RegTech The Case for Financial Inclusion

RegTech: The Case for Financial Inclusion

The FinTech industry has grown tremendously in recent years, introducing both scale and efficiency in new banking technologies. According to Statista, at an annual growth rate of 18%, the global transaction value in FinTech is expected to grow to $8 trillion by 2022. But according to research by Thomson Reuters, the financial industry spends at least a day, weekly, to track regulatory shifts which can be increasingly time-consuming and costly. So as the fintech and compliance costs continue to grow, RegTech seems to be getting global attention from the financial sector, as well. 

Traditional financial service providers (banks, insurance, transactions, and payment services, mobile wallet payments) have no option but to catch up with changing tides, in order to survive the technology revolution. From cutting costs to providing seamless transaction experiences, FinTech and RegTech both have changed the way individuals and businesses manage money. 

The world has witnessed more transparency in banking, and, financial transactions are thriving with the use of disruptive technologies such as AI, machine learning, and blockchain. Fueled by the advent of the internet, FinTech has now grown to taller heights with mobile payments and online banking. 

Reaching the Unbanked

One of the marked success of this digital wave is how it has led to increased access for previously unbanked populations, largely due to mass outreach of mobiles and the internet. Now, mobile phones are making it possible for more and more people to enter the global financial system, albeit with limited access to services such as mobile payments and transfers. 

The mobile money market is witnessing a revolutionary transformation fueled largely by:

  1. Growing focus on customer experience
  2. Diversified financial services structure
  3. Evolving regulatory landscape
  4. Expanding mobile money services

Mobile money accounts, as well as text and app-based financial accounts, are providing financial coverage to growing global populations. A small but rising percentage is also taking advantage of smartphone technology around the world. However, this is subject to the availability of adequate underlying infrastructure such as power supply. The challenge is greater in developing countries where only 40% of adults have access to both the internet and mobile phones, as opposed to 82% in high-income economies. 

Online Security and meeting global compliance is still a topmost priority for customers and businesses alike. For this reason, digital banks are also focusing on RegTech in banking solutions for building long-term trust in the market.

How RegTech and FinTech are related

A large customer base is currently left unserved in the financial services industry due to a lack of the right infrastructure. As the FinTech revolution continues to benefit the economy and break into new markets, it promises to close gaps in financial inclusion. However, this comes with high risks of exploitation that need to be managed. 

Currently, 1.7 billion people in the world are unbanked, down from 2 billion in 2014. This is one of the most challenging pain points for financial service providers. FinTech is changing this, and RegTech can accelerate the process.

 

How RegTech is Relevant to FinTech

 

RegTech startups are experiencing growth and investment at almost the same rate as the FinTech industry. Firms are realising the need to capitalize on compliance efficiency and use it for a competitive edge in the industry. There is great potential for powering the future of financial regulation by integrating technologies into supervisory systems used by banks.

RegTech has major implications for financial institutions in the form of reduced regulatory costs and improved operational efficiency. With far-reaching benefits for the economy, RegTech in banking is also aspiring to drive growth and profitability by better regulatory reporting and risk management, as well as transaction monitoring. 

This is especially relevant for emerging markets, where a notable percentage of the population can experience compounded benefits from access to services like micro-credit and remittances. The effective use of RegTech in banking strikes a balance between access to credit and credit security. 

With machine learning, artificial intelligence, and e-KYC (Know-Your-Customer) verification methods, the gains are far-reaching. Fraud mitigation and reduced compliance costs make it possible for FinTech to include more financially excluded population segments. Automated KYC processes through RegTech ensure that foolproof methods for legal use of financial services can be made effective. Using API code, RegTech can also simplify complex regulations that optimise compliance costs of time and labor. 

Both financial institutions and regulatory authorities see added value in the adoption of RegTech for better compliance and service delivery. APIs for data collection and reporting have also shown a marked improvement in customer engagement, as well as compliance. 

RegTech solutions and AML compliance

RegTech solutions are increasingly used by financial institutions to comply with the regulation of anti-money laundering and the evolution of other financial crimes. There is no denying the fact that eliminating the crimes of money laundering has been one of the biggest challenges for financial institutions over the years when new and improved methods of money laundering are on the rise. But regulatory technology (regtech) is helping financial institutions to eliminate financial crimes through regular AML checks, set into motion by regulatory authorities. 

Regtech solutions for AML compliance offer a cost-saving solution to the financial sector for real-time identity verification, crime monitoring, and reporting. It not only improves the efficiency of the entire system but also reduces operational costs altogether. 

With the use of intelligent technologies, RegTech in banking is a frictionless solution that can reduce time by easily screening people against vast databases. The regulatory landscape is subjected to regular change, this evolution of regulatory trends affect the business operations directly. That’s why RegTech solutions and AML compliance is the need of the hour. 

Service offerings by RegTech

Driven largely by business demand and technology innovation, there are five main service offerings by RegTech :

  1. Regulatory reporting
  2. Risk management
  3. Identity management and control
  4. Compliance
  5. Transaction monitoring

Challenges in Financial Service Delivery 

As financial services become more digitized and pervasive, regulatory systems need to adopt more forward-thinking ways of digital transformation. 

The foremost challenge in providing digital financial services to previously unserved populations is risk management. In most cases, financial authorities are still learning their way into the digital revolution. If vast amounts of data are collected without apt use of APIs, serious data security concerns could arise. This could undermine the regtech revolution and make the onboarding process more complex for new entrants.  

Supporting infrastructure in the form of digital databases is also absent in most cases. While there is a steep demand for mobile money accounts, some key services such as government payments (pensions, wages, social benefits) are still paid in cash. This reinforces financial exclusion for large segments of the population who could otherwise benefit from services such as mobile payments. 

Additionally, stringent identity verification requirements, such as those in KYC, get in the way of digital relevancy. National identity document verifications are sometimes not enough to ensure that people from remote areas can open an account and other local documents are required for account opening. This opens up a range of opportunities for the RegTech industry to influence financial service delivery, and in turn financial inclusion. 

RegTech Solutions: Closing Delivery Gaps

Across the globe, traditional financial systems are increasingly embracing technological advancements and committing to streamlining regulatory networks. Regulatory sandboxes and ‘reg labs’ are now being facilitated for innovation, to cater largely to the spike in RegTech solutions and AML compliance in both developed and developing countries. 

Sandboxes are controlled spaces for tech firms to test out new technologies under the regulator’s supervision. In addition to offering room for innovation, RegTech sandboxes can also be used as effective feedback and communication channels between FinTechs, regulators, and RegTech solution providers. For financial inclusion, this means balancing innovation and risk to reach underserved customers. 

Improving access to mobile money markets also depends a great deal on the efficient implementation of KYC regulations. In areas where access to financial services is a challenge, fulfilling tedious document verification requirements can be a cumbersome task. This stands in the way of scaling mobile money networks, hence hurting financial inclusion. 

This is where RegTech plays a central role. By simplifying customer onboarding processes, through efficient use of AI and HI, the mobile money industry can get a real push. The use of innovative e-KYC technologies such as biometric authentication and digital ID systems can make the process more efficient. 

With tangible results in the form of financial stability and customer engagement, investment in better regulation technology is being recognised as key to an efficient financial system. A sound regulatory environment, with regtech applications that support risk management, will ensure that economies reap maximum value from the FinTech revolution.

Identity Verification to Control Social Media Scams in 2020

Rising Social Media Scams in 2020 Calling for Digital Identity Verification

Social media was a simple place for interaction a few years back. People valued it for its security and anonymity, but unfortunately, 2020  faced the opposite side of what was expected from it. Social media is not just a place to keep children busy with cartoon videos now. 

Social media is a big industry that provides a smooth networking space for everyone. On the other hand, it is also unknowingly facilitating the proliferation of spams and trolls. Harassment cases and scams are significantly increasing. But why are scams on social networking platforms drastically increasing? A freehand and lack of a robust verification system is the main reason. Everybody can join these platforms with fake social media identities. 

According to 2020 statistics, there are 3.5 billion social media users and a significant number of profiles are created with fake names and documents. These accounts threaten other users with hacking, social media identity theft, and other cybersecurity issues. Spammers have thousands of fake profiles that become an obstacle for legitimate users to interact and expand networks. Furthermore, fake posts and junk advertisements do nothing more than diverting attention and manipulating the thoughts of innocent users.

Professional networking sites like LinkedIn are also not secure since fraudsters post fake job ads to attract desperate job seekers. The increasing scams on social media have led to plenty of government regulations for the security of the users and their identities. However, the authorities cannot blame someone without getting their social media identities verified in the first place. 

Some Facts and Figures

This section gives an overview of social media usage and its penetration at a global level. In recent years, social networking applications have shown a clear shift towards handy devices such as mobile phones and tablets. Easy access to these platforms, therefore, have increased the usage via mobile devices. Social media is one of the most defining phenomena of the present environment that is reshaping the entire world. Statista shows that the global social penetration rate has reached about 45%. Among these, North America and East Asia have the highest penetration rate i.e. 70% and Northern Europe with 67%. Also, in the future, this percentage does not seem to go down anyhow because the survey shows that the number of expected social networking platform users in the United States would be 257.4 million by 2023. 

According to a research paper by IEEE published in 2019 named “Cyber Security in Social Media: Challenges and the Way Forward”, the number of active social media users in 2019 is estimated to be 2.77 billion and a forecast shows an increase that sums it up to 3.2 billion by the year 2021. The same paper highlights the threats in social media platforms that correspond to the impersonation of friends and celebrities, cyberbullying, and phishing scams. This increasing trend and penetration of the population into it shows a tremendous increase in social platforms’ security flaws. Lax rules of these platforms are inviting fraudsters to poison the cybersecurity triad i.e. confidentiality, integrity, and availability. Lack of security measures gives birth to attacks such as CSRF or XSS that lead to data breaches.

Social Media Scams 2020

Know more about Identity verification

Frauds in the Social Media World

The section covers some major frauds in the social media world that every user must beware of. Social media has penetrated every corner of the world, and it is now a fundamental source of communication. Here are some of the common frauds on social media platforms. 

Hidden URLs

Short URLs may not be suspicious for anyone, but they are now a threat to social media users. Beware of URLs that have hidden locations. They are common on twitter and LinkedIn, and they can innocently redirect you to the relevant web page. However, other social media platforms may not always look out for such issues. Fraudsters can post a trending news headline and redirect you to a scam page. Acquiring your social media identity and other personal information will not be a problem. 

Phishing Attacks

Phishing attacks are a new form of social media identity theft. These attacks were common in emails, but advancements in technology has allowed scammers to perform phishing attacks on social media as well. “Someone just uploaded weird photos of you from the party last night.” What will you do now? As a reflex, you will immediately click on the link, and it will redirect you to some other platform. It can be a twitter page that will ask for credentials. As soon as you enter your account details, the spammer can use your social media identity and other personal information for fraud.  

Catfishing 

Catfishing is a kind of online harassment where spammers search for people desperately looking for their special one on social networking sites. Spammers create fake accounts with an eye-catching picture and false social media identity to begin a relationship. They earn the trust of the other person and ask for money after some time. 

“Who Visited Your Profile” Scam

It is always good to know who visited your profile. Someone might call you for a job or just become good virtual friends in a while. Fraudsters take complete advantage of this curiosity and create ads, for example, ‘click on this link to find out who viewed your profile today’ or ‘visit this link to know your secret admirers.’ As soon as you click the link, you are redirected to a new page that asks for your personal information or credentials of the platform. Stealing your identity is not a problem then. 

Know about the top five key identity verification market trends here.

Digital Identity Verification: An Effective Measure for Social Media Security

Individuals alone cannot always figure out these scams, however, social media platforms can restrict fraudsters from creating fake accounts for harassment and illegal use. Social media platforms that assume personal identification an overkill for social users would now be realizing that how many spammers are facilitated through these platforms, and how they are disrupting the integrity and privacy of online users. Again, spammers are not only posting junk information but exploit weaknesses of the system to damage in the best possible way among which phishing attacks and malware/malicious executables injection is the one. 

Lack of social media identity verification service on age-restricted websites affects both the social media platforms and their users. Online users below an adult age are not verified and use the applications without any restriction. Or some websites do apply age affirmation pages or checkboxes for age verification that actually does not serve the purpose of age verification and can easily be deceived by minors.

Online Age Verification

In the past few years, age verification has become a regulatory requirement that is necessary for social media platforms to consider. Taking advantage of technological advancements, social media firms can take in place various solutions that could help in identifying the individuals and restrict services if they are not for children. 

Current verification methods can easily be falsified which require obvious changes in digital practices of verification. Many social networking platforms are now using age verification services that verify using document verification if the online user has misstated their age. Those social media identities would immediately be flagged with the status of unverified as they do not lie under the age limit that could access the networking platform. 

Ideally, social media platforms are required to collect minimized data from customers. For instance, if they want to make sure whether someone is above 18 years, then the individual would have to share a proof of their social media identity in the form of an official ID document, etc. The company should ensure that the individual is above the defined age and avoid collecting much of the information from the user’s uploaded document.  

Know more about age verification at Age Verification – Does Your Business Need It?

Video KYC

Technological advancements have made everybody’s life convenient, including fraudsters. Dodging verification checks may not be a challenge anymore. Moreover, the young ones can provide wrong information to skip age verification. Video KYC allows socializing sites to verify all the clients on a live video call. Verifying social media identities through video-based KYC can enhance the result of social media verification service. 

Digital Social Media Identity Verification

In social media platforms, it is quite easy to create a fake account/profile to impersonate a social media identity online. Whether it is Facebook, Twitter, Linkedin or some dating sites, fraudsters find all of these a hot target and conduct malevolent activities there. With single digital identity verification, misuse of social platforms can be crushed. 

Focusing on just collecting data whether it is true or false should not be the goal of social networking platforms. Allowing legitimate traffic can help provide better search results. Stuffing fake social media identities affect the huge population and hence the platform reputation. Using artificial intelligence and machine learning algorithms as the underlying technology, facial recognition systems, and online document verification for social media verification service can help maintain an honest community with much more healthy working and networking opportunities. 

What’s the big deal, if a social media identity can be verified within seconds? But it would really be one if your platform is in the spotlight due to data breach that compromises the security of millions…

Have questions about how Shufti Pro can help you secure your social media platform?

canadian

First Canadian bank introduces digital ID verification

Digital Identity is progressing in Canada, with a new bank account opening process backed by digital ID documents, biometrics, and a new digital identity mobile application for residents of the most crowded Canadian province, Ontario.

Biometric Update tweeted:

RBC is the first Canadian bank to offer digital identity authentication services to customers opening a personal account in a branch for secure identity verification, fraud prevention, and smooth customer onboarding experience by scanning IDs or passports.

Peter Tilton, SVP, Digital at RBC stated, “As we make our clients’ everyday banking experience easier, we continue to be guided by the imperatives of trust and security. Verifying and protecting our clients’ identities is among the most important things we do,” He added, “The world-class technology underpinning these features will better protect clients from fraud caused by identity and document forgery and give them an unparalleled account opening experience.”

The RBC Mobile Application uses Artificial Intelligence technology to inspect government-based identification documents such as ID cards, driver’s licenses and passports, and Near-Field Communications (NFC) for analyzing ePassport use.

After the identity document is scanned through the mobile application, the customer data is registered in their account profile on an advisor’s computer, but RBC reassures customers that the information is used and protected in line with its strategy to guard personal information.

“Until now, our architecture limited our ability to quickly deliver the solutions our clients and advisors want,” continued Tilton. “A single digital platform gives us immense flexibility to reuse core capabilities that extend across the bank and design solutions with our clients and advisors in mind from the start. This means clients will enjoy a more consistent experience with RBC across our delivery channels.”

In the future, RBC plans on introducing a mobile account opening feature with live biometric selfies to verify identity against the identification documents on file. Since the introduction of advanced technologies for customer onboarding, RBC says it has increased the efficiency of the process to up to 70 percent because customers no longer waste time with data entry and document verification.

“We’ve spent the last two months piloting this in nearly 50 branches and the reaction from clients and advisors has been outstanding,” said Sean Amato-Gauci, EVP, Cards, Payments & Banking at RBC, in a prepared statement. “We are adding to the existing suite of digital identity solutions developed by the banking industry by providing clients with another option for securely verifying their identity with us.”

The new features are supported on both iOS and Android devices. They allow clients to have more control over their personal information and prevent them from disclosing more personal information than required. This option is already available in 100 branches in Canadian provinces Ontario and Quebec, but it will expand to more branches, channels, and partners this year. The processes are in line with Canada’s Know Your Client (KYC), Anti-Money Laundering (AML) and privacy regulations.

banks

Banks take measures to serve customers amid COVID-19

The banking industry is stepping up to serve customers as well as their employees as the Coronavirus pandemic puts instance pressure on customers, as millions of Americans are restricted to remain in their homes, and businesses are facing huge losses. A number of banks have started doing their part in this time of need.

Mobile Payments mentioned this in a tweet on 18th March, 2020:

Berkshire Bank in Boston has increased the daily spending limits for customers and penalties for early withdrawal have also been waived from Certificates of Deposits. Bank officials reported that clients have been seeking extra flexibility and coming into the bank with concerns that they might have to spend a greater period of time at home.

Tami Gunsch, Senior Executive Vice President & Director of Relationship Banking stated, “We did experience an increase in customer traffic into our branch locations late last week to ensure they had money on hand in case they were not able to visit a bank for a few weeks due to impact related to the Coronavirus. He added, “This gave us an opportunity to connect with customers and provide information on the various ways they can conduct their everyday banking without reliance on a branch location and in a way that promotes social distancing.”

Similarly, BBVA USA is offering penalty-free withdrawals from Certificates of Deposits, reimbursing ATM fees, and deferrals, extensions, and waivers on loans and lines of credit to its clients. Javier Rodriguez Soler, BBVA USA President announced in a press release, “We understand that this pandemic has put many of our customers in a position of uncertainty, and we are working to take some of that burden off of them,” Furthermore, “We know that this is a fluid situation and we will closely monitor any developments that could continue to negatively impact customers across our entire footprint.”

Webster Bank in Connecticut has also started offering various improvements in services to help small businesses and consumers. John Cuilla, President and CEO of Webster Bank said, “We recognize the emergence of COVID-19 and the dramatic steps we must all take to curtail its spread, will create financial and other challenges for our customers and communities,” He added, “Consistent with our long history of supporting our customers in times of need, Webster is committed to providing the financial flexibility to the individuals, small businesses and corporations we serve.”
Webster is offering the following options to customers:

  • Increased spending limits on debit cards.
  • Penalty waivers for early CD withdrawals up to $25,000.
  • Increased remote deposit limits.
  • Payment deferral options on mortgages, home equity or personal and
  • small business loans, based on the requirement.
americans work from home

Americans ‘work from home’ strategy present new targets for hackers

Coronavirus outbreak has forced organizations to let their employees work from home during the outbreak. A new wave of cyberattacks targeting such employees is emerging, warns the experts.

After scammers, now hackers are exploiting the virus outbreak to prey on employees who are working from home. The evidence reports that working outside the office environment is not secure since it opens more doors to cyber vulnerabilities.

While giving a statement to ‘The Hill’ last Friday, the presidential cybersecurity commission server, Tom Kellermann said,

“There are nation-states that are actively taking advantage of the situation, particularly our Cold War adversaries, and we need to be keenly aware that they are aware of the lack of security that is presented by everyone telecommuting”

Reckoning the opinion of Kellermann, the department of Homeland security’s cyber agency – CISA – issued the statement on Friday highlighting the cyber threats associated with working from home as compared to the office. CISA pointed out the potential vulnerability around virtual private networks (VPNs).

Employees working from home are remotely accessing the organization’s file through VPN, which is paving roads for hackers to get into the network and exploit the files and data shared on the network.

In their statement, CISA wrote

“As organizations use VPNs for telework, more vulnerabilities are being found and targeted by malicious cyber actors. Update VPNs, network infrastructure devices, and devices being used to remote into work environments with the latest software patches and security configurations.”

Moreover, the agency highlighted that cybercriminals may increase phishing email attacks to steal employees’ credentials. Such emails may use corona fear to tempt users into opening emails and performing certain activities; downloading viruses.

Checkpoint stated that since January more than 4,000 coronavirus-themed websites domains have been introduced; some with the intention of running email campaigns to lure victims into clicking malicious links.

With the agencies indicating the vulnerabilities, Kellermann has recommended individuals to use separate and private networks to do their work and isolate the data to keep it secure from intruders.

Australia introduces new rules to tackle mobile identity theft

Australia introduces new rules to tackle mobile identity theft

Acma (Australian Communications and Media Authority) has introduced a new regulation to fight identity fraud, according to which users who want to change their mobile network while keeping the same number will have to verify that the number they plan to port belongs to them. 

Guardian news tweeted regarding the event:

It is normal for users to verify their identities through their mobile phones via two-factor authentication, especially on digital platforms. Nevertheless, it is still not considered a strong method of ID verification, since people can easily get hold of someone’s mobile number through number porting. 

In Australia, there are no checks involved when a change of mobile number is requested by a customer, apart from basic identity checks. Under the new regulation introduced by Acma on Friday, mobile companies will now have to verify identities in a number of ways. It can be done by a unique code sent through SMS or email to confirm the number that has requested the port or at a retail store by the sales representative calling the number with the person in the store to establish the identity of the owner. 

Fiona Cameron, the Acma Authority member, stated: “This new standard is a strong step forward in the battle against criminals who scam mobile phone users and will significantly reduce the prevalence of mobile fraud,” Teresa Corbin, the Chief Executive of the Australian Communications Consumer Action Network, appreciated the new regulation but expressed that SMS was not a secure method of two-factor authentication. 

“We’d like to see the Acma require telcos to use highly secure forms of verification, such as hardware or software authentication tokens, which are generated with a mobile app,” she said. “We’ve already seen some government services adopt this approach through the development of the myGov code generator app.”

The new rule will be effectuated by the end of April, and in the case of non-compliance, telecommunication companies will face fines of up to $250,000. Paul Fletcher, the Federal Communications Minister, said that some mobile service providers had already started following the new rule and he expects every provider to be compliant by the end of next month.

OCR technology for businesses - Its applications and benefits

OCR technology for businesses – Its applications and benefits

Optical Character Recognition (OCR) technology provides a business solution that automates data extraction from an image file or scanned document containing written or printed text. The extracted text is then converted into a machine-readable form that is further used for data collection, processing, and analysis. 

OCR is a widespread technology used in various business operations to streamline the process of data extraction from the documents. It is capable of reducing the overall time it takes in manual data extraction and entry. 

The technology started prevailing in the early 1990s while digitizing the historic newspapers. It then came through several startling improvements that today it is able to sleekly extract the data from documents and automate the global business processes. With constant advancements in the past few years, OCR technology has reached a remarkable accuracy of more than 90%. 

User access to information is improved with advanced OCR technology that can extract data from a variety of text formats/templates such as invoices, contracts, ID documents, financial statements, receipts and many more. These digital files can be searched from a repository to find the required document, viewed, edited, and repurposed to send the information to other systems.

OCR technology gaining grounds at the business level

Automated OCR technology has abridged business workflows and operations. Businesses can employ technology to reduce the resources as well as save time in data collection and management. With high accuracy and robust OCR technology, businesses can extract data from multiple electronic or paper document formats. As the world is moving towards digitization, businesses around the globe are adopting innovative solutions in their workflows that could reduce the human effort, speeding up the processes and aligning well with the customer needs. 

The following are some benefits that OCR technology brings for the businesses;

  • Reduced manual identification: Businesses need to identify each onboarding individual. They can use OCR technology to automatically extract the customer details and verify it.
  • Reduced cost: Automated document verification reduces human effort and therefore reduces the cost while providing improved services to customers.
  • Substitute manual data entry operations: The business operation that includes the collection of customer information can employ OCR technology to feed the identity document to the system and get all the customer information from the document in seconds. 
  • Save human resources: The number of employees to manually enter the customer details in sheets can be reduced by integrating OCR services to their system. Hence, human resources can be minimized. 
  • Boost up the business workflows: With automated data collection and processing, businesses can speed up their processes that can ultimately boost the business revenue. 
  • Reduced error-rate: Businesses can reduce the error-rate as a result of manual data entry. AI-powered OCR system intelligently extracts the user information while mitigating the errors. 
  • Improved business productivity: Robust data collection process eventually improves business productivity. The resources that previously used to perform operation manually can be utilized in other useful work. 
  • Automated content processing: OCR technology extracts the information from documents and fills it in the fields accordingly. For example, it will extract the name from an ID card and fill it in the system storage against the field of ‘Customer Name’.

AI-powered OCR technology employs strong underlying algorithms and techniques that make it possible for businesses to compete in the digital world with respect to robustness and accuracy. For example, the banking industry has a lot to do with the paperwork. To comply with the regulatory requirements such as KYC/AML procedures or to ensure a clean customer base, there is a need for document verification. 

Now the digital world demands digital solutions and so online banking emerged with a variety of online services. In this industry, identity verification via documents is the primary step that helps onboard honest individuals to participate in the legitimate financial system. Now the challenge of online document verification can be met using OCR technology. The online user aiming to open an online bank account would require to upload an official identity document, for example, an ID card for identity verification. OCR technology embedded in the document verification will extract the data from the user-uploaded document by identifying its format. 

Using various algorithmic techniques, the data will be extracted and verified. An automated data extraction process reduces the overhead of manual data entry in the banking industry. The information is stored and can further be used for other purposes. 

Find more relevant resources:

OCR technology for businesses

Use-Cases of Optical Character Recognition for Businesses

Conversion of a printed/scanned paper into machine readable form – An operation of many businesses. Before OCR, only one option that businesses had was to re-write/type the text that was a time-consuming process and prone to errors. The labor-intensive tasks are now replaced by automated OCR technology in businesses around the globe. The old texts are easy to access, search engines are using OCR to index the documents, number plate recognition can be done automatically. Other than these, the following are use-cases of Optical Character Recognition (OCR) technology:

Information retrieval

A searchable PDF format is one of the use-cases of OCR. The business systems that use OCR software convert the image-only PDF files and paper documents into searchable files. Unlike normal PDF files, these digital searchable files have an invisible overlay that contains searchable text. For this, OCR technology is used that acts as a digital system to find out the keywords, phrases, names, and other required information from those files. 

Greater security with cloud storage

The paper documents are hard to secure from any unauthorized access. They can be stolen, misplaced or damaged easily. With cloud storage, it is easy for the companies to secure data in an efficient manner, providing a controlled access and protecting it from the breach. OCR technology helps extract data and store it on the cloud. 

Small, medium and even big-sized enterprises prefer cloud storage to physical storage space. Cloud-storage makes it easy for smart devices and companies to access the data anywhere, on any smart device. OCR technology helps companies store the extracted data efficiently to the cloud where the users can access, read and edit the data easily. 

Reducing costs

Advanced OCR solutions help businesses reduce the cost of hiring a professional for data entry. The OCR system is integrated into the whole system infrastructure and it extracts each receiving information. The manual data entry by professionals is replaced by an automated system. For example, to submit the utility bill online, the user just needs to upload the previous paid bill and the system will automatically extract the data from it. Now the need for active professionals on their seats to look for each request is entertained using OCR technology. Moreover, the cost of shipping, copying, and printing is reduced and companies can manage all the data in digital form rather than keeping a pile of documents that occupy large spaces.

Time Optimization

Business operations save time by utilizing OCR technology in their data extraction processes. With a better accuracy rate, OCR software reduces the error rate and optimize the time it takes to complete a task. Moreover, it paves the way for the company towards productivity and greater revenue generation. 

Digital Identity Verification

The online businesses aiming to ensure a clean customer base are either required to perform identity verification to secure businesses or comply with regulatory requirements. Digital document verification against government-issued identity documents can help online businesses filter out bad actors. OCR technology is used in document verification in which an online user uploads an ID card, passport, driving license or credit/debit card, etc. to verify a person. With OCR, the information is extracted automatically and verified within seconds.  

Automation

Online businesses scan the hard copy of the invoice of their customers after importing them into their system. The extracted data is validated automatically to check its credibility and accuracy. The slip can be categorized accordingly and moved to the accounting system. In this way, the whole system is automated after analyzing the content and moving it to the relevant set. 

Shufti OCR has got your business covered. With its remarkable accuracy of more than 90% and fast real-time results, Shufti Pro helps businesses automate their data extraction processes. In mere seconds, the banking industry, e-commerce, digital payment services, and many more can pull out the user information from any type of document by taking advantage of OCR technology. This reduces the overhead of manual data entry and time taking tasks of data collection.

Shufti pro offers both options of onsite verification with or without OCR.

Biometric Identification revolutionizing the world in 2020

Biometric Identification revolutionizing the world in 2020

Every day we come face to face with new technology innovations that leave us awestruck. From the past few years, the world is witnessing technology change that is not only impacting the industries but also defining the new lines about how we communicate and interact with each other. One such technology bringing revolution is biometric technology. Biometrics is defined as the unique and intrinsic physical and biological characteristics of a person that verifies their identity.

The history of biometrics 

The concept of biometrics has been there for centuries, the only difference is in the advancement in their use. Back in the 19th century, Bertillon was the first one to use specific anatomical characteristics for the identification of reoffending criminals. This technique has proved to be quite successful for years, however, it was not much reliable that soon turned it into a thing of past.

Afterward, this budding use technology was reacquired by a British officer, William James, who was put in charge of road construction in Bengal. He made his subcontractors sign the contract through fingerprints –  the early and most common form of biometric authentication. This fueled up the use of biometrics in different industries and countries. In 1901, the UK Metropolitan Police started the use of biometric identification.

In 1902, the New York police and French police also followed their suit. Later in 1924, the FBI adopted biometrics for identification. Apart from fingerprints, the concept of behavioral biometrics – a measurement of unique patterns – isn’t new either. For instance, back in 1860s telegraph operators recognized each other through Morse code which means the distinguished pattern they would send dot and dash signals. 

Trends in Biometric Identification

Identifying individuals based on their unique physical, biological and behavioral characteristics is the fundamental principle of biometrics. The use of biometrics is rapidly growing especially in terms of security and customer experience. Every industry is now incorporating biometric technology for the successful growth of the business. Biometrics first started as fingerprint recognition which is still considered the most common and extensively adopted biometric identification method.

At first, fingerprint scanning was associated with the voting system but now for a few years, it has been promptly used by the organizations as user authentication systems. From offices to schools, the institutions use fingerprints for marking attendance and allowing access to authorized people only after identity authentication. This is just one use case, multiple others are already exploring business operation through biometrics. In 2013, when the iPhone introduced a fingerprint scanner, people found this feature a thing from the future and hence it gained popularity among other brands. 

Fast forward, fingerprint scanning isn’t the only form of biometric identification. In 2018, with the launch of ‘FaceID’ in iPhone X, using facial recognition technology, biometric authentication seems like a mandatory requirement of smartphones. This highlights the increasing trend of biometric identification and verification. The race isn’t about differentiating between different types of biometrics but to focus on the biometric adoption for better security and customer experience. 

As per the study by Spiceworks, 90% of businesses will be using biometrics by 2020. 

Biometrics and Identity –  Who you are?

Biometric identification is a fastly-growing phenomenon, particularly in the identity verification market. From a general perspective, biometrics are often combined with other technologies to gain competitive advantage, for instance, AI-powered biometric verification systems to confirm the user identity and facilitating organizations in curbing fraud and making the business secure and free of imposters.

The identity of an individual has been verified using three common factors that include

  1. Something you know, like a username and password, pin codes or some secret information.
  2. Something you have, for instance, a bike belongs to one who has its keys. In terms of technology, we can say a verification code or a one-time password.
  3. Something you are, means unique characteristics – a face, fingerprint, voice, iris, etc.  – of an individual.

From these three authentication ways, the first two are not secure and reliable. The reason is the technological advancements through which cybercriminals and fraudsters are finding ways to access and steal user credentials; for instance, phishing, social engineering, and brute force attacks. If the identification data is compromised, then how to ensure that the person on the other end is an authorized person, not some imposter.

However, in the case of biometrics, they can’t be stolen, forgotten, exchanged or forged that makes them accurate and secure to verify the identity of individuals. The biometric identification methods are evolving with time. The ‘old school’ identification and authentication methods are being replaced with voice recognition, retina scans, facial recognition, and fingerprint identifications.

Every method of biometric identification is unique and reliable depending on the utilization of emerging technologies. It won’t be an understatement to say that individual identification through biometrics is progressing at a commendable rate and soon can become a global standard.

Major use cases of Biometric identification

Biometric systems use physical characteristics to verify the identity of individuals. And these characteristics can be in any form from fingerprints to face biometrics. These biometric systems are being employed by multiple organizations across the globe. Initially, it was meant to facilitate law enforcement and government agencies such as the FBI and CIA to identify criminals and threats to national security. 

The digitization of the world is driving businesses to integrate biometric systems to survive the competition layer. Here are some significant use cases of biometric identification and verification.

Biometric Access Controls

Biometric access control systems are effective in keeping imposters and unauthorized individuals at a bay by preventing them from accessing a system, networks or some facilities through biometric authentication. In the world of technology, logical access control is accounted as a corresponding factor for user authentication. Moreover, these systems facilitate organizations in meeting ‘identity and access management’ policies.

Contrary to passwords, pin codes, and access cards that can be stolen, forgotten or compromised, biometric authentication is secure and reliable since it’s base on who you are instead of something you know or possess. Similar to the mobile industry, other companies have started using fingerprint scanning and facial recognition in their authentication systems.

An integral part of KYC

Know Your Customer (KYC) check is one of the obligations imposed on every business dealing with money whether a bank, money exchange or e-commerce. As per the KYC regulation, companies need to verify and authenticate the customer’s identity during the onboarding process and for conducting customer due diligence. This is a fundamental for combatting digital fraud, identity theft, financial crimes, and money laundering.

Integrating biometric identification checks, organizations can streamline the KYC process making it faster and more efficient. Moreover, the automated verification through biometrics makes the onboarding process frictionless hence, improving customer experience.

Multi-modal biometrics for security

Biometric technology comes with a wide range of practices and techniques that can easily penetrate into different domains including state security, identity verification, and customer convenience and experience. Multimodal biometrics are generally used in forensic identification and identity management sectors. The multimodal biometric systems combine various biometric sources such as fingerprints, iris, and face, for more accurate identification minimizing false positives and increasing security and customer convenience.

The way forward

Biometric adoption is on the rise; as per Global Market Insights, the global biometric market is expected to grow up to $50 billion by 2024. This figure provides a significant insight into the impact of biometrics on the industries. In the near future, to say biometric identification is going to be a global standard for customer verification won’t be wrong.

whatsapp

WhatsApp accounts hacked to acquire bank card details

Recently a new scam has emerged in Singapore where hackers are found to take-over WhatsApp accounts of people. This leads to the acquisition of personal user-info, such as bank account details from the victims. According to the police, 18 such cases have been reported since December 2019.

The hackers use a compromised WhatsApp account to ask the victim for a 6 digit verification code. Once that code is provided, the victim loses access to his/her account. By impersonating the victims’ friends on jeopardized WhatsApp accounts, fraudsters and scammers would ask for the victims’ contact details and photos of their bank cards as well. 

The hackers then insist on helping the victims sign up and claim prizes from phony lucky draws supposedly conducted by Lazada, Shopee or Qoo10. One time password (OTP) is also sometimes required by hackers. The case was revealed when the victims noticed bank transactions that they had never done. The Police further stated that scammers were previously adopting similar strategies but through other social media platforms such as Facebook and Instagram.

It is advised that individuals should avoid exchanging their account verification codes with anyone, including their friends and family members. WhatsApp users are emphasized to enable the application’s two-step verification feature to inhibit others from manipulating their accounts.

AI face recognition for total automation

AI face recognition for total automation

Face recognition is everywhere but still we’re unable to say goodbye to document, maybe because we’re still far away from total automation that we wish to achieve with this technology. 

A research stated that the global facial recognition market is expected to grow at Cumulative Annual Growth Rate (CAGR) of 16.6% reaching a record-high value of USD 7.0 billion by 2024. This growth is quite justified as we see face recognition everywhere in our day to day life. 

Nations such as U.S., U.K, EU, China, etc are leading the convoy of these technological advancements where one’s face will replace the identity documents. Face verification solutions are used everywhere, from our mobile phones, and Facebook, to crime control agencies and airports. But this awesome technology has unique limitations and benefits for different industries where it’s used, that will be explored in this blog. 

Let’s explore some use-cases of face recognition. 

Travel is becoming document-free

An increasing amount of airports are using face verification solutions to verify the identity of their passengers. As airports are commonly used for huge crimes such as human trafficking, money laundering, and drug trafficking. The documents are losing their touch which leads the airports to use advanced technologies for passenger screening. Passenger security and their travel experience are equally significant and face verification satisfies both these requirements. Accuracy rate as high as 98.67% is achieved with facial recognition and results are delivered within 15-60 seconds.  It enhances customer experience, reducing the time consumed for security processes. 

Given these valuable benefits of face recognition technology, it’s predicted that 97% of airports will roll out this technology by 2023. But this is not the end of the story, because the airports are lacking in using this technology throughout the passenger flow in the airports. Maybe because they lack resources that Hartfield-Jackson Airport holds. This airport in Atlanta uses a multi-faceted facial recognition system that scans the passengers to verify their identities at various check-points in the airport. This airport provides an ultra-modern view of what the future holds for the travel industry. 

Businesses utilizing facial recognition

Businesses are always in a bid to deliver the best to their customers, especially the ones that operate in totally private sectors, with no government players. Industries such as e-commerce, Fintech, Regtech, identity verification, and blockchain are trending as they’re carving the future of how businesses will be conducted in the future. 

These industries are the primary users of next-generation technologies due to nature of their products and services. The identity verification industry uses it in customer due diligence and identity screening solutions. These solutions use face verification along with document screening to ensure fool-proof security and seamless consumer onboarding. Fintech and blockchain ventures are using the solutions of the identity verification industry to onboard their remote customers without any false positives. 

Other than that, some tech giants such as Google, Facebook and Amazon are also using in-house face recognition systems. Mobile phone producers are also using face recognition to give a better experience to their consumers. All these unconventional use-cases of this technology have made it a household term. 

Face recognition for crime control

Crime control authorities are always in a bid to bridge the loopholes in social infrastructure which may lead to criminal activities. FBI uses facial recognition to identify the suspects, and if a match is found in the database of criminals, it can be used as the proof l to pursue a lawsuit against him. 

Also, the police department in some states of the U.S uses face recognition technology to identify the criminals in the recordings of public cameras. The police departments are still working on this initiative as the social activists have found privacy related loopholes in it. 

What are the hurdles in the growth of face recognition technology

Regulatory authorities have not given a free hand to the entities in using this technology. There are some restrictions on the use of public data. 

The Anti-surveillance ordinance signed by San Francisco’s Board of Supervisors banned the city agencies to use face recognition technology in 2019. Other states that ban the use of surveillance camera recordings to find the suspect are Somerville, Oakland, and San Diego. 

The best solution to overcome these hurdles is to use the technology with care and to handle the customer data with care. 

Customer data and privacy is the primary concern of the regulatory authorities hence the reason the laws such as GDPR and CCPA are introduced to control the use of customer data by the private sector. 

So far the private sector is the one that is least affected by the hurdles in the use of facial biometrics, compliance with data protection regulations and cautious usage of customer data will lead to the projected growth of the facial recognition industry. 

To wrap up, businesses from every corner of the world are onboarding remote customers and initiating business relations with global business entities. Face recognition solution enables them to onboard customers and to allow secure login to them in the future. As the businesses have a bigger and clear field to play, fully utilizing the potential of this technology controlled with data protection practices will lead to retainable growth. As for the public sector and government agencies, the future is bright one they have developed reliable in-house solutions.

European parliament imposes ban on facial recognition technology

European parliament imposes ban on facial recognition technology

Following a public outcry after the leak of an internal memorandum discussing the utilization of facial recognition technology, the European legislative assembly decided to place a ban over its use. The European parliament’s intranet posted on one of its pages that facial recognition and artificial intelligence assisted translation would affect working techniques, processes, staff profiles and the contraction of services. 

A notable member of the European parliament and staff unions raised questions on the potential use of facial recognition which led to the removal of the parliament’s ‘digital transformation program.’ A parliamentary spokesperson stated, “There is no project of facial recognition in the European parliament,” adding that it was “not foreseen at any level.” This incident has led to an embarrassing situation for the parliament as a temporary ban on facial recognition was expected from the EU executive earlier. 

The facial recognition technology is expected to be banned in all public places such as stations, stadiums, and shopping malls. The ban will be announced by the European Commission by the end of the month, lasting for up to three to five years. The Dutch Liberal Member of the European Parliament Sophia in ’t Veld, who sits on the European parliament’s civil liberties committee, sought information on benefits, costs, consequences and coherence with EU’s data protection regulation. An internal staff union initiated a complaint in an email sent to all 705 members of the European Parliament and many of the parliament’s 7,500 officials.

The page was removed shortly after the complaints emerged. The EU spokesperson explained, “One exploratory project of the EP administration is to study and understand the potentials and threats of AI applied to parliamentary and administrative activities of the institution,” He further added that data protection was and will forever remain a clear priority for the European parliament and its administration.

The Members of the European Parliament will meet up next week for Committee Meetings. Many interesting votes and debates are scheduled to take place in favor of and against the ban on facial recognition technology.

FInTech solutions to be incorporated by Chinese banks

FInTech solutions to be incorporated by Chinese banks

According to International Data Corporation (IDC), an international market intelligence firm, as much as 80% of the Chinese banks will adopt FinTech solutions from the cloud-based market. The Chinese FinTech sector has rapidly adopted a wide range of information technologies such as artificial intelligence, big data, cloud computing, mobile solutions and the Internet of Things (IoT) – based applications.

It was reported that China’s IT spending is expected to rise to a significantly high value of 220.8 billion yuan (approximately $31.6 billion) by the end of the year. IDC’s report further stated that 20% of the manual bank transactions will be digitized and the physical banking experience will be replaced by the digital experience. 

Furthermore, around 30% of Chinese insurance providers will collaborate with at least three (Insurtech) insurance technology firms by 2021. To increase the efficiency of the claim settlement process, 35% of insurance companies will adopt AI-based technology by 2022. Around 40 traditional Chinese banks will integrate cloud-based technologies and infrastructure by 2022 to work with industry challengers.

Ant Financial, the country’s largest FinTech firm, revealed it was collaborating with numerous banks to revive its plans for introducing an initial public offering (IPO). The process was however postponed due to regulatory issues and concerns regarding its capability to make profits. Ant Financial is probably one of the world’s largest FinTech companies due to its valuation of around $150 billion in 2018. 

Phishing Scam affects thousands of Banking App users

Phishing Scam affects thousands of Banking App users

Thousands of customers have been exploited by a fake mobile banking app. The customers were sent phishing scam messages by the application to trick them into giving up their login details. According to Cybersecurity researchers at Lookout, the campaign is based around a text message which attempts to maneuver the victim into visiting false websites claiming to be those of the famous United States and Canadian banks. 

Nearly 4000 people have been reported to fall victim to the malicious links that were part of the phishing campaign. The process works by notifying the users that the bank’s security system has identified unusual activity on the user’s account, thereby prompting them to open a unique URL, followed by extracting valuable information and data from the user. 

Although the scammers behind the attacks are not aware of the bank their potential victim is a customer of, they manage to send enough messages with the names of different banks to enough users, that some of the banks coincidently match with the right customer. Some of the customers follow the harmful link, leading to a fraudulent website that has a design similar to their bank’s original website. 

Not only will the spoofing website extract sensitive data such as username and password from the user, but also ask other relevant security questions to confirm their identity such as asking for their card’s expiry date or double-checking the account number. This is to ensure that the fraudsters are well-equipped with all the information needed to steal the user’s account details. The account information can then be used to either make false transactions with the victim’s money or potentially to sell sensitive data to underground forums.

Apurva Kumar, the staff security intelligence engineer at Lookout stated that the campaign showed them how convenient it was for a less computer-savvy person to get involved in phishing by gaining access to an off-the-shelf phishing kit. Using the kit, The attacker can easily target potential victims in large numbers via text messages and track performance with the simple user interface. 

Lookout has informed all the banks that were affected by the malicious campaign and all of the phishing sites have been closed down. But there are still chances of such occurrences in the future. In order to effectively protect oneself from such attacks, one should be aware of the links sent to their mobile phones, whether through email or text message. One should instead develop the habit of proceeding to a login screen using a bookmarked link or the official website of a service they want to use rather than blindly following a unanimous link.

5 Ways How AI Is Uprooting Recruitment Industry

5 Ways How AI Is Uprooting Recruitment Industry

Artificial Intelligence is strengthening its position in many industries and the recruitment industry is one of them. The AI-based platform is used to optimize recruitment processes for many industries. Through machine learning and problem-solving

AI helps find companies the best resource. The ability of AI to provide effective results in less time is the reason for its massive use in the recruitment industry. The battle to attract and retain talent is gaining a grip in recent years. 

Today’s candidates are more selective and gravitating towards companies having a compelling mission statement and instead of focusing monetary gains they have positive impacts. The recruitment industry is feeling the crunch to enhance their game by deploying AI. To enhance recruiting efforts, artificial intelligence technology has become an essential prerequisite.  AI- solutions are used to make it less hit or miss by recruiters in hunt of talent and help speed up the process. 

Will AI replace human recruiters?

With rapid strides in technology has made humans think that artificial intelligence is harmful to humans as it will take away their jobs.  Many industries, especially recruitment, might wonder if AI will replace human recruiters. While AI can be a lot more efficient in sorting out candidates based on criteria set by the potential employer and data available but it is almost unlikely that AI will replace human recruiters. Human touch is always a necessary component of the recruitment process. AI is more like a labor-saving aid rather than something that will completely take over human activities. 

AI Setting a Sight in Recruitment Industry:

Here are some benefits that AI provides to lighten the load of recruiters and do better talent hunt in the recruitment industry:

1- Unbiased Decision Making

The recruiting process has traditionally been laden with bias. Human biases can be a major factor to hinder the right recruitment process leading to inefficient and unproductive hiring. Recruitment analytics solutions clubbed with AI can be used for an enhanced and quick process by extracting useful information from the resume and saving in relevant data fields. Such screening helps companies find the right fit based on skills and qualifications without being biased towards any race, gender, faith or nationality. 

As the environment builds through fair and accurate hiring, resulting in more productivity and workflow of the company so recruiters benefit from it. According to a report, 56% of candidates believe that AI may be less biased than human recruiters and 49% believe that AI can improve their chances of getting hired.

2- Effective Data Analytics

A data-driven recruitment process is needed with the abundance of data we have in this word. AI-powered accurate data analytics are used to evaluate candidates on the basis of their performance. Predictive Analytics suggests a candidate’s job changing behavior which helps a recruiter in excluding unreliable sources and by optimizing the hiring process. By targeting candidates on different platforms, data-driven recruitment processes help in improving the quality of the hiring process. Data-driven recruiting not only assists in improving the quality of hire but includes better allocation of funds for recruitment. Such as targeting candidates using Social media, etc.

3- Facial Recognition Technology

Video interviews are conducted for remote and non-remote candidates. So facial recognition technology can be used for a number of reasons in the recruitment process. This saves a lot of time for recruiters and provides a great way to get to know the candidates. The candidate’s facial expressions are recorded and analyzed by integrating AI in the video interview process. This helps to subsequently show their mood and assess their personality traits. This technology also fulfills the sole purpose of recognizing a candidate to authenticate the candidate is who he says he is. 

4- Automated Candidate Finding

The most crucial thing in recruitment is to find the best fit or perfect match with relevant skills and talents. This is done by developing a pipeline and sourcing potential candidates. Sourcing potential candidates out of the many is a challenging and daunting task. This can now be done using AI by automating the sourcing process and extending their reach simultaneously. In order to screen the perfect candidates, AI solutions have the ability to analyze more than 300 million social media profiles in a small amount of time. Another example of automation is the use of sending personalized messages to candidates in pipelines to keep them engaged and up to date. 

5- Hiring Remote Workers

Hiring remote workers come with their own set of challenges. The idea of hiring remote workers by businesses is getting a lot of fame and traction. According to research, around 5% of all workers in each state in the US work remotely. The difficulties and challenges are reduced by deploying AI for this purpose. A number of AI-powered tools are available to keep track of the remote hired workers and to check their productivity. The uses of various pre-employment assessment tools are remarkably useful to assess a candidate’s personality, skills, and organizational fit  As the remote workers can be physically present in the office. Moreover, by employing a digital document verification into the system the documents submitted by the candidate can be authenticated. 

AI can be used to vet candidates to know if they are trustable. The purpose is to help identify potential threats when hiring someone to work remotely. These tools help to assess potential employees’ honesty and ethics to whether they would be a good resource for the organization. Such technologies help companies to distribute their workforce more widely.  This will probably prove invaluable for service companies like Uber, Cream, Lyft, etc.

AI has limits – Recruiters Should Recognize

AI can analyze data to help recruiters but it cannot take their position. The human brain is always required to recognize real talent. AI is poised to give staffing and recruiting professionals more time to do the task that requires human decision-making instead of replacing jobs in recruiting. Following are the limits of AI:

  • AI is fast and accurate but not error-free.
  • AI makes connections from data but does not define causes so the human brain is required to decipher the meaning behind the correlation.
  • AI follows defined sets of orders for harnessing large sets of data but it will not be able to see the bigger picture.
7 Trends in Identity Verification Solutions to look for in 2020

7 Trends in Identity Verification Solutions to look for in 2020

Internet is an anonymous space where people can hide their identities and come up with bizarre pseudo names. With the increasing online services, identifying identities digitally is becoming crucial than ever before. But verification should be done in a way that does not impact the user’s experience. Security has become the topic of utmost interest for all businesses due to the increasing number of recent high-profile data breaches that have affected millions of consumers and organizations. Identifying individuals online is an essential component of KYC and AML regulations as well. Organizations can benefit from remaining compliant by having proper identity verification checks in place. It also increases customer confidence in the business that they are taking proper measures to protect their private data. 

As identity thieves are becoming more sophisticated, organizations are arming themselves with technologies to protect themselves against viruses, malware, and other frauds.  Identity authentication technology has evolved using biometrics as a stronger security measure to fight back fraudulent activities. As well as unequivocally answer the question that the customer is who he says he is before starting to deal with him. 

The Rise of Identity Verification Solution for businesses

As financial frauds are clamping up, the demand for identity verification technology is also increasing. 50% of stolen identities were reported to be used in various business crimes in recent years.  According to a report, UK based company lost £1.2 billion falling in the pit of frauds last year.  The identity verification market is expected to reach $12.8 billion by 2024 at the Compound Annual Growth Rate (CAGR) of 16.0% during the upcoming period. As many businesses have drowned and faced major losses due to falling in such frauds so having proper ID check is a must-have. The digitizing of the world has bought so many scams to light and urged businesses to take stringent measures for cybersecurity. Digital communications are preferred as no one has time for face to face interactions so is the case with identity checks. Manual identity verification requires a lot of time and is now a thing of the past. 

The presence of users on the internet has significantly raised the number of digital frauds, causing millions of losses for individuals and businesses every year. Regulatory authorities have made it mandatory for every business to have sound identity authentication checks integrated into their system to put a halt on money laundering, identity theft, financing of terrorists, etc. KYC (know your customer) regulations are there to know who exactly you are dealing with, by verifying their original documents, address, and biometrics.  AML (anti-money laundering) regulations around the world have placed stringent compliance regulations on the investment companies as well as other financial institutions. 

Trends in Identity Verification

Some of the latest trends in this technology are taking it to new heights. Here are the top trends in this technology that are changing the ID verification sphere: 

  • KBA is Moving Out

The authentication process by having possession over data is no longer considered a sufficient solution. KBA and SSN verification are going out of the picture as they are proving to be a week security system. Recent data leaks have also validated this fact. So businesses are looking for better solutions to perform authentication methods. A phone number to identify allows a business to authenticate the user accessing a system and halting fraudsters from using leaked data. 

  • Comprehensive Integration:

Financial institutes are becoming aware of the need for systems to fully integrate with financial institutes existing core technologies. Most of the businesses are not considering alterations in their core processors, finding it way too expensive. But latest identity verification solutions do not require any additional hardware to be installed. They can be easily integrated with the current processors cutting short the cost for businesses. ID verification system can easily be integrated and does not create bugs that are formed due to incompatibility issues upon implementation. The time required for diminishing such bugs out of the system is also saved. As time is money for businesses so this technology is both time and cost-effective.

  • Biometric Technology

Biometric verification is not just a buzzword in identity verification but this technology is a milestone achieved in mitigating risks of forgery and scams. By identifying a person through his unique facial features or fingerprints, fraudsters can be authenticated before giving access to the system. It is becoming increasingly powerful with every new iteration. Biometric technology, depending on applications, allows a user to authenticate himself using geolocation, fingerprints, iris scan, face recognition, and other biometrics that are unique to a person.  

This technology is becoming more prevalent. Face verification technology provides seamless authentication just like taking a ‘selfie’. No contact or additional hardware is required in this. That is why it is being widely adopted. 3D liveness detection adds an extra layer of security. Liveness Detection is a process that assures the live physical facial presence of a person is validated at the time of biometric authentication. It is an anti-spoofing measure to fight back all kinds of frauds to deceive such a system. This technology is vetted and became mainstream in identity verification solutions to ensure greater accuracy without using additional technology. 

  • Two Factor Authentication

Securing your systems with passwords only is known for years but we know these can be cracked easily in this digitized world. It is even difficult to memorize and change passwords frequently. It has become a fantasy that only strong passwords can now protect us, as hackers regularly breaking into the systems and releasing passwords. As our accounts are interconnected by Emails, it becomes easy for hackers to crack the password of one and gain access on all. So the solution for it is two-factor authentication, which lets a user know when someone is trying to gain access on any of their accounts. Like Gmail account is asking you every time you are signing in from different browsers if it was you. The basic idea is just a secure second option that authenticates without making it inconvenient for the user. It’s easy adding your mobile number and add a secret code sent to you every time you are logging in. It is instant and adds an extra layer of security making it difficult for scammers to get access. 

  • Consumer Concern Drives for Change

Identity theft, credit card frauds, account takeover, and many other scams are the biggest concerns of businesses such as banks as well as consumers falling victim to it. According to FICO, ID theft costs businesses around 16.8 billion dollars each year, so it is the top concern of financial institutes as well. More effective identity verification solutions are being used to meet the security-conscious market demands against fraudsters. If the security threats are on the rise, new advancements in ID verification technologies are on the heels. These trends will equate a more secure online sphere, which will result in benefits for both businesses and consumers. 

  • Blockchain Technology for Data Storage

No matter how advanced identity verification solution is being used, one eminent question remains there that where is the private data of a consumer is being stored to make it out of criminals’ reach. One recent answer in this regard is blockchain technology. Blockchain is a secure distributed database where no single entity has all the data.  Blocks of data are added to embed the private data safely. 

  • Automation will continue to be Gold

Identity verification solutions perform the process in real-time without using any tam effort. Adding automation to the procedure enhances user experience as now they will not have to wait for days just to get verified. It becomes frustrating for clients at times and ultimately they end up leaving the platform. It is also beneficial for businesses as it saves their time and labor resulting in lower costs. 

EBA revised its guidelines on ML/FT risk factors

EBA revised its guidelines on ML/FT risk factors

The European Banking Authority (EBA) issued revised money laundering and terrorist funding (ML/TF) risk factors as a part of comprehensive AML/CFT concerns. 

This new update reckons changes to the EU Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) legal framework.

The revised guidelines are for the EBA’s to lead the work, regulate and monitor the fight against money laundering and terrorist funding. The guidelines are addressed to both financial institutions and supervisors, setting out the factors that must be considered while assessing the ML/TF risks associated with ongoing transactions or business relationships.

These new amendments in the guidelines assist the financial institutions to conduct customer due diligence (CDD) and enhanced due diligence (EDD) related to high-risk customers and countries to mitigate the ML/TF risks. 

In its revised version, EBA has added new sectorial guidelines for crowdfunding platforms, payment initiation service providers (PISPs), corporate finance, account information service providers (AISPs), and currency exchange firms.

This update public consultation provides more details on the ML/TF risk factors and the CDD measures. It includes the identification of the ultimate beneficial owners, using advanced solutions to verify the customers’ identity, and setting clear regulatory expectations for both individual and business risk assessments. 

It is believed that the proposed changes will strengthen the EU’s AML/CFT measures to combat financial crimes.

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