Document verification need, and industry use cases

Identity documents are considered a reliable piece of identity proof of a person. Because identity documents are issued by government authorities and have great credibility. But how do you know if these documents are not fake or the person presenting it is the reak-owner of the document? To cover this loophole, KYC (Know Your Customer) laws are made, businesses must verify the identity of their customers before onboarding them and identity document verification is a feasible method in this regard. 

What is document verification? 

Documents verification is the process to verify the authenticity of legal identity documents to ensure that the person presenting the identity documents is actually who he claims to be and the document is not altered or fake. 

Identity documents are verified through manual verification or document verification solution. Generally, manual verification is practiced less due to the lack of accuracy and scalability of this process. On the other hand document verification solutions are preferred due to high accuracy, global scalability, and cost feasibility. These solutions use Artificial Intelligence (AI) to verify the authenticity of identity documents in real-time. OCR technology is used to fetch the information from the documents and verified, also the document is checked for photoshop or altered format. 

Why document verification is necessary?

Below are a few reasons why verification of documents is significant for businesses. 

Regulatory compliance

It is the regulatory obligation of businesses, financial institutions and even public entities such as (airports, law enforcement agencies,etc.) to verify the identity documents of the people connecting to them in B2B and B2C relationships. 

Verification of identity documents at time of customers onboarding is the primary part of KYC and AML regulations. Non-compliance leads to hefty fines and penalties, so it can’t be ignored. 

Fraud prevention 

Using fake documents to onboard a business platform is one the rise. Identity theft, account takeover, credit card fraud, money laundering and fake identity are common frauds these days, so document screening before onboarding the customers or accepting any payments from them is mandatory for the businesses. 

User experience 

Customers nowadays are well-versed of the risk and frauds, so they demand better security measures from the businesses. Especially the e-commerce, and fintech businesses are under high pressure. Customer screening delivers a better experience and improves customer value of the company. 

Industry Use cases

Below are the use cases of document verification. 

Financial institutions 

Financial institutions need to be very careful in managing their customer risk. Document screening is mandatory as the resulting loss in case of fraud will be high. It is performed at time of user onboarding, transaction authentication, etc. 

E-commerce 

The E-commerce industry is huge and incorporates a lot of business types in it. The primary reason for the growth of the industry is its ability to connect global businesses. The above-mentioned fraud risks are high, document screening of the customers will enable the businesses to stand out. Consumers are in search of low-risk online platforms, document verification will show them that the company cares for their security, and it will increase the market value of merchant. 

Documents are verified in e-commerce at the time of user onboarding, payment acceptance, and account login, etc. 

Fintech 

Fintech has a high risk of fraud due to remote user onboarding, and decentralized payment processes. Cryptocurrency, digital exchanges, payment solutions, P2P lending platforms, have a high risk of financial fraud, which can be eliminated with the help of document screening. 

Fintech industry uses document verification for customer due diligence, account login, payment processing, and regulatory compliance. 

Travel industry 

Travel industry caters to people from all over the world, and screening of identity documents (ID cards, Passports, etc.) is necessary. Document screening through software enables the industry to mitigate the risk and to give a better experience to the passengers.  

The travel industry also verifies the documents for border controls, to deliver better hospitality, etc. 

To wrap up, document verification is practiced in the industries for a long time, but the increase in fraud, regulatory scrutiny, and increased customer expectations, demand enhanced processes and better scalability. One-time screening at the time of user onboarding is no more enough. It needs to be practiced more often and with better accuracy and efficiency to gain all the benefits. Manual verification is unable to fulfill all these requirements, so outsourcing document verification is the preferred measure across the industries.  



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