7 online identity verification trends you must know in 2021
The acceleration of the global digital transformation is astonishing and enchanting at the same time. Nowadays, people need almost no face-to-face interaction with businesses representatives to carry on their every-day life. The new and more efficient forms of services have replaced their previous incarnations. What was called “e-commerce” not so long ago now stands for just “shopping”, while “online-banking” has become simply “banking”.
With the further rise of online financial and peer-to-peer services, social media, governmental programmes, etc — robust digital identity verification becomes more important than ever. Being a key factor for the success of any digital platform, online identity verification constantly evolves and adapts to the needs of different markets around the world.
Let’s take a closer look at the 7 biggest trends influencing the online identity verification industry this year.
1. The mobile demand is increasing with colossal speed
2021 shows that the world has completely gone mobile without any signs of abating. The Covid-19 pandemic and the new reality of social distancing are constantly accelerating this trend. More than half of global online traffic is already mobile with some parts of the world demonstrating even greater numbers.
Several statistical surveys reveal that mobile devices are now the number one tool for accessing the Internet, while 1/3 of modern online users don’t have access to desktop devices at all.
We are steadily moving towards a mobile-only world. Already today
there are not many things left that you can’t do with your smartphone.
The growing tendency toward mobile payment and digital signing up solutions will further drive the market demand for innovative online identity verification vendors. As more people have leaned towards mobile devices, the instances of fraud abusing this technology has also risen.
In 2021, it will become a priority task for the businesses to find the best ways to protect sensitive data while creating a positive customer experience.
2. Digital identity fraud is reaching an unprecedented scale and sophistication
One of the most evident global financial trends of the last decades is an incredible rise in the volume of online and cashless transactions due to pandemics. Fraudsters are aware of it too and also increase their attacks.
After a troublesome 2020, scammers are even better prepared to take malicious advantage of businesses this year. Identity frauds will increase in 2021 at a faster than ever rate. Numerous reports predict an 82% increase of identity theft risk already by the end of summer 2021. We also can expect a higher intensity in the sophistication of various fraud types.
Although Artificial Intelligence and machine learning algorithms have made business operations faster and more efficient, fraudsters also use them for their malicious actions. Forged IDs, account takeovers and synthetic identity frauds are just a few examples of the least sophisticated frauds that are waiting for us this year.
New scams will make it more challenging for businesses to fight identity thefts and money laundering crimes while securing their customers’ data.
Companies will need to be extremely vigilant in their onboarding and identity verification/authentication processes to be able to detect and prevent new breeds of frauds.
However, online identity verification service providers will help businesses combating new phishing scams and complex frauds.
3. The boom of cryptocurrencies and blockchain-based technologies is coming back on the agenda
The boom of cryptocurrencies and tools made using blockchain technology (like smart contracts and decentralised finance), is now hitting record highs.
The latest researches and experimentations by major financial world players showed that blockchain means more than just a basis for transactions. The technology has the potential to change fundamentally the processes that underpin financial services.
And we might see it already this year.
While blockchain is being actively adopted and implemented by many companies, it is getting more focused attention from international regulators. The necessity to monitor blockchain transactions, along with sanctions screening and analysis for money laundering and other related criminal activity, has already resulted in the growth of companies that help to solve this task.
Their services are used by government agencies, cryptocurrency exchange markets, online payments systems, banks and many other financial sector players.
Since fraud detection and Identity theft prevention are essential for all of them —It is no exaggeration to say that KYC and AML service providers’ influence on the industry will grow tremendously.
4. Digital IDs are becoming more commonplace in government services
It is not a financial sector only that starts to look closely at online identity verification. Governments, healthcare and social service providers are getting more and more involved in working together with digital identity verification vendors to find solutions for moving their services online.
BASIS ID is a good illustration of such vendors, who actively participate in the development and integration of eID services. For example, we work with BankID, the leading electronic identification platform in Sweden with more than 8 million people actively using it for a wide variety of private and public services. Another case is MyInfo — a Singapore government eID and a personal data platform for faster and easier online transactions.
2021 is promising a massive rise and further development of similar government programmes across the globe.
For instance, the EU urged to adopt vaccination and immunity passports a few weeks ago; that aim to help speeding up post-covid economic recovery. It means possibly very soon there will appear a certain solution, that will allow people to digitally verify their identity for demonstrating their vaccination status.
Generally, there is a huge need for individuals and businesses of our “new era society” to get access to the services quickly and without the unnecessary burden of face-to-face interaction. So it’s well expected that governments, state insurers, health providers etc can serve their customers digitally and securely.
Therefore, the digital ID will become a sort of “virtual umbilical cord” that naturally will connect every individual to their public and social life.
5. Businesses and their customers are becoming more aware of Data security issues
Companies and their customers are becoming more privacy and security conscious. More people get to know their data privacy rights and monitor sites that show personal data leaks. Recent surveys show that 50% of online services users consider ID theft and banking fraud as their top concern.
These factors are driving demand for more complex identity-verification tools.
2020 was the “year of change” when society has stopped taking online verification as something unusual. It is now expected and even highly desirable by the users themselves. So, companies are now crawling to implement and integrate robust security systems using the latest cutting edge technology to prevent fraudsters and satisfy customer demand.
The new reality requires the introduction of new mechanisms for customer identity verification systems, transaction monitoring and AML procedure. Neither of them will be an easy process if you do it in-house and start from scratch.
6. Artificial Intelligence is continuing to drive the online identity verification industry
One more trend that we see this year is the evolution of artificial intelligence (AI) and the machine learning mechanisms in the sector of online identity verification.
AI has already made its bright entry in the various industries worldwide from travel and gaming to finances and sharing economy. It has been commercialised and commonly accepted as the technology that will drive those industries forward for the next many years.
However, as identity crimes are getting more sophisticated, AI technology has to evolve too to be able to take stronger security measures and mitigate fraud in the earliest stages of the verification processes. It’s a classical case of fighting fire with fire, indeed!
Therefore, another issue is becoming more distinct this year ( and probably in the years to come) — the human role in the processes of identity verification. There is a very common misconception that AI will eventually replace humans in the workplace.
Well, it is completely false, especially in the context of online identity verification and combating frauds. Nobody knows better human nature than another human. As AI continues to evolve, so will the role of compliance professionals.
7. KYC/AML Regulations are becoming tighter than ever
Global and local KYC and AML regulations have already been extremely tightened for all the businesses in the last couple of years but after the covid-19 pandemic, these regulations are expected to become even more rigid.
The tremendous rise in online frauds and related illegal activity has led regulatory authorities to enforce stricter rules.
So, FATF increased the scope of reporting organisations and requested the member countries to oblige legal experts, art dealers and virtual asset dealers to perform AML screening on their customers.
At the same time, the EU has enforced 6AMLD to ensure European countries will fight digital crimes more efficiently.
The European Commission has also been evaluating the eIDAS (regulation for electronic identification and trust services) regulatory framework a few months ago. They are now analysing the collected feedback and deciding upon leaving it in its current state or working further on the format.
So we can expect more news about it pretty soon…
The ultimate purpose of all these stiff laws is to cover the tiniest gaps in customer due diligence protocols. And though, nobody can foresee the future, there are many expectations of additional regulatory changes later on.
All these named above trends can be narrowed down to one point – online identity verification services are crucial for businesses in 2021.
As financial and Identity scams will increase this year, it is obvious that the companies need better verification mechanisms to mitigate all the risks of fraud. The battle against fraudsters is evolving into a never-ending arms race.
BASIS ID is a company of a ZignSec group.
BASIS ID’s bank-grade software verifies over 3000 government-issued documents from more than 190 countries. That’s millions of verified identities per year. The company follows every regulatory obligation meaning strong reporting, corporate governance, licensing, and compliance with international laws such as GDPR, data localisation laws, and FATF. Our internal processes are audited every quarter by EY and Deloitte.
Get in touch with our experts and start implementing online identity verification checks to fight illegal activities and keep your customers happy in 2021.
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