ID Verification - KYB

All About: Identity Verification

January 20, 2023
The identity verification ecosystem is changing all the time. With new AI technology it is much more important to be sure who your customer really is.
Table of Content

Identity Verification is vital to preventing fraud on digital platforms by accurately verifying the identities of each user to ensure everyone is who they claim to be.

ID verification has become particularly critical in the wake of increasing fraud as well as stringent regulations mandating the security of consumer data. It is widely used across industries to help businesses prevent crime and build customer trust.

What is Identity Verification?

Identity verification is the process of verifying the digital identity of users to prove they are actually who they claim to be. It involves verifying a user’s identity including name, date of birth (DOB), address and other relevant identifiers by cross-checking with trusted databases such as official government documents, credit bureaus, or mobile operator databases.

Why is Identity Verification Important? 

All digital businesses are vulnerable to fraud. However, with digital identity verification, businesses can accurately and quickly verify consumer identities and mitigate risks

By enabling businesses to understand who they are dealing with, identity verification solutions help create a safe and trustworthy digital environment for everyone. It facilitates faster onboarding and reduces abandonment rates while enabling companies to comply with the prevailing regulations.

Challenges Associated with Identity Verification

Digital identity verification is vital to ensuring that a business is dealing with a genuine user. However, it comes with its own set of challenges, which can include:

Document Fraud:

One of the biggest challenges with identity verification is the volume and types of identity documents issued across countries and geographical regions.This diversity and complexity can make it difficult for businesses to quickly verify disparate documents, while staying up-to-date with the emerging fraud tactics and complying with the evolving regulations.

Sophisticated Fraud Tools:

Use of technology such as bots, biometric forgery, and deep-fake software makes it easier for fraudsters to obfuscate their true identity online. 

Striking A Balance:

As identity becomes more complex, businesses face a catch-22 situation. Should they enforce strict verification processes, the onboarding process may become more difficult for genuine consumers. Whereas, with a lenient user identity verification process, they risk letting bad actors in.

Situational Challenges:

Even with liveness detection, it is possible that genuine users may fail a facial matching exercise due to several reasons including incorrect lighting or posture.

Evolving Regulations:

The need to keep up-to-date with a dynamic regulatory landscape can make it difficult for businesses to comply with regulatory requirements without disrupting customer experience.


Millions of people around the world do not have any identity documents, are not digitally savvy, or may not be in a position to provide biometrics. When such people try to access digital services, digital identity verification can become difficult.

Data Security:

Rising incidents of data breaches and theft pose a challenge to consumer data security.

Steps to Follow for Identity Verification

The specific steps in user identity verification may depend on the unique verification needs of a digital platform, industry, and applicable legal regulations. Some of the common steps include:

Document Submission:

Users submit digital copies of identification documents, such as, passport, driver's license, national ID, utility bills, and so forth.

Facial Recognition:

User's face is matched with the photo on the submitted identification document. Users may need to take a selfie or a short video during the registration process.

Biometric Verification:

Biometric data such as fingerprints, voice recognition, or iris scans is used for additional verification.

Verification Code:

A one-time-password (OTP) or code is sent to the user via SMS or email to input in the platform and confirm the validity of contact information.

Liveness Detection:

Physical presence of the user is needed for verification and prevention of usage of static images or videos.

Background Checks:

Authenticity of user-submitted information is verified.


Documents and data are reviewed and analyzed in compliance with the verification standards.

Approval or Rejection:

Further access is allowed for users who successfully clear the ID verification process.

Identity Verification in Action

Identity verification is the process of collecting and verifying a new user’s personal data at onboarding. It involves verifying user-submitted data and analyzing digital intelligence such as device fingerprint, geolocation data, and IP address to recognize genuine users.

For more complex checks, active authentication techniques such as liveness detection, face matching, SMS or email with a code, may be used.

In the digital realm, the commonly used methods of digital identity verification include:

  • ID Document Verification
  • Facial Biometrics
  • Liveness detection
  • Mobile checks


How Good Identity Verification Drives Revenue

Identity verification can play a significant role in driving revenue for businesses by fostering trust, mitigating fraud, and enhancing the user experience. By reducing friction at onboarding, user-friendly digital identity verification services can improve user experience and customer loyalty, leading to increased revenue streams.

Some of the ways identity verification services can help drive revenues for a business are:

Faster Verifications:

Leverage artificial intelligence and machine learning to speed up the verification process, hasten onboarding, improve conversion rates, and reduce shopping cart abandonment rates. 

Faster Checkout:

Facilitate faster checkouts by enabling customers to quickly verify their identity and use the stored payment and shipping information.

Reduced False Positives:

Ensure that good users are not mistakenly identified as suspicious 

Reduced Chargebacks:

Prevent bad actors from making fraudulent purchases to reduce chargebacks.

Improved Customer Experience:

Create a trustworthy digital environment for customers to transact securely, resulting in superior customer experience, lesser negative customer reviews, and higher new customer acquisition.

Fraud Prevention:

Detect anomalies and deviant patterns to trigger additional safety measures and prevent attempted fraud.


In a fast-growing digital economy, rife with fraudulent activities, it is crucial for businesses to adopt robust identity verification solutions to ascertain the true identity of users.

An automated and customer-centric user identity verification process can facilitate faster customer verification and onboarding, reduce manual errors, fight fraud, contribute to higher conversion rates, and meet regulatory requirements.

If your business is looking for best-on-class identity solutions, talk to a Caf expert today

Related Blogs

Don’t miss a post.

Subscribe to our newsletter to receive exclusive content as soon as it is published.
"All About: Identity Verification"