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Why you need a digital verification system for your business

Here’s what businesses need to know about the evolution, operation, and impact of digital verification.

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Identity theft is on the rise. Losses from identity theft reached more than $700 billion in 2020 and are expected to exceed $721 billion in 2021. And according to the FTC, identity theft reports are up 45% year-over-year, with more than 400,000 people reporting that fraudulent government documents had been submitted in their name in 2020.

These stats highlight why it’s so important for companies to implement robust and reliable digital verification systems to ensure they can quickly and accurately confirm that customers are who they say they are. But what exactly does the process of digital verification look like? How have customer identities evolved, where does trust factor into the equation, and why are verification systems so critical in this process?

Here’s what businesses need to know about the evolution, operation, and impact of digital verification.

What is digital verification?

Verification is the process of establishing the validity of something — for example, confirming an individual is who they say they are. Identity verification is common across physical transactions — for example, a cashier might ask to see a customer’s driver’s license to verify that they’re old enough to purchase alcohol, or individuals may need to confirm their identity when calling their financial institution for account information or to initiate transactions.

Digital verification shifts this process out of the physical world by allowing customers to prove their identity online through information provided by the individual, signals from official lists and reports, and more.

The evolving role of identity

Identity refers to specific characteristics that set individuals apart from one another, such as their name, date of birth, height, weight, hair, and eye color. Unique identifiers assigned by the government — such as driver’s licenses, Social Security numbers, or passport numbers — are also considered part of our identity.

Historically, identity has been verified in person. Individuals visited physical locations with documents in hand and staff compared what they saw with what they were provided. Today, however, many transactions — and subsequently their required verifications — happen online. Underpinned by the increasing adoption of mobile devices and fueled by pandemic pressures, digital interactions have increased substantially. Consider the boost to digital banking — more than 75 percent of the U.S. population now use some form of digital banking, which is astonishing when you consider that just under 10 percent of individuals worldwide were comfortable conducting digital banking transactions in 2010.

The result is a rapidly changing identity landscape: what was once verified in person now needs to be able to be verified digitally — and at a distance.

The increasing impact of trust

The goal of any company is to create a long-term relationship with customers, and every relationship starts with trust.

Both the customer and company must trust each other to get the most from the relationship. On the business side, verification is essential to ensure that legitimate customer accounts aren’t being compromised and the company isn’t putting itself at risk of fraudulent transactions. Customers, meanwhile, need to trust that companies are doing all they can to prevent identity theft and fraud.

Digital identity verification is the first step in cultivating this trust. If customers feel like the process is safe, accurate, and fast, they’re more likely to return for further transactions. And if companies are confident that customers are who they say they are, they can focus on other things, like providing the best experience possible.

In other words, while a digital verification system is now necessary, a great verification system can make all the difference in building long-term trust.

Why digital verification matters

Identity theft and compromise have long-ranging impacts on both businesses and customers.

For customers, stolen credentials can lead to account takeovers, paperwork filed on their behalf, and money spent without their knowledge. The consequences of ID compromise can last months or years as victims discover the full extent of the issue — for example, they may end up getting calls from creditors or letters from the IRS stating that they owe money and could face possible legal action. Reliable ID verification systems can help reduce this risk by making it easier for companies to detect fraud and stop it before it gets out of hand.

Meanwhile, ID theft and fraud can cost companies money as customers opt for more secure competitors or the business is penalized for failing to adequately protect consumer data.

Digital verification offers benefits for businesses across five key areas:

Ensures regulatory compliance

As privacy guidelines evolve worldwide — from GDPR to CCPA, LGPD, and POPI — businesses must be prepared to meet compliance expectations anytime, anywhere. Digital verification tools can help provide proof of due diligence: auditable evidence that companies are taking steps to thoroughly verify customer data before authorizing account creation or approving transactions.

Creates long-term relationships

Rapid and reliable digital verification makes the process easy and secure for customers, meaning they’re more likely to come back. In contrast, ID processes that are slow, inaccurate, vulnerable to criminals, and leave users with no indication of where they are in the process or what comes next can frustrate efforts to build reciprocal relationships.

Reduces total risk

Digital identity verification can also help reduce the risk of approving transactions that may involve stolen funds or money laundering. By verifying (and reverifying) identities, companies can prevent fraud from happening in the first place, rather than scrambling to fix incidents that have already occurred.

Boosts operational efficiency

Robust digital identity verification tools can also boost efficiency through automation. Using advanced data analysis and comparison algorithms, the right tools can reduce the need for manual review of PII and increase overall decision-making speed — without sacrificing security.

Increases consumer confidence

Consumers are often willing to share personal and financial data with companies to help reduce friction and streamline transactions. For example, they may let a website save their credit card number so they don’t have to enter it every time they want to purchase something. However, according to research firm McKinsey, they’re also willing to “walk away from doing business with companies whose data-privacy practices they don’t trust, don’t agree with, or don’t understand.” Secure and transparent digital verification services can help customers feel more comfortable with the process by limiting the need for company representatives to manually review their personal information and ensuring their data provided is well-protected.

Options for digital ID verification systems

As the number of digital transactions increases exponentially, so does the market for identity verification. From homegrown solutions to all-in-one verification options and more robust ID verification platforms, companies don’t want for choice.

The challenge? Many companies don’t have the resources available to build and maintain their own ID verification infrastructure and/or prefer not to store PII themselves. And so-called “all-in-one solutions” aren’t usually customizable enough to handle each company’s unique use cases and customers.

When it comes to digital verification platforms, it’s worth looking for tools that can both meet current needs and adapt to future requirements. This includes the ability to mix and match verification options — such as government ID submission, database scanning, and biometric identification — and automate key processes and make decisions quickly. In addition, companies can benefit from tools capable of blocking known bad actors, detecting repeated verification attempts, and discovering larger fraud rings via surface pattern analysis.

Picking the right identity verification solution

Persona makes it possible to digitally verify your customers at scale and speed without sacrificing security. With coverage across more than 200 countries and 20 languages, customizable verification options, and natively secure code, Persona lets you tailor ID verification to meet your needs and get accurate answers in seconds, not hours or days.

Digital verification is critical to boost consumer confidence, ensure regulatory compliance, reduce overall risk, and cultivate long-term customer relationships. Discover how Persona can help.

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