Going beyond Passwords: Implementing eIDV for Safer Banking

What is eIDV?

Electronic IDV is where people must prove their identity through electronic means like biometrics. Initially, Electronic ID verification was introduced to supplement the AML and KYC implementation. Soon, it became a vital part of the system. Especially, after the global shift to electronic systems, ID verification systems are now also digitized. Virtually, IDV has become a part of our daily lives almost everywhere. Thus, the verified identity through eIDV allows a person in the system distinctively.

Traditional IDV & its Limitations

Traditionally, Identity Verification Methods are complex, time-consuming & difficult to use. They are irritating for customers and regulatory firms as well. The following are the main loopholes in Traditional ID Verification systems:

• They highly rely on physical document verification, which can be easily forged or stolen
• Lack of cross-referencing between different databases or systems, leading to potential duplication or fraud
• Inability to verify the identity of individuals remotely or online
• Manual Identity Verification is time-consuming and inefficient.

Due to these drawbacks, Digital Identity Verification took over the traditional verification methods.

Why Choose eIDV over Traditional IDV?

Primarily, eIDV was introduced upon the following needs:

• Increased adoption of online services and digital transactions due to global digital transformation in every sector.
• With increased cross-border travel, a greater need for remote identity verification was felt by regulators.
• Rising threats of identity theft, financial fraud, and Money Laundering.
• Need to efficiently & securely verify identities in the digital age.

Also Read: 5 Issues in KYC Document Verification and Their Solution

eIDV and KYC

Mostly, Electronic ID with Digital ID are used interchangeably. However, the two concepts may converge in some cases. Digital Identity is used to support the KYC & AML processes through electronic verification and identification of users. Increasingly, it became popular for supplementing the KYC procedure. As banks are subjected to KYC and AML regulations, they need advanced systems for identity verification. It can bring in robust digitization for secure banking as well. ATMs now have biometrics and facial recognition methods as electronic ID verification. Similarly, while applying for a loan people can now use banking apps and provide the information through eIDV.

Benefits of Electronic IDV

Certainly, there are many benefits of electronic IDV in the banking sector. Businesses & individuals now shall opt for electronic IDV and banks are swiftly shifting to it. The following are the key benefits of Electronic Identity Verification.

• A seamless, fast & frictionless verification process that is electronically processed.
• Optimization of conversion rates with speed, security & smoothness during the Customer Onboarding process.
• Abruptly, it identifies fraudsters, business losses & potential threats.
• It is fully KYC-compliant and supplements the KYC/AML process.
• It is a vital part of the AML process nowadays.
• Customer Due Diligence is improved through it.
• Compliant to PSD2 and GDPR directives.
• Fully automated IDV reducing time and effort in banks’ KYC.
• In-depth fraud & theft identification and preventive measures.
• Fraudulent transactions through banks will be stopped through the efficient electronic IDV.
• Now electronic IDV is supported by multiple countries, languages, and systems globally.

eIDV checks

eIDV checks are important for cross-verification and are employed by organizations in various industries. These include financial institutions, e-commerce platforms, KYC AML service providers, and Government agencies. These checks help establish a higher level of trust and security in online transactions and interactions by adding an extra layer of protection against identity theft and fraud.

Common methods and technologies used for eIDV checks involve the following elements:

1 Document Verification

For cross-verifying records, and matching identities to physical documents such as driver’s licenses, identity cards & passports. This validates the authenticity of documents by scanning these documents.
Also Read: 3-Step KYC Document Verification

2 Biometric Verification

It includes fingerprints, facial recognition, voice recognition, or iris scans to ensure that the real person is accessing through the recorded identity.
Also Read: Biometric IDV Systems | KYC AML Guide

3 Watchlist Screening

Banks and financial institutions perform checks against the watchlists and sanction lists so that no suspicious person can penetrate the system for the prevention of money laundering and terrorism financing. Watchlist screening ensures that the financial services of banks are not manipulated and misused for any criminal activity.

Use Cases in Banks

Ideally, eIDV is used in the following areas in the Banking sector:

• Credit/ Debit Card validation in banks
• Identifying the high-risk and high-end transactions
• Identification & verification of the PEPs, SIPs, SDNs, Shell companies, etc
• Loan disbursements and policy-making
• AML/CTF compliance

How to connect with Leading eIDV Solution Providers?

Streamlining the KYC and eIDV Technology Procurement is a crucial task for staying compliant with the KYC and AML regulations. KYC Technology Buying & Vendor Analysis are unique and cost-effective ways to help you choose the most-suited KYC solution for your organizational compliance needs.

Endnote

Experts predict that Electronic Identity Verification will break down the traditional IDV system soon. Being fully automated reduces time & effort in banking procedures for both customers & the banks. Banks are using eIDV in various areas, including account opening, loan applications, and ATM transactions. Currently, banks are instructed by regulatory bodies and governments to shift to electronic IDVs to enhance KYC compliance and AML procedures. Moreover, electronic IDVs are considered a tool for improved KYC and AML for banks. But it is also important to train employees as well as customers for the proper and safe use of Electronic Identities.