The Trend Report: Identity Fraud 2022 – IDnow’s annual report into the challenges and trends from the seedy underworld of identity fraud – is out now, and ready to be downloaded.
As everyone’s online presence continues to increase, along with their reliance on digital services, identity fraud has never been a more pressing concern, for consumers and for businesses.
Data from the Federal Trade Commission reveals a 70% increase in fraud losses (US$5.8 billion) in 2021 compared to the previous year.
The situation in Europe fared no better, with the British public exposed to several Covid-related identity fraud scams involving fake PCR tests and vaccine passes throughout the year. Meanwhile, in Germany, financial supervisory authority, BaFin identified an increasing number of cases involving fake job offers, where ‘recruited employees’ were asked to open bank accounts for test purposes.
Fraud has become digital, behind a screen and remote; the work of fraudsters has been greatly facilitated through advanced technology. It is no longer necessary to physically fabricate fake documents, as the resources needed for digital usurpation, such as photos or videos of identity documents, or stolen official documents, are available and accessible with a few clicks on the Dark Web.
Lovro Persen, Director Document & Fraud at IDnow Group
“To prevent these frauds, the requirements for remote identity verification need to be further harmonized and standardized on an institutional level, for example European Telecommunications Standards Institute, across Europe. This will allow identification verification (IDV) providers such as the IDnow Group to leverage state-of-the-art IDV technology combined with the expertise of fraud experts,” Persen added.
Download the Trend Report: Identity Fraud 2022 to learn all about the newest fraud and identity theft trends, including army romance scams. Thankfully, the report also contains invaluable information on how, using high assurance verification solutions, organizations can protect the identity of their customers, thereby preventing fraud, whatever the industry, whether finance, insurance, mobility, gaming, esports, travel, or crypto. Check out the report today to discover the benefits of IDnow’s VideoIdent, which offers seamless online identification via expert-assisted video chat.
Download the Trend Report: Identity Fraud 2022 to discover the newest fraud and identity theft trends, and how assurance verification solutions can enable organizations to protect the identity of their customers.
What is eKYC, and what solutions offer the best user experience in Europe?
The European digital banking revolution has ushered in a new way for banks and fintechs to acquire customers, and create superior end-to-end user journeys. As digital experiences have managed to remove many of the customer pain points associated with sending, saving, and investing money, customers have quickly become accustomed to frictionless digital banking journeys. In addition to maintaining a frictionless customer experience when it comes to KYC, banks and fintechs must also adhere to and navigate the sometimes disparate national and EU AML regulations while using technologies that fit within their tech stack. Fortunately, several eKYC solutions, such as AI-based identity verification, and agent-based identity verification, offer a superior user experience, adhere to regulation, and utilize future-proof technologies. For more information on the benefits of eKYC, read our ‘Why the future of KYC belongs to eKYC‘ blog.
eKYC in Europe: What to consider.
There are numerous considerations to take into account when assessing KYC in Europe. The first: regulation, is perhaps the most important. Banks and fintechs are required to focus on KYC regulations at both a national and EU level. At the EU level, banks and fintechs must adhere to AMLD5 and AMLD6, but at national level AML requirements vary greatly. For example, in the UK, banks and fintechs can use automated solutions to perform eKYC, but in Germany, the regulator (BAFiN) requires a video-based solution for eKYC.
AMLD5 came into force in the EU in 2018, and required all EU member states to transcribe the directive into their own legislation by 2020. The directive aimed at expanding the scope of AML requirements, while streamlining AML procedures across member states.
Another core consideration is if the customer already has an existing banking relationship. Customers applying for their first financial product in a country are often required to visit a branch. However, customers who have an existing banking relationship tend to be able to access quicker onboarding services, such as MobileID in Sweden or ID confirmation via bank account number in Spain.
What is eKYC in the UK?
Although each country has their own processes, rules, requirements and regulations, the UK government suggests five steps to check identities:
Gather evidence of claimed identity This can be digital evidence, such as information from a personal data store, or physical evidence like a passport, or driving license.
Check evidence is genuine or valid If digital, check cryptographic security features. If physical, check the physical features of a PASS card (a cheaper form of ID used predominantly by teenagers to prove name and age).
Check claimed identity has existed over time Also known as an ‘active history check’ to ensure the identity is not synthetic or belongs to someone who’s died. This can be credit card transactions or gas or electricity account payments.
Check if claimed identity is at high risk of identity fraud Check details with authoritative, or national counter-fraud data sources.
Check that the identity belongs to the person who’s claiming it Like with the other four steps, there are different strengths (or scores) of verification checks. The weakest is knowledge-based verification, where applicants are, for example, asked to submit a free text response and enter a previously agreed-upon answer.
The strongest identity verification check is biometric-based authentication of documents that feature electronic chips. This may involve cross-referencing an authorized and approved form of ID with a selfie, or live video recording. The most secure identity verification solutions have ‘Liveness Detection’, which makes use of sophisticated AI to determine whether it is interfacing with a physically present human being, or an inanimate spoof artifact. With this functionality, fraudsters using stolen photos, masks, or deep fake videos to access or create online accounts will be detected and stopped.
Identity crisis? The future of digital IDs in the UK.
Download to discover all about the UK’s past, present and likely future usage of digital IDs.
How can a bank or fintech offer a compliant eKYC user experience?
Understanding the many requirements of the customer experience is critical when assessing the most appropriate eKYC solution. A good user experience is characterized by several factors and attributes, such as efficiency, access to relevant help and support, error prevention, and consistency of experience. Within Europe, a number of eKYC options are available that not only adhere to local and regional regulations, but allow banks and fintechs to offer a superior onboarding user experience.
The most common type of eKYC in Germany is agent-based authentication. This type of authentication, either run in-house or via specialized eKYC companies, enables the applicant to speak to a qualified agent who completes the identity and document check. From a user experience perspective, it offers an incredibly high amount of convenience, as applicants are able to undertake the agent-based video call at a time that works for them.
AI-based identification often combines machine learning, AI, NFC, and biometric capabilities to provide a highly accurate and quick eKYC process. This type of identification is often the quickest to complete, and is a great solution for banks or fintechs already employing AI or data-driven products and experiences because it provides a consistent brand and usability experience.
Finding the right balance between UX & banking regulations.
The digital financial service space is growing more competitive by the day, and offering customers a seamless, innovative and relevant user experience is quickly becoming a hygiene factor. While designers and product owners may be inspired by the user experience of non-regulated tech companies, such as Spotify or Netflix, banks and fintechs must first ensure they abide by not only national, but regional regulation around AML. Historically, these requirements, specifically KYC and customer identification, have been a cumbersome, manual and time-consuming process, both in physical and digital onboarding, that disrupt an otherwise exceptional user experience.
However, eKYC options like AI-based verification and video verification offer seamless onboarding that strikes the perfect balance between UX and banking regulations. These solutions are a win-win-win; for the bank or fintech, for the customer, and for the financial services industry.
Britons now spend an average of 3.5 hours every day on the internet — the statistic is much higher for Britons who work and live through e-commerce establishments.
The unstoppable rise of the internet opens up a plethora of questions that technology providers need to answer. The most important revolve around ways of building security and trust, without frustrating end users.
How do we keep every Briton safe and secure when they access the internet — without hampering user experience?
On-demand culture in the UK.
The proliferation of digital products and services for the everyday consumer has had many effects — some intended, others unforeseen.
As is customary when people have multiple choices, an unpleasant one-time experience is enough to negatively affect customer experience, leading them to switch between brands that provide more pleasurable experiences. This is the most important rule guiding a frequently increasing on-demand culture in the UK.
What is on-demand culture?
The term “on-demand culture” pays homage to a 21st-century consumer trend of heightened consumer convenience.
A major example of on-demand culture in action is the expectations of mobile phone users. For mobile devices, users want digital service providers to deliver top-notch services and software solutions — search engines, financial apps, instant messaging — that can work securely and efficiently anywhere in record time.
In line with the on-demand culture in the United Kingdom, end-users require the most of digital ID verification systems. Consumers want an identity verification system that is fast, reliable, and accessible on cue.
How to be ‘on-demand’ compliant.
Given that 85% of internet users in the United Kingdom would rather access the internet via a smartphone, digital ID systems that are accessible on both web and mobile platforms will be considered on-demand compliant.
Consumers will waste no time switching brands whose ID systems they consider to be unavailable or often inaccessible. Tech service providers need to always prioritise solutions that fit the on-demand culture. Digital identification solutions, no matter how complex the backend operations, are no exception.
Ultimately, Digital ID solutions that fall short of the on-demand culture expectations risk losing consumers, who will undoubtedly lay claim to poor customer experience.
As of the turn of 2021, an aggregate of 939 million contactless transactions have been made in the United Kingdom. As more people decide to function digitally, there’s a corresponding increased responsibility on the part of public and private stakeholders to ensure that the internet is safe, secure and trustworthy.
What is digital identity verification?
Digital identity verification is fast becoming a requisite for smooth operations in the on-demand digital economy — and the digital world. Digital ID verification systems provide processes to digitally authenticate a person’s identity whenever the need arises. For digital ID verification systems to work, people need to have their own individual digital identities.
The global power of digital IDs.
The United Nations recognizes the need to bring trust back to digital operations. Together with the World Bank’s ID4D initiative, the plan is to provide every person on earth with a legal identity by 2030.
Providing security for consumers through digital ID verification is crucial for all digital service providers who want to stay ahead of the curve. As part of the on-demand culture amongst Britons, businesses that do not provide a robust digital ID framework for their customers are very likely to lose out.
Nipping the “fraud” bud.
Fraud, money laundering and a swathe of financial crimes are what you get in a world where digital ID is not taken seriously by both private and public stakeholders.
The United Kingdom, according to research findings by Uswitch, was the highest-ranked nation in Europe for money lost by online fraud in 2020. A mind-boggling amount of 376.5 million pounds was lost to e-commerce fraud.
There’s still a lot more to lose to fraud because the threat still exists. For the end-users, especially on digital payment service platforms, the threat of fraud is a big-enough incentive to switch to more reliable and secure solutions.
Digital ID solutions that are accessible, operable and usable by Britons anywhere will surely change the racecourse, favourably. A workable digital ID process should combine national identity documents with company-specific consumer data (biometrics, to facilitate on-demand electronic identification) for every financial transaction.
This effectively prevents fraud and other financial crime cases to create the kind of secure environment that ultimately ensures Britons trust in the digital economy.
Identity crisis? The future of digital IDs in the UK.
Download to discover all about the UK’s past, present and likely future usage of digital IDs.
The United Kingdom government has not had the best of times where implementing a national digital identity project is concerned. The cost-intensive “Verify” digital identity project fell short of its goals — meaning the UK does not yet have a national standard identity verification system. Read more about the UK’s troubled relationship with digital IDs in our ‘Why the UK banking sector and FCA are banking on digital IDs in 2023’ blog.
Nonetheless, the British government is still keenly aware that digital ID systems are the key to a future of financial inclusion and security in the United Kingdom. It is precisely why the Government Digital Service is working on another digital identity project.
Following further amendments to financial regulations, the government’s position — under the trust framework — is to make it mandatory for service providers to have effective, robust, flexible and scale identification verification systems. For service providers, nothing should be more important than picking the right identification verification service to work with.
A user-centric digital ID system.
Building a hugely secure digital ID system is important. That said, building one that is not just simple, but also requires minimal effort to operate is far more important — because it really is all about the end-user.
In line with the on-demand culture in the UK, companies need identity verification solutions that excel in: security, compliance and versatility.
Get in touch with IDnow.
Simple and effective digital identity verification systems are not as straightforward as they sound. These systems require massive data input, immense technological capabilities and strict compliance with the government’s identity regulations.
Even for the most qualified tech service providers, forging a consumer-centric digital ID verification solution that complies with the on-demand culture can be a tough ask.
.And that’s where IDnow comes in.
IDnow is proudly in control of one of Europe’s leading identity verification platforms with trusted expertise in regulation markets, financial institutions and a host of other businesses and industries.
One glance at our website, and you’ll be under no illusion that fostering a positive customer experience while delivering value is something we’re great at. Here’s the link to our comprehensive Partnership Program for more information.
Partner with us now and get a digital ID verification solution that fits perfectly into today’s on-demand culture.
