What is Digital Identity Verification? Use Cases and Technologies
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The convenience of quickly accessible online services is priceless, and the use of smart things is becoming more and more widespread. This translates into the growing role of digital identity across various industries. But this also leads to a bigger need for strong data security and privacy in identity verification technology. So where do we stand now in this regard? Let’s discuss.
What is digital identity?
Simply put, a digital identity is data on an individual, an organization or even an electronic device that can be found online. The data exists as a file that contains personally identifiable information on the person or party, like the following:
- passport number
- date of birth
- social security number
- biometric data
- bank account number
- driver’s license number
- login credentials
Information that makes up a digital identity is collected by computers and systems through actions the person performs online. It can then be assigned to a unique ID or to the person’s IP address. Often, the digital identities of people are linked with their national IDs.
So what is the use of digital identities? They allow using online or electronic services, hence giving people access to the perks of automation. Based on the person’s actions and patterns of behavior online, organizations can use digital identity data to enhance their services and advertising through personalization.
How does the digital identity verification process work?
The computer can’t identify whether the person logging into a website uses their own or someone else’s ID information. Hence, this poses a threat of identity theft and other risks associated with privacy and security. That’s when the digital identity verification process comes into action.
The goal of digital identity verification is to confirm that the person providing personally identifiable data is the owner of the information. The process of digital identity verification implies a validation of the user by his or her identifying characteristics.
While there are lots of methods of digital data verification, all of them work by comparing what the user has, such as a document or a selfie, with previously verified data, like that held by the government. If the presented data matches the existing one, then the user is verified and can proceed.
Online identity verification methods
There are different methods of digital identity verification, and services may use a combination of such to enhance their security. Here are some of the most common ways to verify users’ identities online.
1. Two-factor authentication (2FA)
Two-factor authentication (2FA) is a widely used verification method and is also referred to as dual-factor authentication. 2FA implies that there are two steps to verifying a user’s identity. The first step requires the user to enter their credentials to log into a website. If this step is the only one required for authentication, this verification method is called single-factor authentication.
But that single step to accessing someone’s account is not secure enough — knowing or hacking one’s login info is possible and poses a privacy risk. That’s why a second step is now usually required to log into a website. The second step requires entering additional information and can be performed in several ways:
- email verification: you get a login link via email, which you can follow after you access your email, given that you are the real identity owner and have access to the email address you use to login
- phone verification: you get a one-time passcode (OTP) via SMS that you have to enter on the website to log in or you get an automated call you have to interact with.
In some cases, you get sent an OTP to your email, too, instead of the link.
Some websites may require more than two steps to verify your identity — in this case, it’s called multi-factor authentication. With each next authentication layer, the system becomes more secure and prevents account hacking even if one of the layers has failed.
2. Knowledge-based authentication (KBA)
Knowledge-based authentication implies that you have to enter some kind of information that you are the only one who’s supposed to know. So when you sign up on a website, you have to choose a question and fill in the answer. The system will then ask you this question when it needs to authenticate you, and you will have to provide the right answer to be verified.
Most often, the questions used are the name of your pet or the school you went to. But this authentication method is not the safest since it’s not difficult to get answers to these questions if it’s someone close to you who’s looking for them or even by looking you up online.
Moreover, users can forget what answers they enter during registration, especially when trying to make the answer less obvious or cyphering it, and fail authentication while being the account owners.
So KBA is a useful method but rather when it’s one of the factors in multi-factor authentication as opposed to being the only digital identity authentication method.
3. Biometric verification
Biometric verification is one of the most secure identity verification methods because it uses the unique physical features of a person for authentication. These include the person’s fingerprints and the recognition technology to identify the face, iris, and voice of the person. So by using sensors and selfies, devices can verify the user.
One of the easiest examples of using the technology of biometric verification is unlocking your phone with Touch ID, Face ID or a voice command to Siri.
4. ID document verification
ID document verification method is a secure and quick verification method used to confirm that a presented ID document is legitimate. This method can verify an individual’s passport, driver’s license or other documents issued by the government.
The process of ID document verification starts with a system extracting data from the image of an ID. The data is then run through artificial intelligence algorithms to be analyzed and compared to the authentic issued document.
The data used for comparison are the presence of security features like watermarks and their positioning, the fonts used and the shape and corners of the ID. Since there are standards for government-issued documents, the technology can easily detect if a presented ID differs from the template.
This verification method is especially beneficial in the banking industry, both online banking and traditional banks, to onboard new clients, open bank accounts and perform financial operations. ID documents can be verified in real-time and cause no delays for employees to proceed with the next steps of their work.
5. Database authentication
The method of database authentication involves using information held in various databases to provide a user with access to an account. The databases used for verification are usually social media, like Google or Facebook, which leads to this method also referred to as social verification.
With this method, people can use their credentials to their social network accounts to log in to a website, so there is no need to create different login and password to get an account.
While this is quite a convenient and quick method to log in, there are some privacy and security concerns associated. In particular, as you share your social media credentials with a different database, there’s a threat of exposing access to both websites’ accounts in case of a data breach.
Besides, the website may share data with the linked social media, which may not be what you want, too.
6. Liveness detection
Verifying one’s identity via liveness detection implies checking whether the document a person is presenting corresponds to their live image or a selfie. With this method used, the individual holds their smartphone in front of them and performs some movements like nodding or tilting their head. This way, the software can verify the person’s identity.
Some other ways of liveness detection include analyzing selfies or photos of documents to identify whether they are legitimate or are photos of photos, contain the use of face masks, have been edited, or are fraudulent in any other way.
Digital identity verification use cases
Because digital identity verification allows people to get access to various services without having their ID documents with them or physically presenting them, the technology has been adopted across various industries.
Identity verification online is one of the most burning issues in finance. To prevent identity theft and fraud, financial institutions require technology solutions that are secure, reliable, and compliant with various regulations like:
- customer identification program (CIP)
- know your customer (KYC)
- Federal Financial Institutions Examination Council (FFIEC)
- anti-money laundering (AML)
Besides keeping a high level of security, software should allow for identity verification in real-time.
Overall, ID document verification is the go-to method used in financial services. Solutions that meet all the criteria are already available on the market.
For example, Euristiq has worked on Verified.Me, a document verification system allowing Canadians to verify their identities via a document scan. The system runs a check of the scanned papers to audit whether they match the data in an official database so that users can access services provided by various institutions. Read the full case here.
Logging into online services provided by governmental organizations is another area susceptible to security and privacy risks. Because government services contain verified identity information, hacking into one’s account may easily lead to identity theft and other serious problems for both the user and the government.
Besides, faulty transactions like financial aid and benefit payments caused by fraud lead to huge financial losses for the government annually.
Therefore, it’s crucial to make identity authentication strong and reactive in real-time. Some solutions allow flagging suspicious activity and transactions with potentially high risk for further review as they occur and building an identity risk score for each user with the time. Other solutions, in turn, involve data encryption and eliminate the involvement of third parties in the sign-in process.
Among such, Government Sign-In by Verified.Me our team worked on helps users avoid the risk of getting their accounts hacked by using their online banking credentials to log in to government services instead of creating new login and password. With a Trusted Sign-In Partner an individual uses to log in, no parties have access to any sign-in data, providing extreme security for the user’s activity and information.
Travel and tourism
There are many areas in tourism that require people to share their identity documents and payment details, like buying tickets, registering for a flight or booking a hotel. These, of course, pose threat in case of a data breach, fraud or theft of this information. So what are the solutions?
Biometric verification allows for secure identity verification at airports. With passports containing the person’s fingerprints, customers can be verified for boarding within seconds via passport scanning. The same applies to ID document verification, which helps services verify that a customer is real in real-time when he or she is buying tickets or booking a place to stay.
Besides, border crossing and other situations that require identity verification while traveling or moving to another country are simplified with software like the Diia app. It’s a Ukrainian e-governance app that allows users to store their verified government-issued ID documents and access various government services. Diia has been insanely helpful when people had to flee the country as the war started in February 2022 and didn’t have the chance to take their printed documents or lost them on their way.
Another initiative helping speed document checking and verification when traveling is a Covid passport issued for citizens of countries in the EU. Both this e-document and the vaccine certificate stored in Diia simplified checking whether travelers followed the restrictions caused by the pandemic in recent years.
Online gaming and gambling also face fraud and hacking aimed at accessing real users’ accounts and their payment details or even account balances. Besides, age limits are also a factor that needs to be regulated in this industry.
So gaming operators come to use various identity verification solutions, from real-time liveness detection and biometric verification to ID document verification to make sure the users are who they say they are, especially when it comes to their age.
Another solution applied is checking the IP address of the users to see whether they’re playing from the same location and using 2FA to verify the user in case they log in from a different IP address.
Wearables, vehicles, and even smart home appliances have become everyday assets of many of us. Since these are designed for personal use, identity verification plays a significant role to keep things private. Of course, there are different levels of security required for different smart things, but there are some most commonly used methods of identity verification.
Biometric verification is the most common one, such as using Face or Touch ID to unlock your phone. Then, liveness detection and one-trust events are used to activate tools under certain conditions, such as when you hold a key near the device for the signal to reach and activate it. Of course, the key is linked to your account, where the software uses various verification methods, too.
Overall, the higher cost of security or privacy risk, the more complicated identity verification is, often consisting of several different methods and authentication steps to ensure the safety of your data and devices.
Pros and cons of digital identity verification
While digital identity verification methods are still in development and adjustment, there are different sides to their essence. Here are the advantages and drawbacks to verifying users’ identities online.
- It’s easy to use, you only have to take a photo of a document and upload it, the system and algorithms will do everything on their own.
- Verification is quick, it takes just a few moments as opposed to when done manually offline.
- Databases are updated automatically and regularly so that services can access the most recent and accurate data on users.
- It’s not 100% foolproof and there’s still a chance of fraudsters and scammers or errors despite the significance of AI technology.
- The technology doesn’t check the details of the documents but their authenticity only, so fake IDs still can pass verification.
- The risk of data breaches is still an issue that digital identity verification doesn’t solve.
Regardless of the drawbacks, digital identity brings users convenience and just makes everything faster. But privacy and security concerns must be handled well when it comes to online identity verification. If you’re an online service provider or are working to make your service digital, contact Euristiq for assistance or book a consultation to develop a secure identity verification solution and gift customers an excellent, worry-free user experience.