Leveraging identity verification throughout the customer journey allows financial services organizations to manage financial risk, identity risk, and compliance risk. While implementing a KYC process as part of customer onboarding is the obvious first step and ensures regulatory compliance, identity proofing brings value at various customer relationship stages.
Account Opening
When a new customer initiates their very first interaction with a financial institution, checking their identity is typically a part of the customer onboarding process. Checking a new customer’s stated identity against an official document such as a state-issued ID or passport should include not only matching the name and face on the document but also verifying the validity of that document. This greatly decreases the likelihood of a fraudster opening an account with a stolen or synthetic identity, and gives the financial institution confidence in the new customer’s intentions.
Borrowing Money
When a customer wants to borrow a significant sum of money, checking their identity should be a prerequisite for the release of funds. In some cases, the financial institution may be seeing the customer for the first time – for example, if the customer is applying for a mortgage through a lender that isn’t their main financial institution. In other cases, the customer may be well-known to the lender, but the request for funds could still be fraudulent if the account has been taken over. Whether verifying the customer’s identity for the first time, as in the case of account opening, or re-verifying an existing customer’s identity again before allowing them to access significant funds, identity proofing at this point in the customer journey can greatly reduce misappropriation of funds.
Wire Transfers
There are a variety of reasons that a customer may suddenly choose to make a large transfer, but checking their identity before sending the money through is frequently a good idea. Many financial institutions already step up authentication and require MFA before allowing large transfers, but re-verifying the user’s identity at this point can be a better way to shut down fraudsters. While this doesn’t protect against every type of fraud (see our breakdown of scams and social engineering for additional tips), identity proofing is a very effective way to stop fraudulent transfers that have been initiated as part of an account takeover.
In-Person Check Cashing
Many use cases center around purely digital interactions, but digital identity proofing can be very effective in stopping certain types of fraud that occur in bank branches every day. Whether the individual who comes to cash a check is an existing customer or not, utilizing an identity proofing tool to verify the legitimacy of that person’s ID document can mitigate the majority of in-person check fraud. In fact, Ping's estimate based on existing customer solution performance is that identity verification can reduce this sort of fraud by over 90% if implemented correctly.
Service and Support
Customers may require support for a broad range of reasons, and identity verification can help ensure that the employee offering the support doesn’t accidentally aid a fraudster in committing a financial crime. For things such as password resets, call center services, account closures, and disputes, it is imperative to know that the identity of the person requesting support matches the identity of the customer who owns the account. This protects customers against account takeover and stops fraudsters before they can do lasting harm.
Promoting Customers’ Financial Well-Being
This broad category of activities includes things such as opening college savings accounts, opening, renewing, or updating wealth plans and investments, and interacting with affiliate programs. In certain situations which the financial services organization considers sufficiently high risk, verifying the customer’s identity before proceeding can help protect both the customer and the financial institution.