History and future of verifying identity in customer onboarding

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History and future of verifying identity in customer onboarding

The onboarding customer process is among the experiences that can make or break your business’s success. People want to seamlessly access and use your products and services. At the same time, they want their data to be secure and ensure nobody can take over their accounts or steal their digital identity. This is why you must pay utmost attention to verifying the identity of your customers — and it becomes increasingly complex year over year with fraudsters coming up with new ways to deceive your business and steal your money.

In addition, customer verification is an integral part of the Customer Due Diligence (CDD) process required by regulators across the globe to prevent money laundering and terrorist compliance. Thus your business should ensure your customers are properly identified while also enabling a seamless and enjoyable customer journey. Read on to learn customer onboarding best practices and the ways to keep both customers and regulators happy.

Let’s start with some definitions to ensure we are on the same page.

What is customer onboarding?

Customer onboarding is the process your customers go through, from signing up for your products and/or services, through installing and configuring them, and all the way to getting the intended value out of them. A good onboarding process ensures the customers get the value they seek as early as possible, preferably on the first use of your products/services.

Now then, how to verify identities in a way that does not disrupt the onboarding customer process? Clearly, the CDD workflow and all Know Your Customer (KYC) procedures must be automated.

How is it done and why is it so important? 

Identity verification challenges of 2021

Long gone are the days when criminals could only forge identities based on real documents stolen from real people. Nowadays, fraudsters use synthetic identities, where some real data is combined with some fake details. Thus, they can pretend to be a legitimate customer and fool your verification specialists or systems.

Therefore, the verification systems should process lots of data in various databases quickly to ensure the customer details you are given are not fake. There are global watchlists, blacklists and whitelists of known fraudsters, devices involved in criminal activities, IP and email addresses that were a part of fraudulent schemes, etc. 

There are many international databases for such a kind of data, and one of the biggest is operated by Dow Jones — the international PEP/SAN/RSA watchlists data broker. Thus, every identity verification tool can check any details provided against these watchlists. Covery does exactly the same, as it downloads the latest version of Dow Jones databases daily and performs real-time checks against them at every action in under 300 ms.

Verification through facial recognition

However, the absence of a match does not necessarily mean we are dealing with a legitimate customer here. Fraudsters can also see which of their details were compromised and replace them with new ones — this is exactly what synthetic identities are for. Thus, CDD must go well beyond checking against Dow Jones databases.

This is where various KYC platform features come into action. 2-step facial recognition verification is one of them. A customer must provide a photo-quality image of any government-issued ID and make a selfie, preferably with that ID in frame. Then, an AI-powered algorithm performs facial recognition and analyzes, whether a person on the selfie and on the ID are one and the same. 

Every human being has unique facial features, differences between facial points, and fluctuations in other parameters. A well-trained AI algorithm can even discern twins, not to mention lookalike people pretending to be the person on the photo. Thus, customer verification can be as easy as taking a photo of an ID and making a selfie, which can be done instantly. However, this is still not enough. 

Risk scoring and Trustchain

Not every merchant implements facial recognition verification. In the majority of cases, a fraudster can get away with simply providing a phone number and/or an email and a password. If this is good enough for Facebook, then it’s good enough for an e-Commerce platform, yeah? Wrong.

Facebook is a social media and does not have to deal with chargebacks per se — it’s a headache for the merchants operating through the platform. Thus, what is allowed to Zeus is not allowed to a bull, a the saying goes, and the merchants who require only a phone number/email address and a password as credentials need to have other means to detect fraudsters.

This is where Trustchain from Covery comes into effect, as it analyzes 12 identifiers to instantly find out if a user is a fraudster. Along with device fingerprinting and behavioral analysis, this enables precise risk scoring, so you can keep the fraud at bay, prevent future chargebacks — and ensure a seamless positive experience for law-abiding customers.


Thus said, as the fraudsters invent new ways to steal from merchants, risk management platforms like Covery develop new tools to prevent such outcomes. To stay protected in the future you must select not the tool that barely meets the needs of today — you must build an adaptable strategy that can be quickly adjusted to help you overcome new challenges as they arise.

By verifying the identity of every client with an automated real-time workflow, you can make sure your customer onboarding process remains pleasant for legitimate users while blocking fraudsters on the fly. This is yet one of the many ways Covery can deliver value for your business. Should you like to learn more — contact us to book a free demo!