Online transactions have become mainstream because the internet has become an essential part of our lives. Businesses are increasingly relying on the internet to carry out their operations, and with this comes the need for online identity verification. Businesses use identity verification to verify their customers’ identities and prevent fraud when conducting online transactions.
Due to the rise of identity and data theft, companies are being charged high fines by regulatory authorities. By June 2022, nearly 2.4 million fraud cases, including identity theft, had been reported. As a result, document verification has emerged as an essential tool for any company to use when ensuring that customers are who they claim to be. It helps businesses in numerous other ways and authenticates customers during onboarding. Fortunately, the advent of artificial intelligence (AI) has provided an opportunity to streamline the document identification process, making it faster, more accurate, and less expensive. Using machine learning algorithms, AI-based document identification classifies text documents according to predefined categories.
Let’s delve into document verification and discuss how it works. Additionally, we’ll examine the industries that can gain advantages from including this in their identity verification procedures and address any other common inquiries you may have regarding document verification.
What is Document Verification?
Document Verification is the process of verifying the customer’s verified documents. In many industries, including banking, healthcare, and legal services, document verification is crucial for regulatory compliance, customer service, and operational efficiency.
Data Verification Process
Document verification checks features such as watermarks, fonts, stamps, holograms or other security marks to ensure if they are genuine or fake.
Here’s how document verification services do their job:
Step 1: Document and Data Collection
A picture of their identity documents must be uploaded by the user. Algorithms thoroughly scan including encrypted data and recognize it. The documents are pre-processed to be ready for the second step. This includes proper data extraction by examining document edges, aligning images, and optimizing brightness and colors.
Step 2: Data Extraction
The documents are used to extract the necessary data, and any information that isn’t relevant is thrown out. Using optical character recognition (OCR) technology, the intelligent engine of the document verification system extracts each and every piece of data.
Step 3: Document verification
The authenticity of the retrieved data is then confirmed by comparing it to the database. Validation checks that are performed include:
- Face recognition and orientation check
- Edge detection Posterior correlation
- Cross- match with other global IDs
- Color space investigation
- Assigning a selfie to an ID picture
Step 4: Generate Results
The results of the verification of the documents are given to the end user and saved in the back office for later use.
Benefits of Document Verification Services
Adopting digital document verification services can provide several significant advantages to your business. Utilizing online document verification can allow you to:
- Meet regulatory requirements
- Control platform’s Fraud
- Enhance customer reliance
- Improve customer acquisition speed
Common Use Cases for Document Verification process
Document verification has many use cases. The most common ones include:
Compliance with KYC and AML:
Document verification is frequently an essential component of the verification puzzle for businesses subject to KYC and AML regulations.
Verification of the Supplier:
Document verification is a method for ensuring the legitimacy of a new supplier. When working with a new supplier, document verification is one way to verify their legitimacy. It may also assist you in adhering to Know Your Business (KYB) regulations.
Account Opening
A lot of businesses use document verification as part of the account opening and client onboarding processes.As part of the account opening process, businesses like financial institutions, digital health companies, e-learning services, and social networking and online dating sites often require document verification.
Verification of Age:
ID verification is frequently used by businesses that sell products or services with age restrictions, such as alcohol, tobacco, prescription drugs, online gambling, and adult entertainment.
Detection of Fraud:
Document verification makes it easier for businesses to identify and mitigate various forms of fraud, such as account creation fraud, phishing attempts, identity theft, and more.
Industries that Use Online Document Verification
Financial institutions use document verification because they are required to verify the identity through document checking under Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. The following businesses are regarded as financial institutions:
- Banks
- Credit unions
- Savings institutions
- Creditors
- Brokerage firms
- Investment companies
- Fintech companies
- Cryptocurrency Exchanges
- Insurance
Final thoughts
To summarize, document verification services have advanced due to the rise of technology. As a result, it is now typical for businesses to request that clients upload proof of identity documents or selfies when creating a new account. Document verification, particularly digital authentication, is used by businesses today. Companies can now enter international marketplaces without needing clients to provide physical documentation. A safe document verification process must be balanced with a quick and easy client experience. Customers frequently want real-time document verifications, which can be a challenging undertaking. Online document verification solutions help improve the user experience with real-time decision-making, full automation, and an increased level of security.
