The banking and financial industry has progressed dramatically with the dynamic landscape whether it is technological changes or customer demands. Though technological advancement has made things easier for the customers but opened doors for cybercrimes like identity theft and credit card fraud etc. The journey towards digitization is impressive, but the financial sector has to take strict measures to deter cyber threats and other possible crimes. Let’s look at the challenges that the financial sector encounter and how ID verification helps businesses cope with them.
Issues in the Banking Industry
All the banks, insurance firms, credit card unions, accounting businesses are digitizing to enhance their customer experience, productivity, and efficiency of the business. Unfortunately, criminals are also searching for loopholes in financial services to commit synthetic identity fraud and crimes.
Most of the data breaches come from financial institutions. Malware and hacking attacks were mainly responsible for such data breaches in the industry. Any customer using online banking or other financial services is at significant risk of any financial loss and leakage of their sensitive information.
Financial platforms and online investments like online banking and crypto exchanges are more prone to money laundering activities and tax evasion. This is why the regulatory authorities have made it obligatory for the banks and other financial sectors to comply with the KYC/AML regulations. But not all institutions comply with such regulations which makes them a breeding ground for fraudsters and criminals.
The greatest concern of the banking and financial industry is identity theft. Fraudsters are now using sophisticated strategies to steal the personal information of any individual to get financial gain. One of the common examples of identity fraud in the finance sector is stealing your credit card details to purchase goods without your consent. Cybercriminals, in some cases, misuse your personal details and apply for loans or new credit cards.
Identity Verification in Banking Industry
Identity verification service plays a great role in providing superior security to all sectors whether it is a bank, e-commerce, or any other business. It is a great choice to combat identity theft, terrorism financing, money laundering, and other crimes.
Identity verification services ensure that the client’s identity perfectly matches the one that they are supposed to be. In many countries, verification of an individual’s identity has been made obligatory, especially for institutions that deal with money and financial services. As per Statista, the revenue of the identity authentication market is predicted to reach 18.12 billion dollars by the year 2027.
How Banking Industry Could Benefit from ID Verification
Comply with AML and KYC
Businesses that deal with financial services such as banks are obligated by the law to abide by the KYC and AML regulations, and identity verification is a crucial part of the KYC procedure. Verified identity of any individual not only helps banking and other industries to avoid heavy fines but also improves the brand reputation in the market. Thus, it is mandatory for all businesses to verify the identity of the clients before they start dealing with them.
Prevents Criminal Activities
Identity verification helps the banking sector ensure that the transactions made by the user are legitimate and that they are not a part of any illegal activity. Furthermore, when the user knows that the industry verifies the identities, it builds their trust in the particular entity and help-s in customer retention. Safer businesses improve customer experience and are a great bet to build a positive image of the brand in the competitive market.
Identity theft protection solutions also help the banking sector to check the age of the client which is crucial to know before opening bank accounts.
Minimizes Operational Costs
The AI-powered online identity verification system seems costly but it is actually not. They help banking and another sector streamline their workflow and save their time and efforts. Furthermore, verification solutions eliminate the need for manual verifications and reduce the probability of human errors.
Growth in online banking, alongside the danger of cybercrimes, is creating challenges for the banks to verify individuals effectively. If banks would not perform ID verification, the threat of cyberattack would increase even more. Thus, the regulatory bodies have made it obligatory for the banks and all other sectors to verify the identity of the individuals not only for security purposes but also to stay compliant with the KYC guidelines to avoid penalties and heavy fines.