbers – against a selection of trusted comprehensive global data sources.

The number of international identity data sources around the world can make this complex for any business trading internationally and requiring global data coverage.  Also, without a universal way to format data (DOB is a common example of how data can be written differently in each country), it is shared and recorded in different ways, further complicating identity verification.

And of course, the world doesn’t stand still. People move house and names change, which makes matching against multiple data points and trusted data sources best practice for a brand seeking full confidence that the identity that’s been presented has been seen and trusted before, and that it would be safe to do business with that person.

Document Verification

Scanning and capturing information from a government-issued identity document and verifying the document as genuine is an important document-based approach to digital identity verification.

Typically, these identity documents include passports, ID cards and driving licences, as these are official documents that have specific features, such as watermarks, fonts and rounded corners, that can help to detect and signal cases of document tampering and identity fraud.

For accurate document identity verification worldwide, a business requires access to a comprehensive global database of identity documentation. Optical character recognition (OCR), AI and authenticity algorithms are deployed by digital identity document verification solutions to analyse and match the image of a document against the officially issued template of that document.

​​So, what’s identity authentication?

As well as verifying that an identity is a genuine identity, a business needs to check that it belongs to the person presenting it so that they can trust that person is who they claim to be. This process is called identity authentication – it relies on data that is difficult for anyone but the person to produce, such as biometric data.

A returning customer may be asked to re-authenticate her or his identity multiple times or even every time she or he accesses their account to ensure it’s the same person each time and no fraudulent transactions take place on a legitimate account.