Fundamentals by Nevis: What is Digital ID Verification

Digital ID Verification

With more and more transactions taking place in the digital realm, the need for digital ID verification is unquestionable. Unlike face-to-face interactions in the analog world, which rely on facial recognition between two individuals, digital ID verification is performed by a computer. Or to be more specific, machine-learning algorithms.

A number of protocols and regulatory frameworks have since established the ground rules for digital ID verification. Among them are:

eIDAS: The Electronic IDentification, Authentication and Trust Services (eIDAS) establishes a legal framework for safe digital interactions online and single-click transactions, which are verified using predefined digital forms of identification (digital signatures, certificates, etc.). The main premise behind eIDAS is to have a cohesive and unified system of identity verification in the European single market. eIDAS facilitates numerous cross-border digital transactions, from opening a bank account to authenticating online payments to various administrative procedures.

AML: Anti-Money Laundering (AML) guidelines, like those established in the AML Directives, aim to align domestic anti-money laundering regulations with outlining methods for detecting illicit financial activities, creating a unified set of regulations for online transactions, establish a definition of money laundering offenses and punishments,

KYC: Know Your Customer (KYC) protocols outline a series of steps to be taken in order to protect financial institutions operating in the digital realm. They go beyond establishing a user’s identity to include an understanding of the user’s financial behaviours and activities. This makes it possible to determine the level of risk the user poses with regard to fraudulent activities like money laundering, terrorism financing, etc.

On the basis of these protocols/legislation, digital service providers can design their own digital ID process. Such a process may rely on a number of factors, from documents to biometrics to digital signatures.

Benefits of Digital ID Verification

As mentioned, there is no question about the need for digital identity verification. Between the sheer number of online transactions and the rampant amount of fraud, impersonation, and illicit financial behaviour, having a digital solution is the only way forward. However, there are a number of clear advantages to a digital identification verification process. FOr example:

Minimised risk of human error: Since digital ID verification relies on algorithms, which are consistently improving thanks to machine learning capabilities, the margin of error for false identifications is low and constantly decreasing. On the contrary, human detection is and has always been prone to fatigue and bias and lacks the same level of accuracy as a machine-based system.

Speed and efficiency: Digital ID verification solutions are able to tackle multiple verification processes simultaneously and quickly. This is essential given the number of transactions taking place online at any given moment.

Added security and convenience for customers: Digital ID verification relies on a number of foolproof factors to verify users are who they claim to be. Much of this process happens behind the scenes (with biometrics and comparisons against golden source data). This not only means that users are not involved in complex authentication procedures, it also means potential fraudsters have little opportunity to interfere and manipulate the system.

How does Digital ID Verification work?

The digital ID verification process generally relies on three basic methods of identification. In many cases, and especially for sensitive transactions that require strong verification protocols, more than one method is used. Here’s how they work:

Document verification: When creating an online account or signing up for an online service, users are prompted to provide a government-issued form of identity. This could either be a passport or an identification card. During the registration or transaction process, users can use a computer camera or smartphone to scan their ID. Once the document is scanned, it can be assessed for authenticity (by confirming e.g. holograms or watermarks, etc.). Finally, this scan is compared against one of the following two features: biometrics or liveness.

Biometric facial verification: This is the form of digital ID verification that many of us are probably most familiar with since most mobile devices offer facial recognition or fingerprint scans to unlock them. When using biometric facial verification in the digital ID verification process, the service provider prompts the user for a photo during the registration process. This photo is then used to draw a comparison against the user’s face during future transactions.

Liveness detection: The point of liveness is to provide a real-time verification of a user’s identity. Liveness detection ensures that ill-intentioned third parties can not gain access to an account or services by simply providing a static image of the true account holder. Liveness detection relies on face-mapping and motion detection to conduct a facial recognition process. Liveness detection systems also often request that the user being verified perform specific activities (head nods, blinks) to complete the identity confirmation process.