We’ve come a long way since the evolution of KYC. traditional rules-based KYC verification methods were manual, slow, and mired in bureaucracy for the longest time. Many financial institutions are still having issues between security and convenience. Business and security managers continue to seek some middle ground, and they expect business to be worthy of trade-offs.
KYC AML guide provides highly extensive research-based KYC technology buying consultancy to help you choose the best KYC solution that can help you in KYC Identity verification.
What is Identity Verification?
Identity verification is the process of determining the authenticity of information individuals provide. This procedure is required to prevent illegal activities and to ensure compliance with regulatory requirements. One of the most common methods for comparing the information about individuals’ identification data with information provided during the identity authentication process. Documents were required to verify the information from country to country. Customers in the United Kingdom, for example, can present documents such as a valid passport, photocopy, or driver’s license.
A brief history of identity verification
Let’s have a quick look into the history of identity authentication before we dive into the most popular KYC verification method and how we went from face memorization to automatic solutions, such as document-free verification.
People have had to verify and identify each other since civilization existed. People rely on the memory of the human face because there are no technological instruments. We still do this when we meet new people, but due to its unreliability, this approach cannot be used for official verification. People began to use jewelry and other exclusive goods and identity markers to verify each other to understand the limitations of human memory. This method was used 100,000 years ago, according to an archaeological discovery made in 2004. Jewellery was used effectively in some civilizations.
The Babylonians were the first civilization to collect and record personal information. The census improved and became more accurate over time, and the Roman Empire eventually developed a procedure for citizens to create and implement a variety of documents for identity authentication.
Only in 1414 did King v Henry issue the first version of the passport that English citizens could use to prove their identity when traveling abroad. Identification documents, such as passports, have become more structured and reliable as technology has advanced, and with the invention of photography, countries began incorporating photographs into the KYC verification method.
The first computer password was created in 1960, marking a true breakthrough in verification technology. The decision to protect the data is to use passwords because they are simpler than other theoretical solutions. Surprisingly, in 1966, the password system was hacked, resulting in the first leak of this type of database. It established the precedent that password protection is untrustworthy in the fight against hackers.
Security questions were introduced in the 1990s to ensure that consumers claimed it. These were private questions that only the right identity owner was aware of and used to reset passwords or as an additional security check. However, identity thieves eventually learned to circumvent such checks, so the search for new, safer solutions began.
Then, in 2010, we saw the introduction of the first advanced biometric systems to the market via mobile technology. Fingerprints and facial verification were first used in police investigations but now are a common element in mobile phones.
The history of the KYC verification method is still being written as new technologies develop around the world. Whatever technology is used, the goal is the same: to simplify user control and protect businesses from fraud.
How are Identity Verification Methods Evolving?
Due to legislative changes, technological advancements, and increased demand for seamless and safe operations. The KYC verification methods became more necessary with an increased need. With the consistent use of identity verification, some evolution is unavoidable. The need for identity authentication evolution is due to the result of loopholes that were detected as well as the need to make the process more efficient and reliable.
The following are some examples of how identity verification has evolved:
- Biometrics such as facial recognition, iris scanning, and fingerprint scanning are becoming more common. This technology is used to improve the user experience and safety.
- Due to the widespread use of smartphones, an increasing number of cell phones have included identity authentication. Mobile app-based verification and SMS-based checks are two types of mobile KYC verification methods that are becoming more common.
- Blockchain technology enables businesses to leverage decentralized identity solutions as well. This eliminates the possibility of centralized data and gives individuals more control over their personal information.
- For risk-based authentication ML and AI algorithms are used. These systems are looking for a pattern in user behavior to correctly analyze possible fraud and change the verification methods.
- Multi-factor authentication (MFA) is becoming more common. They require users to provide various forms of authentication, such as passwords, fingerprint scans, or one-time codes, which adds an extra layer of security.
Thanks to user-focused design and the best user experience, businesses understand the importance of the user’s positive experience when it comes to managing their image. Creating a friendly connector and reducing friction in the control process results in increased customer satisfaction.
Conclusion
Identity verification has been here for thousands of years. During this period, the process has been constantly improving as the world has seen a radical improvement in verification and technology in recent decades. However, technological development made criminals improve their methods. Identity providers continue to develop new solutions to fight fraud, but at the end of the day, companies are set to monitor their confirmation solutions to ensure that companies comply with regulations and keep criminals away.
