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According to the AFI model, digital IDs and biometric KYC verification must be deployed by businesses to streamline onboarding, minimize costs, and promote inclusive services.
The Alliance for Global Financial Inclusion (AFI-Global) has issued a framework for digital IDs which promotes remote KYC processes and biometric verification.
The ‘Policy Model for Digital Identity and Electronic Know Your Customer (E-KYC)’ model lays down a series of factors to be considered, including frameworks, and infrastructure details, to enable countries for building robust and sustainable systems that contribute to the country’s financial integrity.
According to the AFI model, governments need to identify which biometric technologies best serve the purpose of identification. Furthermore, the collection of biometric data should essentially be kept at a minimum while biometric information must be periodically updated, given that it is subject to change due to age, occupation, physical or medical conditions (including amendments and deletion of such data).
Numerous countries have been advocating digital IDs, as they reduce the risk of error in data collection and safeguard customers against various frauds. Digital IDs also promote better access to financial services, healthcare, education, aid migration, and streamline identity verification among other benefits. The AFI policy model highlights the importance of developing user-centric systems that enhance the overall fintech policies. KYC verification, a process mandatory for all financial institutions, can be streamlined through biometric authentication and digital IDs.
The U.S. National Institute of Standards and Technology also recently introduced a proposed set of guidelines that define key concepts of digital identity, best practices to enable remote onboarding and authentication, and suggestions to mandate Digital IDs at a federal level.
With Digital IDs in place, banks, FinTechs, insurance companies, and other financial institutions can substitute passwords with biometric methods of verification, leaving less room for error, financial and identity fraud, as well as streamlining customer onboarding.