Online identity verification is essential to avoid frauds like identity theft, credit card frauds, and chargebacks. Many online businesses deal with these frauds daily. According to daily mail UK, fraudsters are stealing £ 1 million daily. People and governments across the world seem to abuse banks for this failure but on the other hand, banks believe that this is all due to negligence of the customers, who use their credit card for online payments and get scammed by the fraudsters.
Neither banks nor customers have any idea on how to keep fraudsters away from the financial system. There are stringent regulations that require a thorough identity verification and age verification when onboarding customers to put a stop to online frauds but banks usually fail to adopt an effective verification system. Especially, banks providing online services often fall victim to online fraud more often.
There is a need for a robust identification system that could help financial institutes to reduce frauds like identity theft, credit card, and chargeback fraud. FinTech is a growing industry helping financial institutes through technology in many different ways specifically for identity theft protection. One of the most prominent addition is the use of Artificial Intelligence for making identity verification process fast and effective.
Use-Cases of AI in Identity Verification
Artificial Intelligence is the most talked technology nowadays. While it is changing the industries all around the world through automation and machine learning, the Banking sector is also making many processes automated and optimized using AI. Here are some use cases of AI in identity verification online
AI has automated the toughest task in the identity verification process. It is one of the biggest revolutions that AI is delivering. From automating the process to gather information to easing the analyzation process, AI has reduced the human interaction and makes the process time-efficient and cost-effective.
For instance, the previously manual process of entering customer detail is now replaced with OCR extraction. The user just uploads the picture of a document carrying information and it is easily extracted using OCR.
Most enthusiastic feature of AI to connect various transactions leading to Ultimate Beneficial Ownership (UBO). AI has this capability to extract meaningful information from a vast array of data even unstructured data. It is a huge assist to the compliance team, which is trying to connect links between different transactions happening around the world. This increases the advantages of the automated identity authentication process.
Maintaining Compliance and Regulatory Changes
Natural Language Processing (NLP), a subfield of AI has the ability to read and comprehend the meanings and important details from the text. Since the regulatory environment always keeps changing, NLP can help the business to stay up to date with the KYC compliances and restrict bad actors.
AI has proven to be instrumental in fighting fraud by providing an effective identity verification mechanism for the finance sector and remaining in compliance with KYC regulations. With AI, businesses can reduce human errors, remain in compliance with regulations, eliminate the risks of money laundering and terror financing, and fight fraud.