According to the Federal Trade Commission in the US, one of the most common types of financial fraud is identity theft. As per a report in 2021, more than 2.8 Million reports were filed about financial crimes and half of them were about identity theft. Almost all these crimes were conducted digitally.
With the rapid shift to digital platforms, the possibilities of these threats have increased. Therefore, it is vital for almost every business sector to verify the identity of their customers and determine the risk levels associated with them. Thus, to verify these user identities, financial industries incorporate KYC compliance regulations and a biometric identity verification system is one of the processes in KYC. This procedure is conducted in industries that are obliged to be compliant with the AML and CFT regulations.
In this blog, you will learn everything about the biometric identity verification system and how it works in KYC.
What is Biometric Identity Verification?
Biometric identity verification is the process of verifying the identity of the customers through their unique physical characteristics that are matchless and unique. These characteristics are also known as biometric features. They usually include fingerprints, and facial and voice recognition.
Through the biometric identity verification system, the customer is able to prove his identity both in-person and digitally. However, several financial organisations use their own software or applications to identify customers via biometric verification.
Biometric identity verification is usually used for two purposes:
When a new customer requests to access your services, you need to verify their identity before approving their application and employing them. For instance, if the client requested an account opening in a bank. The bank would ask for the customer’s documents and set up a biometric feature for verification purposes. Further, the biometric system would analyse these documents in order to provide you access to their services.
Once the customer has been onboarded successfully, the acquired data will be compared to the information in the database. The objective of doing this is to verify the customer’s identity through their biometric features. Yet, if their characteristics match, then they are able to access the account and other services.
How Does the Biometric Identity Verification System Work?
The biometric verification process is based on the comparison system. In this procedure, the biometric system uses artificial intelligence to capture the biometric features of the individual that are unique and do not match with other individuals. Once these elements are acquired, this data is stored for future investigations.
However, when the user requests identity verification, the AI system compares the acquired information with the biometric data stored in the database. This whole system is called biometric recognition. In case, the comparative data matches with each other, the user gets access to the banking and financial services.
Nonetheless, biometric characteristics can be measured through various software and devices such as scanners. Besides, a few organisations use their own apps and programs for the biometric scan to verify customer identity.
Types of Biometric Identity Verification
Biometric identity verification is done in numerous ways. Some of them differ on one level or another. Moreover, the level of security of each type also varies on the KYC with biometric identity proofing. The most commonly used types of biometric recognition are:
1. Fingerprint Recognition
A fingerprint is a unique physical characteristic of an individual. However, this is one of the most commonly used features for biometric identification. In order to use this biometric process, the customer needs to capture an image of their finger. However, they need to make sure that they capture high-quality images of their fingerprints which could be verified easily via sensors. Fingerprint sensors serve as an important component for obtaining data.
2. Facial Recognition
Facial recognition is also used to verify the identity of the customer by recognising the facial features and attributes through an image. These features are recognised by taking an image that is digitised and compared with the data stored in the AI database to verify user identity.
However, facial recognition in biometric identity verification systems measures a few facial patterns that include the shape and size of the eyes, cheekbones, length and width of the nose, and shape of the lips. On the basis of these measurements, the facial recognition software converts this information into digital format and verifies user identity.
3. Video ID Verification
Another type of biometric identity verification is through video and the liveness of the person behind the camera. The purpose of this type of verification is to determine that there is not someone else behind the camera with a printed picture.
The facial liveness check is a 3D biometric process which works by taking or capturing a video to determine the user’s identity and whether the customer is real or fake in real-time. This type of biometric verification is considered securer which adds another security during the identification process. It also helps businesses verify if the person’s documents are real.
Organisations, particularly banks, are improving their KYC procedures for customers through the use of biometric identity verification systems. Biometrics has gained widespread adoption and is now commonly used in devices as a security system. This technology has also become a standard for automating KYC approaches across various institutions including healthcare and retail. By harnessing the potential of biometrics, KYC processes can be transformed and result in a more positive customer experience. However, if you hold a financial business and want to verify your customers’ identities through biometric recognition, which type of biometric verification will you choose? Follow KYC AML Guide to learn more about KYC compliance regulations and prevent any fraudulent activity.