All You Need to Know About Video Verification
This article covers everything you need to know about video verification. It talks about compliance, KYC, use cases, and security.
During the quarantine, there was a spike in demand for digital identity verification as more and more people started using online services. People understood that instead of going to the bank, you could make online payments. Instead of having face-to-face meetings, you can meet online. Most of us found at least a few more things that we will be doing online from now on rather than going back to traditional methods.
Many online services require you to make some sort of an identity check because quick rise in demand also brings a high number of scammers, who are constantly looking for vulnerabilities and errors to exploit.
Banks and other financial institutions possess a greater risk of fraud. Therefore, they need more robust protection measures.
Some of the organizations that should read this article especially carefully:
- ✔ Banks and neobanks
- ✔ Cryptocurrency exchanges
- ✔ Trading platforms
- ✔ Lending platforms
- ✔ ICO platforms
- ✔ Marketplaces
- ✔ Gambling websites
One of the best ways to significantly enhance the security of your platform is to use video verification.
What is video verification?
Video verification, also known as video identification, video onboarding, and video-based KYC, is a very secure way of verifying your customers’ identities online. Video verification is widely used thanks to the many benefits it has.
Video verification prevents scammers from committing identity fraud and financial crimes. It increases your clients’ trust and ensures that you and your compliance officers do not have any headaches because of the annoying criminals.
In addition to decreasing fraud, video verification improves the onboarding experience by making it easy for your customers to start using your services. Users need to have an incredible first impression, which is achieved through a user-friendly interface, an intuitive flow and automation.
Besides, many of the AML (Anti Money Laundering) regulatory environments require or strongly recommend you to have a video verification in your KYC process. Hence, using video verification will ensure not only the decrease in fraud but also compliance with various regulations.
Why should you use video verification?
Video verification provides the most secure authentication, which cannot be even compared to other methods thanks to its efficiency. Many of the countries with the highest AML standards already require video verification to be performed.
The alternative to video verification is taking a selfie. However, this method is not as nearly secure. Fraudsters are already quite familiar with this approach and print a picture of a person, whose identity they want to steal, or create a mask, or just use an instagram selfie of a victim.
Such fraud methods are impossible with video verification for several reasons.
- ✔ A single selfie is compared to a photo on a user’s document, while the video comparison by BASIS ID does it on 500 frames from different angles.
- ✔ Video verification tracks eye movements, facial expressions, and head rotation.
- ✔ Video verification uses machine learning to spot altered or fraudulent recordings.
- ✔ Specially trained compliance officers review the videos looking for tiny clues that lead to understanding, whether the user is legit.
Top 5 reasons to use video verification
- 🛡️ Security. The magical combination of machine learning algorithms and professionally trained compliance officers provide the most secure onboarding possible, mitigating risk, and preventing financial and identity fraud.
- 🖇️ Compliance. Many countries require video verification to be a part of the KYC process. Others strongly recommend to implement it and move towards it. Having video verification integrated means that you won’t ever need to worry about staying compliant with the changing legislation.
- 💾 Data storage and reporting. All of the videos alongside other user actions are securely stored in an encrypted decentralized data storage, from which they can be viewed at any time to review verifications or submit necessary reporting to the authorities.
- 💰 Cost. Video verification saves you a lot of money as you don’t need to train or hire compliance officers, spend time doing online or offline interviews or worry about possible fines in case your onboarding is not compliant with regulations. In addition to that, you won’t need to suffer the consequences of financial fraud while onboarding more users than ever.
- 👨💻 Seamless onboarding. Video verification was built with the user in mind; the workflow is smooth, intuitive, and takes only a few minutes to complete. Such onboarding is proven to raise the conversion rate and make sure that no users are lost.
Think about it this way. You get maximum security, save money, your customers don’t need to visit your brick and mortar location or call you, it takes them only a few minutes to complete the verification, and they get an approval in real-time. Who wouldn’t want such a system?
All you need to know about compliance
Below is the essential information regarding video-based identity verification.
All of the companies that are tackling finances, including organizations that deal with digital currencies, such as cryptocurrency exchanges, have to implement Know Your Customer (KYC) process into their onboarding flow. KYC provides a layer of security for your organization while making you compliant with specific regulations.
According to AML directives, the most secure way to perform KYC is by using video verification. Before video KYC was possible, organizations would use static images. However, nowadays, there are no regulators that still recommend using selfies or static pictures as an identity verification method.
All of the European legislation view video verification as the best and the most secure way to verify a customer. In some countries, performing KYC via a live video call with a support agent is a requirement
Here’s a list of some of the nations, where some sort of video verification of identity has to be performed:
- 🇦🇹 Austria
- 🇩🇪 Germany
- 🇪🇪 Estonia
- 🇱🇻 Latvia
- 🇱🇮 Liechtenstein
- 🇲🇹 Malta
- 🇪🇸 Spain
- 🇨🇭 Switzerland
Other authorities are already actively working on implementing video verification, here are some of them:
- ✔ BdP (Banco de Portugal) – Regulator in Portugal
- ✔ CSSF (Commission de Surveillance du Secteur Financier) – Regulator in Luxembourg
- ✔ FCIS (Financial Crime Investigation Service under the Ministry of Interior) – Regulator in Lithuania
Services that have video verification are compliant with the highest standards of regulation. And although not all legislation has video-based KYC as a strict requirement, it’s only a matter of time until it will be a must-have in every region.
Staying on top of all of the regulations is very difficult, especially if you are an international business. However, you don’t need to worry about any of that. The solution is outsourcing your KYC to an eKYC provider.
How does it work?
Now that we understand why video verification is so important let’s take a closer look at how it works.
Video-based KYC workflow is intuitive and takes only a few minutes to complete. For that, a user just needs a phone, a laptop, or any other device with a camera and internet access.
First, a user fills out a basic questionnaire. Then, he or she is asked to take a picture of their identity document.
When the upload is complete, a user enters an easy-to-use camera widget, which guides the user through the process. All the user needs to do is to record or upload a video of themselves, turning their head to both sides and showing their document to the camera.
When it’s done, it takes only a few moments for the verification to be completed as they happen in real-time. A user will get a notification, whether he or she was approved or needs to correct some of the information, ensuring that every single user gets a chance to sign up for your service with as little effort as possible.
As you can see, it’s a straightforward and convenient process that doesn’t require your users to take a trip to your physical location.
The verification process is intuitive, and you don’t need to worry that users will get lost. Moreover, it’s so fast that a user will have a gratifying experience completing your onboarding process.
It is crucial to make the first user experience as smooth and as delightful as possible to keep them using your service.
Let’s talk about real magic
We have discussed the user experience, but what happens behind the scenes?
First, using OCR technology, BASIS ID verifies that the data that user has entered is correct. Then, 500 frames from the video are pulled and analyzed to perform the biometric matching.
Eye movements and head rotations are tracked, and a 3D face model is generated. Using the collected data the liveness check is performed.
The 3D face model is then compared to the picture on the document, and the similarity is rated.
The result of the processing via machine learning algorithms is displayed and a sample groupd of frames is composed for a trained professional compliance officer to finalize the outcome if necessary. The compliance officers are trained to spot various types of fraud when, for example, a person is forced to complete KYC for someone else. All of the red flags are carefully analyzed to assign each user a risk score and either approve or decline them.
This is only a part of the behind the scenes magic that BASIS ID uses to makes sure that you are compliant, safe from fraud, and your users are happy and delighted.
A surprising fact
This method is way more secure than a face-to-face verification. As you can imagine, bank tellers, for example, have dozens of daily tasks besides comparing a picture to a customer. Besides, photos on the documents usually are not very detailed and sometimes are as old as ten years. All of these factors make a huge possibility for a human error while verifying customers offline.
Online video verification, however, uses top tier machine learning algorithms to construct 3D models of user’s faces and compare them to the picture on the document. In addition to that, competent compliance officers with years of experience check for any possible errors.
Even though it might seem surprising, but online video verification is, in fact, a lot more secure than the one done by a human face-to-face.
A step in the future
There are lots of use cases for video identity verification, but here’s a unique one. There’s a new trend in China – facial recognition payments. It’s a step to making payments even more accessible than they are. You only need your face to go shopping – no wallet or phone required.
Such technology is disrupting the payment industry. Although it might take several years before other countries will see something similar to what China is doing, we should all be prepared.
If you have questions regarding the video verification or KYC and compliance in general, feel free to reach out to us and our compliance and legal officers will be happy to assist you free of charge. Just let us know!