The importance of accurately identifying your customers

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The importance of accurately identifying your customers
Identity verification is the process of establishing the truth, accuracy, and validity of an individual’s identity.
Photo by Christiann Koepke on Unsplash

With an increasing proportion of business now being conducted digitally, having the ability to securely and reliably identify customers has never been more important.

Secure IDs reduce the likelihood of fraud and allow transactions to be conducted with confidence. Knowing that a customer is who they say they are is vital.

The process of customer identity verification is usually undertaken during the first interaction with a business. Such interactions might include registering for a service, submitting an application, or opening an account. The ability to verify identity during this initial engagement is key because the potential for fraud is high. 

When a business has confidence that a new customer is actually the person they’re presenting themselves to be, security is strengthened and potential victims are protected. However, it’s important not to confuse identity verification with identity validation. While seemingly synonymous, they are actually two different steps in the process of gaining confidence in a person’s identity.

Identity verification is the process of establishing the truth, accuracy, and validity of an individual’s identity. Identity validation is a second step and involves checking or proving the validity or accuracy of the person’s identity using the trust established during verification. 

This two-step process allows a business to verify the identity of an end-user once, then leverage this verification to validate their identity during future interactions. It gives the business the ability to verify a customer’s identity during account opening and validate that identity to allow the customer access. If later, the customer has to reset their password or recover their account, they can revalidate the same verified identity to quickly and securely regain access.

Key business benefits

The trend towards digital interactions was well underway before the global pandemic. As a result, many organisations were already implementing transformation efforts to build out digital strategies and better meet customer expectations. The COVID-19 crisis only accelerated the pace of this change.

Keeping up with this increased digital demand for products and services has forced businesses to fast-track planned transformation efforts to remain competitive. As more and more customers engage online, these businesses are seeking ways to leverage customer identity to support the customer journey and deliver the convenient experiences that customers are seeking.

Customer identity verification allows a business to strike an appropriate balance of convenience and security. While verification does introduce some friction, this can be minimised by integrating identity verification seamlessly into the customer experience. In a digital-first world, integrated customer identity verification is the missing link that will allow a business to quickly and easily onboard new customers while also providing a high level of assurance that those customers are who they say they are.

The customer verification process

A business can choose between two different approaches when aiming to verify the identity of customers.

The first, dubbed data-centric verification, involves a customer providing information about themselves such as their phone number or date of birth. This is then compared with responses from credible data sources, including credit bureaus and census records, to verify identity. 

In the second approach, known as document-centric verification, a customer is prompted to provide a live-image ‘selfie’ and a government-issued form of ID to prove they are a live person and not a fake or spoof. The live image is compared to the customer’s picture on the government ID to confirm a match and verify their identity.

Unlike the document-based approach, data-centric verification relies on customers providing information that isn’t necessarily known only to the customer and as such isn’t as reliable. While this type of verification is still prevalent, more and more enterprises are shifting toward a document-centric approach.

As well as providing greater assurance of identity, using the document-centric approach also ties the customer’s identity information to their mobile device, leveraging their already-verified identity. This helps to streamline subsequent verifications and minimises friction.

Taking this approach will allow business to be in the best possible position to take advantage of the growing volume of digital customer interactions. Businesses will be confident they know who they are dealing with and customers will enjoy a smooth online transaction experience.

Ashley Diffey is Head of APAC and Japan at Ping Identity.

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