1 A guide to digital identity verification

Contents
Executive summary 03 The future of identity verification 14
• Identity verification vendor assessment 15
Digital identity verification explained 04
• Onfido digital identity verification capabilities 16
The identity verification landscape 05 • The Real Identity Platform 16
• Drivers for change 06 • Verification Suite 17
• The future of onboarding 07 • Onfido Studio 17
• Atlas AI™ 17
• Customer stories 18
Identity verification benefits 08
• Increase operational efficiencies 09
• Satisfy KYC/AML compliance requirements 09
• Convert more customers at onboarding 10
• Prevent fraud and enable risk management 10

Digital identity verification: 11

building a strategy
• The customer journey 11
• Orchestrating identity flows 12
• Analytics and optimization 13

2 A guide to digital identity verification

Executive summary
made huge strides in enabling remote, digital-first
Businesses are under increasing pressure
interactions. According to Gartner, by 2023, 85%
to create frictionless experiences for their
of organizations will be using document-centric identity
customers. Providing always on, digital services
proofing as part of their onboarding workflows1.
has opened up the pathway to growth —
businesses can better serve customers and But as capabilities have evolved, identity verification,
in return increase customer loyalty. fraud detection, and user experience have converged.
It’s no longer possible to do one without the other.
The list of things that make up a person’s digital identity
On the flip side, fraud is growing in scale and sophistication, continues to grow. And businesses are demanding more
plus it’s never been harder to keep up with an ever- powerful, orchestrated solutions to the question —
expanding list of compliance requirements. There’s who am I doing business with?
a growing tension between two priorities — knowing
This report examines the importance of identity
who a business is interacting with and providing fast,
verification processes, and its role in facilitating key
frictionless access for customers.
business objectives: preventing fraud and enabling
The COVID-19 pandemic accelerated the need risk management, increasing operational efficiencies,
for organizations to rethink their approach to identity satisfying compliance requirements, all while meeting
verification. The identity industry itself has also customer expectations and driving long-term growth.

3 A guide to digital identity verification

Digital identity verification explained
Identity verification is how businesses confirm that a customer
is who they say they are using unique information about an individual.
Today, identity verification is nearly always done in a digital setting.
It’s no longer scalable, or competitively viable, for businesses to rely
on in-person verification alone.

Businesses usually conduct verification (or at least partial verification) at onboarding during
the account creation or sign-up process. For regulated industries such as financial services,
this is a non-negotiable. KYC and AML regulations mandate that customer identification
and verification must happen at onboarding.

Common use cases for identity verification

➔ Verification for new account opening ➔ Onboarding remote workforces

➔ KYC and AML compliance ➔ Age verification for age-restricted

for financial services products/services

➔ Player verification for iGaming ➔ Fraud detection and prevention

➔ Driver verification for transport

4 A guide to digital identity verification

The identity verification landscape
Identity verification as a sector has seen immense change
over the last ten to twenty years. It’s hard to imagine
that there was a time when all verification was performed
in person. Traditional methods typically involved multiple
forms, paper files, manual compliance checks, and in-person
identity verification performed in the back office, often by
an untrained or inexperienced member of staff.

There are several reasons why the industry moved away from manual
approaches and adopted digital alternatives. The development of new
technologies, the rise of smartphones, and a customer willingness
to embrace a digital-first way of life all created the demand for remote
solutions to identity verification. Today, businesses are routinely using
newer solutions, like online form filing, data validation, and document
and biometric verification to streamline their onboarding processes.

5 A guide to digital identity verification

Drivers for change

Simplifying business operations elements together. It’s time-consuming and expensive — or smartphones3. And they use both to do practically
Complexity exists on multiple fronts. and as different vendor checks don’t talk to each other everything. To keep customers loyal, businesses
For one thing, regulatory requirements — it becomes much harder for businesses to get a clear have to meet increasingly high standards regarding
are constantly evolving. It’s hard for businesses to stay picture of their customers’ identities. digital experiences.
on top of a changing compliance landscape — especially
A new generation of customers Increase in fraud sophistication
if that business operates in more than one geography.
Competition for today’s customers is tough. The rise of digital technologies hasn’t
Businesses must invest a high allocation of resources
They’re used to having access to everything just benefited businesses. It’s also helped
and dedicate departments to implementing KYC and AML
at their fingertips, at the touch of a button, and they fraudsters advance. Since 2019 there’s been a 44%
requirements, but reliance on manual processes to
have a low tolerance for complex, outdated or manual increase in identity fraud attacks4.
conduct KYC and AML compliance is a huge resource
experiences at onboarding. Put unnecessary or high-
drain. It’s expensive, slow and in the long run can
friction roadblocks in their way, and they’ll simply switch Today’s fraudsters also don’t take days off — it’s an
restrict business growth.
to a competitor. Research shows that up to 43% increasingly global and scalable industry. Fraudulent
Adding to this complexity, businesses often have of customers will abandon an onboarding experience activity used to mirror the typical 9-5 working week,
to onboard multiple vendors to support different parts if it doesn’t meet their expectations2. but weekends are now the peak time for fraud — possibly
of the onboarding flow. One vendor might specialize an outcome of fraudsters attacking businesses when
If today’s customers are this demanding, what can
in database checks, another in document verification, they are thought to be most vulnerable and under-
businesses expect from the customers of tomorrow?
and another in fraud protection. So even as businesses resourced. A reactive approach to fraud will forever leave
Consider that most Millennial customers got their
develop more sophisticated approaches to verification businesses one step behind, playing catch-up to the
first smartphone at around the age of 20, whereas
and onboarding, they’re forced to orchestrate their own fraudsters. In the long run, swallowing the cost of fraud
Gen Z has never known life without the internet
onboarding flows, building custom code to bring the only impacts revenue and company reputation.

6 A guide to digital identity verification

The future of onboarding
Given these pressures, the future of identity And that list is only getting longer. Businesses will
verification and onboarding will focus on two key increasingly need to factor in a range of different
elements: simplicity and flexibility. Businesses of today checks and signals to build accurate pictures of
are already dealing with the challenges brought about who their customers are.
by high customer expectations, complex regulatory
Different industries, markets, and risk tolerances
environments, and increasingly sophisticated fraud.
demand different types of verification. In scenarios
When it comes to the identity process, businesses
where reducing friction is priority one (such as social
want to be able to do more, with less complexity.
media or e-commerce) businesses might only want
This is where identity orchestration will play a vital role.
to draw on one type of verification such as phone
number verification.
Digital identity is made up of many things, including: For organizations that require a medium level
➔ Government-issued identity documents of assurance, or who need to meet regulatory
requirements, for example, gaming companies, they
➔ Digital identity documents (such as eIDs)
might leverage several different types of verification
➔ Mobile data and device signals like databases combined with document verification.
In high-risk scenarios, or for highly regulated industries
➔ Identifiers such as phone numbers and email addresses
such as financial services that must satisfy KYC/AML
➔ Database checks (such as credit bureaus) requirements, they might layer watchlist checks with
➔ Transaction history document and biometric verification.

➔ Biometric information (face, voice, and fingerprints)

➔ Social media information

7 A guide to digital identity verification

Identity verification benefits
Identity is the connecting thread that helps Identity verification enables businesses to:
businesses build cohesive, accurate, and trusted
pictures of their customers. Standalone data
signals or checks offer little insight. Until those
insights are brought together, businesses are left
with a mishmash of information that does nothing
to tell them who they’re interacting with or what
that customer’s behavior looks like.

8 A guide to digital identity verification

Increase operational efficiencies Automated ID verification allows businesses to speed
Businesses need to verify that customers are who up turnaround times, removing friction for customers so
they say they are for regulatory compliance purposes they can access services faster. Replacing manual form
– but interpreting global KYC and AML requirements fills with automatic document extraction and population
is no small feat. Regulations are constantly changing, reduces the likelihood of errors. With automation,
and complexity increases when a business operates businesses can grow significantly without increasing
in multiple geographies. On top of this, businesses the size or overtime hours of their internal teams.
must offer a low-friction user experience that allows
a form of government ID, to collecting a blend
customers fast access to their products..
Satisfy KYC/AML compliance requirements of data points to ensure a customer is who they
Reliance on complex, manual or inconsistent onboarding For regulated industries, know your customer (KYC) say they are, through to screening.
processes is time-consuming and increases friction and and anti-money laundering (AML) processes are an
The use of automation and advanced
customer drop-off. While reliance on different providers integral part of any onboarding journey. But in an
technologies across KYC/AML programs can drive
puts pressure on businesses to build out their own online setting, it’s become harder for companies to
positive outcomes, including reducing business
orchestration engines. This limits the time onboarding build an accurate picture of their customers to satisfy
risks such as penalties and reputational damage,
teams have to dedicate to existing and potential those compliance mandates. At the same time, it’s no
decreasing operational costs, decreasing the time
customers and increases a business’s operational costs. longer enough to simply tick a compliance checkbox.
to onboard new customers, increasing revenue from
Customers are demanding seamless, frictionless
For a global bank, you might onboard customers across new and existing markets, and decreasing the time
experiences across all industries. Security can no
a range of geographies and have a team manually reviewing to enter new markets. This way, businesses can stay
longer come at the expense of customer experience.
documents and biometrics for CDD. In cases where there compliant with evolving requirements while feeding
isn’t a clear match, you have a team requesting follow-up This is where identity verification comes in. It’s crucial their growth by easily expanding into new markets.
documents such as proof of address. Your aspirations for to build assurance in customer identities across the And internal teams can focus on providing added
growth are limitless, but your team’s capacity is far from that. different layers of a KYC/AML program – from checking customer value rather than fighting fines.

9 A guide to digital identity verification

Convert more customers at onboarding Identity verification solutions should offer businesses: customer profiles, and risk tolerance, while creating
Converting more customers at onboarding is key minimal-to-no impact on genuine customers. Some
➔ A range of verifications so businesses can pick the
to realizing the lifetime value of a customer. But customers might only require a database check with
righttype of check for their specific goals
conversion rates might be impacted by any number passive, background fraud signals. Other high-risk
of factors. A poor user experience, outdated verification ➔ Optimized capture experiences including NFC, customers might need step-up verification in the form
accessibility, and built-in analytics features
methods, and clunky onboarding flows all contribute of document or biometric checks to filter out fraudsters.
to customer frustration. And the higher your customers’
➔ Sophisticated AI that boosts automation and decisioning
frustrations, the bigger your drop-off. Up to 43%
of customers will abandon an onboarding experience Passive Signals
if it doesn’t meet their expectations. An optimized flow will ultimately help businesses get more
customers through the door, driving long-term growth and Document
Regulated industries can’t run their businesses without Verification
revenue improvement.
verification, but outdated approaches to verification
(for example if prospects have to gather documents Biometric
and appear in person to verify their identities) can Prevent fraud and enable risk management Verification
leave customers waiting up to days or even weeks. Research suggests that global losses due to fraud equate
These outdated onboarding processes can also impact to roughly 6.4% of GDP, or $5.38 trillion5. Missed fraud
expansion into new markets, or a business’s ability results in chargebacks and lost assets.
to keep pace with sign-up spikes during busy periods.
Traditional approaches to fraud prevention are often manual
As a result, verification methods are moving away from and slow. They block resources and increase operational and A layered approach means businesses can leverage
manual, high-friction approaches toward solutions support costs. This is why fraud prevention solutions are the right fraud detection method for individual cases
that prioritize automation, user experience, and scalability. moving towards using a combination of active and passive based on risk scoring. Ultimately, decreasing the amount
signals that combat a range of fraud vectors. Customizable of revenue lost to fraud, while giving genuine customers
identity workflows allow businesses to configure experiences a faster onboarding experience and increasing customer
to their own fraud definitions, based on geography, market, satisfaction and safety.

10 A guide to digital identity verification

Digital identity verification: building a strategy
The customer journey of money, or resetting an account. The higher levels
A key consideration when implementing identity verification of assurance businesses create at onboarding, means
is how to integrate it into the wider customer journey. a more streamlined, cost-effective approach to later
Traditionally, businesses often tacked an identity check moments of authentication.
onto the end of the sign-up flow and gave it little more
Risk management: Businesses should build risk
thought. However, this approach is only going to hold
management strategies around identity verification.
a business back long term. Here are some of the key
This can help identify high-risk events and automate
moments to consider in a customer journey.
responses based on data.
Onboarding: A critical part of identity verification –
by establishing customer verifications on day one,
businesses can build on this to re-verify customers
throughout the lifecycle. Onboarding is also the moment At each stage of the journey, ask yourself:
when a customer is most likely to jump ship and head
to a competitor if the process doesn’t meet their ➔ What information do I absolutely need from a customer?
expectations. So think about when in the sign-up flow
to add that verification step, as well as how to manage ➔ Is this the right moment to capture this information?
customer expectations.
➔ Am I optimising for fraud mitigation or a seamless UX?
High-risk moments: Businesses can use digital identity
to re-verify or authenticate customers at moments
➔ Can I use tools such as gamification to increase conversion?
of high risk — for example when transferring large sums

11 A guide to digital identity verification

Orchestrating identity flows
An efficient identity verification solution relies on coordination
between different types of checks and signals. This is where
orchestration comes in. Gartner predicts that by 2023, 75%
of organizations will be using a single provider with strong
orchestration capabilities, and with connections to many
other third parties for identity proofing6.

Orchestration should act as mission control for all

verification processes. It’s what provides the coordination
that allows all these different elements to work together
and speak to each other so that businesses can create
a coherent picture and analyze the data on the back end.
A no-code, drag-and-drop solution takes the onus off
businesses to build their own orchestration layers —
saving both time and costs — and allows them to easily
build tailored workflows for different scenarios.

12 A guide to digital identity verification

Analytics and optimization
Identity verification as part of any business’s digital
transformation strategy is never going to be a one-step
process. Onboarding processes and customer needs
are constantly evolving, and the business mindset needs
to reflect that. They can test and optimize onboarding
flows to understand where drop-off happens and take
steps to rectify this. By analyzing workflow performance
and granular results, businesses can tweak and test
flows in response to market feedback.

Things to consider as part of this tweak and test

approach include:

➔ The percentage of customers

converting at each stage of the funnel

➔ The number of customers

getting rejected

➔ The cost of customer acquisition (CAC)

all in

➔ The amount of check results

internal teams are over-riding

13 A guide to digital identity verification

Future of identity verification

Looking ahead to the future, there are some emerging

policy trends that look set to affect identity verification.

Around the globe, policymakers are increasingly concerned about what

products and services children can access online. Key considerations
will be the level of certainty required and the age threshold, since that
will affect what approaches to identity verification are viable.

With the growing use of AI and facial recognition technology, we can

expect increased focus on identity verification processes that minimize
bias and treat everyone fairly. This is especially important when identity
verification is used as a way to provide access to critical services such
as bank accounts, housing, and more.

The evolving data privacy landscape will also reshape approaches to identity
verification, as some information used today may be restricted or no longer
accessible in the future.

14 A guide to digital identity verification

Identity verification vendor assessment

Selecting an identity provider is a daunting task. Below is a list of considerations

businesses can use to help identify which partner is right for them.

1. Fraud capabilities 5. Flexible identity orchestration capabilities

What signals is the vendor assessing? Do I need to orchestrate onboarding flows in-house?
What are their false positives / false negatives rates? Does the vendor allow me to create tailored workflows?

2. Turnaround times 6. Accessibility

How long does it take to return results? Does the vendor have industry standard (e.g. WCAG) accessibility features?
What steps does the vendor take to help reduce turnaround times?
7. AI innovation
3. Pass rates Does the vendor build their AI in-house?
What are pass rates like across different documents? Does the vendor take active measures to reduce bias in their AI?
How does the vendor increase pass rates?
8. Seamless integration and developer support
4. Global coverage and performance Does the vendor have easy-to-follow developer documentation?
Does the vendor verify the documents and data sources from my priority regions? Is the product easy to integrate?
Will they cover documents and data sources as we expand to new regions?

15 A guide to digital identity verification

Onfido digital identity verification capabilities

The Onfido Real Identity Platform Onfido Real Identity Platform

is a flexible end-to-end identity solution.
It allows businesses to orchestrate
award-winning document and biometric Intelligent no-code UI Onfido Smart Capture Analytics and dashboard API support
verifications, trusted data sources,
and fraud detection signals. Onfido Verification Suite
Document Verification Data Verification
Performance stats:
Biometric Verification Fraud Detection
➔ Smart Capture SDK offers proven performance
with 90% first-time pass rates.

➔ Atlas AI delivers fully-automated identity

verification with 95% completed in seconds. Onfido Studio
➔ Onfido’s solution offers a 261% return on investment
in less than 6 months according to Forrester7
powered by Onfido AtlasTM

Risk engine In-house AI Face match Anti-bias

16 A guide to digital identity verification

Verification Suite Onfido Studio Atlas AI™
Access a curated library of identity verification services Build and optimize identity verification flows using Get fair, fast, and accurate identity verification
including award-winning document and biometric Onfido Studio, a powerful orchestration layer that powered by AI with a risk engine and anti-bias
solutions, trusted global data sources, and fraud acts as the mission control for identity verification. capabilities built in.
detection signals.
• Workflow Builder: Create verification flows • Anti-bias AI: Atlas is trained on diverse datasets
• Document and biometric verification: Onfido’s that take each customer on the right path. and tested to ensure it performs the same
award-winning document and biometric solutions Allow low-risk customers to get fast access for everyone.
give businesses confidence in customer identity and direct riskier customers to more verifications.
• Built in-house: Atlas was built and refined in-house
at onboarding and beyond.
• Smart Capture SDK: Integrate with existing over the last 10 years in collaboration with leading
• Data verification: Navigate KYC and AML compliance applications using our flexible, easy-to-integrate SDKs privacy organisations such as the Information
at scale with a library of ID record, proof of address, across iOS, Android, and Web, offering accessibility Commissioner’s Office (ICO) in the UK.
and watchlist screening solutions. features and intelligent end-user feedback to correct
• Lightning fast: Atlas delivers results fast, so good
things like blurred or cropped images.
• Fraud signals: Passive signals identify fraud customers aren’t kept waiting.
before it impacts businesses. Analyze geolocation, • Full automation: Set smart conditions within
• Pinpoint accuracy: With over 10,000 micro-models
IP reputation, and device integrity, and spot repeat workflows to automate decision-making and
that specialize in individual tasks, Atlas is highly
fraud across document and biometric solutions. improve turnaround times, clear rates, and fraud
adaptive and accurate.
detection accuracy.

17 A guide to digital identity verification

Customer stories

18 A guide to digital identity verification

Balancing compliance with frictionless UX Driving business growth with speed and conversions

Mettle is the free business account by Natwest® that helps small businesses Revolut faced the challenge of verifying global customer identities
start, run and grow. As a fully remote business account, Mettle had two without sacrificing accessibility or slick user experience. The Revolut team
challenges to gaining market share: satisfying compliance needs at scale, needed to deliver a next-generation onboarding experience to customers,
while making it seamless for customers to apply for an account. To help them while performing KYC checks. Onfido worked with Revolut to create
with this balance, Mettle turned to Onfido. an onboarding workflow that delivers the security of a face-to-face
interaction within Revolut’s polished app.

2 mins We’re building a digital first, 12 % Onfido have really aligned

for a customer to have customer-first banking service, increase in customers with our priorities, working
their identity verified going above and beyond the onboarded with us to achieve our desired
with a fully digital “benchmark” set by branches. delivery by rapidly responding
verification process
A key part of that is making and iterating on their offering.
a sign-up experience that Lewis Tuff
is compliant and frictionless. Lead Platform Engineer at Revolut
Onfido helps us to do that.

Joseph Connelly
Senior Product Manager at Mettle

19 A guide to digital identity verification

Increasing operational efficiencies Reducing fraud while improving efficiencies

TBI Bank had three criteria: decreasing drop-off at registration, reducing San Francisco-based 2nd Address’ Corporate Housing platform
internal costs, and allowing customers onto their platform in a safe and secure is an alternative to hotels. 2nd Address’ hosts need to have confidence
manner. Onfido is giving them the confidence to answer “yes” to each of these. that the people staying in their homes are genuine, while business
travelers want the assurance that the listings are legitimate. To help
them build the best booking experience for their users, 2nd Address
partnered with Onfido.

80 % At TBI Bank we’re building a 35 % We pride ourselves in building

faster to onboard and business that grows with and reduction in fraud a modern booking experience
verify new customers around our customers. Onfido rate after switching for our customers. Continuing
is an enabler of this experience, ID verification manually was not
allowing us to increase our Sales an option. It was not only acting
66 % while remaining secure and 80 % in detriment of our goals of offering
reduction in cost
compliant. It gives us peace reduction in time spent the best booking experience for
to acquire a new of mind, and our customers verifying IDs internally our users, but it limited our ability
customer a very smooth checkout. with the same team to scale with an efficient process.

Armen Matevosyan Jose Arocha

Chief Commercial Officer, TBI Bank Director of Product at 2nd Address

20 A guide to digital identity verification

References

1 Gartner Market Guide for Identity Proofing and Affirmation 2022

2 Customer Attitudes to Digital Identity
3 7 Key Gen Z Trends for 2022
4 Identity Fraud Report 2022
5 The Financial Cost of Fraud 2021
6 Gartner Market Guide for Identity Proofing and Affirmation 2022
7 Forrester Total Economic Impact™ of Onfido

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21 A guide to digital identity verification