The Fintech industry is fast evolving, bringing with it a growing number of innovations that have shaped the landscape of financial service systems globally. As the growth of digital financial services increases, robust digital identity verifications are necessary.
Digital Identity verification, also popularly known as digital ID verification, is a process of proving that an identity is authentic and original without ever having to meet someone face-to-face.
It confirms that the person is exactly who they say they are and that the personal data provided isn’t fake.
Digital Identity Verification is a recent innovation that has helped Fintech companies curb money laundering and fraudulent acts that are perpetuated on the internet. It also helped shift the focus from the traditional service providers that are time-consuming, expensive, and often unreliable.
To address issues related to cybercrime and meet the growing demand for Digital Identity Verification, Fintech companies like Swissmoney are providing reliable digital identity solutions that both online businesses and individuals who engage in financial transactions on the internet can use to accurately and quickly validate customer identities.
This article explores some digital identity solutions associated with the Fintech industry and some key benefits these solutions have offered to the industry.
What Are the Digital Identify Innovations in Fintech?
Digital identity solutions in Fintech typically capture an array of processes, technologies, and services that work cohesively to ensure digital identities’ privacy, security, and integrity. These solutions include:
a. Biometric authentication
This innovation involves the use of a person’s unique features, such as facial recognition, fingerprints, and voice recognition, to authenticate their identity. With this solution, personal information is permanently secured from unauthorized persons.
b. Digital Certificates
These digital testimonials are issued to people and businesses to help verify their identity and offer encryption to secure all online transactions. These electronic certificates are given upon several verifications and online screenings.
c. Blockchain-based identity verification
This solution is mainly provided for people and businesses using digital currencies for transactions. It uses distributed ledger technology to store and verify identity information, offering a secure and decentralized approach to digital identity verification systems.
d. Multi-factor authentication (MFA)
This solution requires users to input two or more forms of identification, including a one-time code and passcode sent directly to their phone to verify their identity. In other words, before a user can gain access to certain accounts or information, they are required to provide two or more verification factors to prove that they’re the real or authentic owner of the information or account when they are about to sign in.
Benefits of Digital Identity Verification for Fintechs
Fintech companies have leveraged digital identity verification to streamline onboarding processes, improve security, and promote overall user experiences. Below are these benefits in detail.
a. Enhanced Security
Cybercrime prevention is a major concern for Fintech companies. The old-fashioned verification systems consume time and are relatively expensive to operate and manage. They are also susceptible to human mistakes and errors.
Digital ID verification is designed with the ability to interpret and verify users’ data by leveraging artificial intelligence and some sophisticated algorithms. This process helps to minimize cyber theft and risks since the identity of a user is revealed to the other user.
It also allows the Fintech industry to access a good amount of data from credible sources, such as credit bureaus and government databases, using them to verify the authenticity of a person’s identity.
b. Adhere to rules and regulations
Regulations guide fintech companies, and every company in the industry must comply for the smooth running of their business. Regulations such as know-your-customers and anti-money laundering were designed to guide their activities and ensure compliance. However, failure to comply often exposes the company to severe financial and reputational risk.
c. Cost-effectiveness
Unlike the traditional means that engulf a large amount of money and deliver limited services, leveraging a digital ID verification can tremendously save costs. The old system often involved manual processes, which can consume time and require intense labor, resulting in higher operational costs.
However, digital IDs automated the process and eliminated the need for manual intervention and related expenses. Besides, it also removes the need for verification efforts and redundant data collection.
d. Enhanced Users’ Experience
Fintech customers enjoy significant user experience with digital ID verification. Traditional verification processes that involve visiting physical branches can be difficult and consume time, leading to a poor user experience. However, the digital verification process is fast and saves time, thereby leading to a good user experience.
This quick and convenient system is the best way customers can verify their identity whenever and wherever they are without the need to visit physical branches or do any paper-based documentation.
e. Streamlined onboarding processes
Digital IDs can greatly streamline onboarding processes for most Fintech companies. The old onboarding system often required physical visits or submission of paper-based documents, resulting in lengthy procedures and time consumption.
In contrast, digital ID verification enables customers to make online verification, eliminating the need to visit physical branches and conduct paper-based registration. This minimizes the onboarding process, time, and effort, making it easy and convenient for customers to sign in and enjoy Fintech services.
Moreover, the structure of digital identity verification can be integrated into a company’s digital systems, such as websites or mobile apps, leading to a seamless and convenient experience.
Conclusion
Digital identity verification has several benefits, ranging from their ability to reduce human errors to high accuracy, streamlining onboarding systems, enhancing user experience, improving security, and promoting compliance with regulations.
Digital identity verification is a new direction for Fintech companies to explore in providing viable solutions to the challenges that characterized the old-fashioned system. Also, by deploring digital verification methods, Fintech companies can protect their company against fraud while enhancing customer satisfaction and adhering to compliance regulations.
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