Financial institutions, especially fintech companies, are the most vulnerable businesses to data theft and cyberattacks. Since these institutions function solely on the web without physical presence, criminals use the anonymity offered by digitization to target these financial institutions. Businesses in the financial industry face an average cost of $210 per breached record. Moreover, there is a considerable risk of losing customers due to the lack of trust created after the breach.
To combat the increased threat of cybercriminals and scammers, companies need robust solutions that keep pace with evolving threats and provide continuous monitoring, eliminating all possible threats.
Eliminating Cyber Threats: Why It’s So Important
Data holds greater significance than physical assets in our fast-paced digital world, which is constantly changing. This is because it can generate fake identities and commit crimes under the victim’s name if they have been subjected to data theft. This makes it crucial for financial institutions and other businesses to eliminate all kinds of cyber threats before they even get a chance to cause damage.
Another primary reason for eliminating these threats is regulatory compliance. Governments and regulatory bodies worldwide impose regulations regarding digital security that companies must comply with. If an institution fails to comply with these regulations, it is subjected to legal fines and charges, sometimes even more significant than the financial loss itself.
Identity Verification and Cybersecurity: What is E-IDV?
Electronic identity verification (e-IDV) is a branch of the field known as identity verification (IDV). As the name suggests, the general purpose of identity verification is to verify the identities of entities that establish any contact with a company. A due diligence test is conducted on individuals, and they are scanned against global watchlists to ensure they are not related to any criminal activities.
Modern identity verification solutions are now integrated with artificial intelligence (AI) and machine learning (ML) technologies, making them more effective. Automation technology, behavioral analysis, and big data analysis have enabled the creation of a suite of automated identity verification solutions.
E-IDV is practically the future of identity verification because it presents a revolutionized concept of our current verification processes. The world has seen a significant increase in portable electronic IDs, especially in the financial sector. It presents the idea of a centralized ID with all user data condensed in one place.
E-IDV will eventually replace traditional KYC practices. Once an e-ID is established for a user, it can be used to conduct both active and passive verifications. This is because e-IDV solutions do not require the users to be physically present for the verification processes. The whole verification process is carried out digitally.
Advantages of E-IDV for Fintechs
IDV service providers are now revamping their existing solutions and integrating them with e-IDs to keep pace with the ever-evolving digital world. Apart from creating separate IDs, the E-IDV process could revolutionize our identity verification processes.
- Advanced Authentication
Modern e-IDV solutions use methods such as biometric verification, liveness detection, and ORC document verification to ensure the legitimacy of entities. By adopting modern IDV solutions, businesses can save significant time and resources by generating precise results in less time. Moreover, the data gathered in this process is then used to create a digital identity for entities.
- Reduced Fraud
Fraud is the most common threat that businesses face. Fraudsters are always looking for openings to target fintech companies or their clients. E-IDV prevents identity theft and account takeovers, ultimately reducing fraud and scams. Moreover, deepfakes and illicit individuals posing as legitimate can also be identified with the help of modern IDV solutions.
- Streamlined Customer Onboarding
Customer or client onboarding is crucial for fintechs. While registering an entity with a financial institution, the entity and its source of income need to be legit. Companies need to look for money laundering and terrorist financing activities, as they can have grave consequences. Moreover, this requires continuous reporting because previously onboarded entities can conduct illicit activities.
- Enhanced Compliance
Regulatory bodies have strict AML and CTF regulations, which makes it crucial for companies to incorporate robust security systems into their processes. Moreover, companies conducting business internationally must comply with the rules and regulations of the specific country or jurisdiction in which they base their processes. This can be a resource-intensive task. Modern e-IDV solutions provide tailored solutions to these businesses, supporting business growth.
- Better User Experience
Out of all the benefits of e-IDV, a simple but crucial advantage is convenience. E-IDV has made identity verification more effortless and accessible than ever. Users can verify their identities extensively with their phones now. This saves businesses a significant chunk of their resources and allows them to streamline their verification processes. On the other hand, users also save themselves the hassle of manually verifying data.
E-IDV: A Full-Scale Verification Solution
The global digital identity solutions market was valued at $27,508.5 million in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 17.2% from 2023 to 2030. Businesses are now realizing the risk of compromising security; the market is ripe, and adopting e-IDV solutions is at an all-time high.
Modern e-IDV solution providers present a whole suite of IDV solutions to users, including KYB, KYC, and KYI. Fintechs can adopt these solutions and get an automated, full-scale identity verification experience. With these solutions, companies get to focus on other aspects of their business and nurture growth.