Confirming users’ identities is crucial for combating fraud and fulfilling regulatory obligations. However, it can sometimes clash with product teams’ objectives of onboarding users. Here are some tips to consider as you develop or update your online identity verification process to balance growth and user experience.
Understand Your Range of Risks
Examine your products and services closely to identify potential risks. Consider risk as a spectrum instead of a binary, assessing how risky something is, rather than merely if it is risky. Your risk spectrum will naturally vary based on your business, products, services, and target customers.
For instance, a marketplace faces different risks compared to a fintech company. Financial institutions should conduct an anti-money laundering risk assessment. This helps them understand their customers’ compliance responsibilities. Additionally, remain adaptable, as risk can fluctuate with changes in economic conditions, technological advancements, and even the promotions you offer.
Provide Various Verification Methods
Supporting different types of documents and verification options can prevent delays and user drop-offs. For example, allowing users to choose from options like a driver’s license, state ID, national ID, or passport can be more convenient when requesting government ID verification.
Ideally, incorporating modern identification documents such as mobile driver’s licenses and e-passports can expedite verification. These electronic IDs share only the essential personal information with the requesting organization and help minimize false negatives caused by unclear photos. Use a drivers license scanner app to verify IDs quickly and accurately.
Describe the Procedure
You can reassure users by clarifying why you need their information. Inform them how you will protect it, and your intended use. For instance, you might explain that their name and phone number are used to verify their identity and safeguard their account against future fraud.
Providing clear and concise instructions throughout the process is crucial. This involves using appropriate language and ensuring accessibility, as well as adhering to best practices like having only one call to action per screen.
Classify Users According to Risk Level
Implementing progressive risk-based segmentation is crucial for balancing verification, conversion, and user experience. By identifying the risks associated with your organization, you can categorize users based on their specific risk indicators and dynamically tailor their experience as needed. The signals and their assigned weights will differ, but potential risk indicators include:
- Active signals: Information provided by the user, such as name, identification documents, Social Security number, and a selfie.
- Passive signals: Data collected without user input, such as the user’s IP address and browser fingerprint.
- Third-party data: Information from external sources, including authoritative databases, watchlist, adverse media, and risk reports related to email, address, and phone.
- Behavioral data: Insights from the user’s interactions with an app or website.
Additionally, you may want to segment users to meet regulatory requirements, such as age verification.
Streamline Through Automation
Automating identity verification offers numerous advantages for both organizations and users:
- Enhances customer experience
- Protects user privacy
- Facilitates organizational scalability
- Minimizes the need for manual application reviews
- Potentially reduces bias in decision-making
- Boosts conversion rates
Improvements in machine learning, computer vision, and other AI technologies are simplifying this process. For example, when users upload an ID photo and take a selfie, they might appreciate the automatic image capture (eliminating the need to press a button) and the pre-filling of forms based on collected data.
Users may not realize that these automated systems also extract data from IDs, conduct database checks, compare the ID photo with the selfie, and determine whether to advance, block, or request more information from the person. All of this occurs within seconds, thanks to automation.
Endnote
Verifying customers is crucial for operating an online business. When creating verification processes, aim to optimize security for both your business and the customer while maintaining a smooth shopping experience.
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