Accurately verifying an individual’s identity has become the topmost priority for businesses these days, as people are increasingly relying on digital services, identity verification is important to ensuring trust, compliance, and fraud prevention.
Businesses that fail to meet identity verification standards are being fined large amounts of money. One recent case involved twenty-one million pounds in penalties as a result of improper controls on new customer accounts due to inadequate or missing identity checks. This isn’t just a compliance issue; it’s a business risk.
Whether you are onboarding customers, handling transactions, or providing access to sensitive services, having an effective identity verification process in place is a crucial part of protecting your company and meeting know your customer (KYC) requirements.
What is identity verification?
Identity verification is the method of confirming that a person is who they claim to be, which can take place in both physical and digital environments. It replaces manual identity checks, such as presenting a physical ID at a store or bank, by validating a person’s identity using online methods. This may involve scanning documents such as ID documents, passports, or driver’s licenses, biometric data, and electronic identification (eID).
Why do businesses need identity verification?
Identity verification is not just about meeting regulatory requirements. Regardless of the industry your business operates in, such as healthcare, iGaming, or financial services, your organization requires a secure and seamless identity verification process to protect both your company and its users.
1. Regulatory compliance: Global regulations such as KYC and anti-money laundering (AML) laws require strong identity verification processes. Non-compliance can result in:
- Heavy fines
- Damage to brand reputation
- License suspension
2. Fraud prevention: Fraud is becoming more advanced every year. Without proper identity checks, businesses are at risk of:
- Money laundering
- Account takeovers
- Identity fraud
Industries that require protection
Organizations and businesses that handle or manage someone else’s personal information, by collecting identity data to verify that the person is who they claim to be, must comply with KYC regulations by integrating a secure and trusted identity verification solution.
Here are some industries that benefit from identity verification:
- Banking and fintech: For opening a bank account, loan approvals, or paying bills.
- Healthcare: To protect sensitive patient data.
- iGaming: For age verification and regional licensing compliance.
- E-commerce: For seller identity checks and safe transactions.
Risks of poor digital identity verification choices
Choosing the wrong digital identity verification provider leaves businesses highly vulnerable to fraud and compliance failures. Subpar systems can be easily circumvented by modern fraud techniques, including deepfakes and synthetic identities, resulting in significant financial losses, data breaches, and severe regulatory penalties.
In 2023 alone, deepfake face-swap attacks on ID verification systems surged by 704%, reflecting the growing use of AI-powered manipulation tools by fraudsters. When combined with the rising threat of synthetic identities, these attacks are projected to contribute to global financial losses of up to $40 billion by 2027. The risks are not just financial; businesses also face reputational damage, data breaches, and severe regulatory consequences if verification processes are not resilient to evolving threats.
Furthermore, a poorly chosen provider can damage customer trust and operational efficiency. Clunky verification processes create a negative user experience, leading to frustration and high abandonment rates during onboarding, which can result in businesses losing potential customers and revenue. The average cart abandonment rate across industries stands at nearly 70%, often due to complicated or lengthy flows. This friction can result in businesses losing a significant portion of potential customers and revenue before a transaction even begins. Inefficient or manual verification methods also lead to operational bottlenecks and increased costs, hindering scalability and the ability to compete effectively in the digital marketplace.
Choose the right identity verification provider
At G2 Risk Solutions, we help businesses meet regulatory requirements and fight fraud through secure and seamless identity verification solutions. Whether you’re onboarding new customers, verifying identity, or maintaining ongoing compliance, our robust identity verification product suite has got you covered.
Make fraud prevention part of your growth strategy. Connect with us.