The transition to digital methods of identity verification and validation during the onboarding process has been accelerated by the spread of COVID-19 and the subsequent restrictions in non-essential travel.
Here in the UK, the Financial Conduct Authority (FCA) wrote to the industry on 31st March, providing guidance on a relaxation and some flexibility to obligations under the Money Laundering Regulations (2017) in regard to verifying a customer’s identity.
This has implications for the UK telecoms market, particularly where telcos fall under FCA jurisdiction through the provision of unsecured finance used to purchase mobile devices.
The guidance makes it clear that fully digital account opening is acceptable to the regulator. Before COVID-19, a FICO survey of more than 5,000 consumers found that 89% of consumers would open some kind of financial account online, and 74% would open a mobile phone account online. COVID-19 is accelerating this and those telcos that have invested in their end-to-end digital journey will clearly be better placed to adapt and offer a low-friction journey and experience.
Two of the items in the guidance that the media picked out were the use of the selfie in this identity verification process, and the sending of scanned documentation by email. Telecoms considering their options should be clear that the sending of documents and selfies by email isn’t the right way to interpret the guidance (and probably not the best customer experience); you also need to validate and verify the authenticity of any digital identity.
This means that, at the online point of sale, you need to find out:
- Does the identity exist? (identity validation)
- Does the person presenting own the identity presented? (identity verification)
For example, the individual must prove that they are the owner of the document (e.g., passport or driver’s license). Furthermore, the person in the photo needs to be an actual human, not a digitally altered picture or a photo of a photo. This can be achieved by matching the photo in the document to a selfie taken in real time by the consumer. This is why it is crucial to be able to conduct ‘liveness’ tests, which can be passive and use machine learning to determine the outcome, or active and require some specific action to be carried out by the consumer (such as look left, look right).
Other benefits of including identity technology within the onboarding process can include extracting data from documents to populate application forms, reducing the effort needed by consumers.
Here's a video on how it works:
The world is online, especially now. Protecting against fraud whilst complying with regulatory guidelines and providing an exemplary customer experience needs an adaptable, flexible approach. This extends beyond the initial customer onboarding — username and password for ongoing self-service are not enough. Enrolling customers into an ongoing scheme of identity authentication is a crucial next step to ensure you are dealing with the legitimate customer at every interaction.
For further information on how you can embed biometrics into your journey read our whitepaper, Biometrics Step Forward.