Blog and Resources

A new study by crypto intelligence firm CipherTrace has shown that at least half of virtual asset service providers (VASPs) have weak or porous KYC. 

The data from the survey come to solidify an idea that has been floating around for quite some time - crypto exchange is the next big KYC market. 

Only a couple of months ago, the Commodity Futures Trading Commission (CFTC) also brought civil charges against the founders and five other entities behind BitMEX for failing to register with the agency and for not implementing AML procedures.

In an interview with “Unchained Podcast” on Oct. 13, United States Securities and Exchange Commissioner Hester Peirce told host Laura Shin that the recent charges have put the international crypto industry on notice about AML and KYC regulations.

“I think that the message has been coming to the industry fairly loud and clear on the AML/KYC front, and I’m sure it will continue,” said Pierce. “It’s definitely sending a message to the crypto world that when there are U.S. users of a product or a service, there’s going to be enforcement of U.S. laws.”

Many crypto-to-crypto exchanges, even those with high trading volume, like Huobi and HitBTC, do not have KYC processes in place and this is something that is about to change.

Why The Crypto Market Is A Money Laundering Haven

Crypto is still relatively new territory for users and regulators alike. 

The unclear nature of crypto has allowed it to evade the eyes of the law for quite some time. Is it money, is it an asset, a product, a property? Both the technology and user applications of this new sector have a lot of grey areas that are now coming into the light. 

The unclear status and makeup of the technology make the crypto market a money-laundering haven. 

Want some proof? Look no further than CipherTrace’s third-quarter report for 2019, recording crtypto losses in the range of $4.4 billion.

It’s no surprise that it didn’t take long for governments to jump on this giant, gaping loophole and address the issue at hand. 2019 was the year of responding to crypto but it seems like there’s a lot more to come. 

The Cryptocurrency/AML Paradox

When you sit down and converse with a cryptocurrency purist, it won’t take long to fall in love with the idea behind the crypto -  a decentralized finance technology that was created to free currency from central authorities and give total power and authority to the people.

In a nutshell, cryptocurrency promises anonymized, secure transactions. That sentence might bring a smile to your face, but you know who is reading that sentence with even greater joy? Criminals around the world.

Crypto technology makes it easy to hide identities and illegal activity, creating a platform that can be exploited by the black market, criminals, terrorists, convicted felons and anyone with malicious intent. 

Let’s talk numbers just so you get an idea of how big that smile is. A recent report from Australian University academics showed that approximately 25% of all bitcoin users and 44% of bitcoin transactions in 2018 were associated with illegal activity. 

After digesting those staggering numbers it’s easy to see why crypto is considered amongst the most unregulated markets in the world, why it needs some sort of regulation and where the paradox is created. 

The same technology that was created to liberate people from the oversight of traditional financial institutions is the one that needs the most oversight. That’s quite something, isn’t it? 

The Escalation Of Crypto Regulation

First, you had the guidance paper regarding virtual assets, and virtual asset service providers from the Financial Action Task Force (FATF).

Then you had the joint statement from the U.S. Commodity Futures Trading Commission, the Financial Crimes Enforcement Network, and the U.S. Securities and Exchange Commission, reminding persons engaged in activities involving digital assets to establish and implement an effective anti-money laundering program, adhering to recordkeeping and reporting requirements. 

As you would expect, Europe joined in with its paper “Regulation Of The European Parliament And Of The Council on Markets in Crypto-assets (MiCA).”

Things have been escalating in recent months with countries addressing the crypto issue like dominoes. First, we have the French commerce court ruling Bitcoin as currency, determining its legal status once and for all. 

Then, we have the announcement from German financial watchdog BaFin that Bitcoin and other cryptocurrencies are now officially classified as legal financial instruments in Germany. BaFin’s new guidelines define crypto assets as:

“A digital representation of value which has neither been issued nor guaranteed by a central bank or public body; it does not have the legal status of currency or money but, on the basis of an agreement or actual practice, is accepted by natural or legal persons as a means of exchange or payment or serves investment purposes; it can be transferred, stored and traded by electronic means.”

In Australia, a court agreed that a crypto exchange account can be used as security for potential legal expenses. 

You can see where this is trending, right? The atmosphere around cryptos has escalated from guidance reports, to court rulings. 

With all of the above in mind, let’s shift our attention to the huge commercial opportunity that arises for FinTech companies around the globe.

Cryptocurrency: The Big KYC Opportunity

KYC technology has been growing rapidly over the past decade and has expanded its reach to industries well beyond financial services. 

While there is still a big opportunity for regtech and more specifically KYC technology to take over in all those verticals, the most obvious opportunity is cryptocurrency.

This is untouched territory, an industry that brings its own set of challenges and presents a riddle that nobody has found the answer to. Here at Identomat, we love challenges and the crypto market is something we have been studying for a long time now. 

Our technology is built to solve problems and our team is ready to answer any questions you have regarding the KYC-crypto match. Reach out and let’s discuss.

Lazika capital, the leading microfinancing organization of Western Georgia is adopting Identomat, identity verification and KYC system to remotely onboard customers. The process has kicked off following the approval from the National Bank of Georgia. According to Georgia’s main financial regulator, Identomat is eligible to be used by Lazika capital in their business practices. The collaboration will be monitored by the National Bank of Georgia to ensure customer protection and that digitally transformed business practices are in line with the Georgian legislation. The news is timely given the global health crisis, making it even more paramount to embrace online ID verification to streamline the onboarding process.

Lazika Capital was founded in 2000, with the aid of International British Organization Oxfam and other donor organizations. It operates in Georgia’s Western region with more than fifteen service centres and offices in Batumi, Kutaisi and other major cities. From the beginning, the main focus of Lazika Capital has been low and average income farmers and entrepreneurs; providing them with a broad spectrum of financial aid and helping to adhere with the small and average business standards. 

‘The exact effects of coronavirus cannot be foreseen; As time elapses, the aftermath changes and evolves, but social distancing has always been the key element in containment of the outbreak. Therefore, the urgent necessity of simple, fast and safe client authorization and digital identity has been outlined.’ - states Lazika Capital. 

Identomat is an end-to-end solution for KYC and Digital Identity Verification that helps businesses onboard customers using advanced AI technology. Created with the mission to improve, simplify and secure the authorization process for all stakeholders, Identomat has become a high-in-demand product amid the virus outbreak, being adopted by the leading Georgian Insurance Company - Aldagi. Priority of Identomat has always been safety of collected data and fast and simple onboarding. Being a perfect fit for industries such as retail, IT and telecom, banking, financial services and insurance, government and defense, healthcare and others, Identomat has become a key element in providing easy and quick user experience for its partners. 

"We take great pride that we have been approved by the National Bank of Georgia as a relevant and appropriate platform for Lazika Capital. We make it our mission to enable our partners to offer frictionless remote onboarding to their customers. In addition to significant cost-savings and improved user experience, Identomat’s automated digital identity verification has become a critical tool for business continuity in the times of a pandemic. Since their inception, Lazika has been a great facilitator of small business growth in Georgia and we hope to see their continued success and would like to think of ourselves being a part of it," says Identomat's CEO David Lomiashvili.

Identomat tirelessly works in the direction of expanding its horizons and offering refined and advanced technology to simplify client onboarding without jeopardizing security. Having a partner like Lazika Capital is a stimulus to keep on improving our technology to provide businesses with a reliable ally in safe identity verification. 

About Identomat

Identomat is a KYC (Know Your Customer) and Identity Verification solution, developed in Tbilisi, Georgia. Relying on its proprietary technology, based on the latest advances in Artificial Intelligence and Machine Learning, Identomat streamlines the onboarding process, providing organisations and businesses with reliable identity verification and fraud prevention solutions. Please visit https://identomat-329a23.ingress-baronn.ewp.live/

About Lazika
Lazika Capital started operation in 2000 as a small credit project launched by Oxfam GB. In 2003, the project separated from Oxfam and started independent operation. Lazika Capital as a microfinance organization provides access to the large spectrum of financial services to small scale rural and semi-urban entrepreneurs and farmers and operates 18 branches across western Georgia. Please visit https://lazikacapital.ge/

Here’s the million dollar question for businesses in 2020: Can you make your customer onboarding faster, more efficient and convert prospects into customers? 

That’s not the million dollar question? You’re wondering why you should care about customer onboarding in the first place? Ok. Here are some stats that might get your attention:

• You’ll lose 75% of your new users within the first week
• 40 to 60% of free trial users will use your product once and never come back
• Happy customers become your top referral sources

Is that convincing enough? Your onboarding process can simultaneously become a sales and a retention funnel. It is one of the most important processes of your business as it is the first official point of interaction between your business and customers. 

Today, we will divulge five tips that can have immediate impact on your onboarding process.

Before we get into it, we want to state that we understand customer onboarding differs from business to business and it certainly differs depending on the industry your business operates in. 

This is exactly why our tips are carefully researched and thought out in order to be applicable for businesses of all types, sizes and industries. 

Let’s get right to it. 

Customer Onboarding Tip #1: Assess Your Current Customer Onboarding Process 

This is one of the simplest, yet most difficult steps in improving your customer onboarding process. Why? Because it involves detaching yourself from something you might have played a huge part in building. 

Being critical and unbiased is hard to pull off in business but it’s a true difference-maker for those who are able to pull it off. 

Take a step back, remove yourself from the position of the business trying to sell, and put yourself in the position of the customer trying to buy. 

When reviewing your current process, ask yourself the following question: 

• How long is the process taking, end-to-end? 
• As a customer, at what point of the process would you most likely quit and why?
• Are there unnecessary steps? 

By answering the following questions, you already have the blueprint of what you need to work on. The questions identify the same pain points that can drive a customer away from your business and into the sales funnel of a competitor. 

Customer Onboarding Tip #2: Display Progress To The Customer

Time is currency these days and people are very careful about how they spend it. 

This is exactly why you need to not only make the onboarding process as short and concise as possible, but you need to to give them a sense of how long it will take.  

The only thing that’s worse than offering customers a long, arduous onboarding process, is leaving them in the dark regarding its duration. 

There are many creative ways in achieving the desired result. 

Include a progress bar that loads as people move through required fields. Identify the steps they have covered and clearly display the remaining steps. Provide an approximate estimation of the time remaining until the completion of the process. 

Don’t let your customers walk in the dark. Show them the light at the end of the tunnel and above all, indicate the time it will take to get there. 

Customer Onboarding Tip #3: Optimize For Mobile

More than half of all web traffic is mobile. Whether you are building a website, an eCommerce store or an onboarding process, you are essentially addressing people using mobile devices. 

People are busy and on the go. They rarely have time to sit in front of desktops outside of work, in order to address their personal matters. Your onboarding process should factor that in. 

Use experience is key and if people are having trouble to load, navigate or make sense of the onboarding, they will probably move on to the next provider. 

Steps and call-to-actions should be clearly defined and the customer should be able to click, type and complete the process in a fast and efficient manner. 

Even though optimizing for mobile is an entirely independent project, it still falls under the assessment of your current process mentioned in tip #1. Try to access and go through your process from a mobile device, identify the loopholes and start improving it immediately. 

Customer Onboarding Tip #4: Authorize Social Sign-In

We know that this is not applicable for industries like banking and financial services but what if...it was? 

Social sign-in is a very popular method of speeding up proceedings for the customer, as they don’t need to re-enter their basic information from scratch. All they have to do is use their already built social profiles to create a new account with your company. 

Whilst that is ok for when creating a profile for an online clothing store, the same can not be said for opening a bank account. The bank needs a lot more information most notably, it needs to perform a thorough KYC check. 

How do we bridge the gap between the two? Social sign-in can be used to automatically populate the early stages/steps of the onboarding process, giving the customer a sense of speed and progress. 

With a simple click, they can find themselves on step 3 of the process, creating a different energy, a different dynamic between customer and company. 

In using social sign-in, customers see a feature they are familiar and accustomed with whilst you get them to start the process with a positive mindset. 

Customer Onboarding Tip #5: Simplify Password Creation & Recovery

Here are some interesting facts for you:

• A study from NordPass found that 30% of people find resetting passwords as stressful as the stress of retiring. 
• According to the same source, 67% of respondents agreed that losing passwords is as stressful as dismissal or changing jobs.
• A research conducted by HYPR in the last two and a half years all around the United States and Canada, shows that 78% of respondents required a password reset in their personal life within 90 days and 57% of respondents required a password reset in their work life within the same period. 

What’s the takeaway? People don’t remember passwords and helping them recover should be a critical part of your onboarding process. 

Security is crucial but setting too many parameters for customers when they are creating a password can prove to be detrimental for your conversions. 

Similarly, recovering a password should be a matter of a few clicks, helping the customer reduce stress and anxiety. 

Recap

Here you have it. Five tips that can uplift and revolutionize your onboarding process. 

Our team here at Identomat, is always at your disposal to discuss ways in which you can improve customer conversion and retention. 

Our state of the art proprietary technology can help you build on these tips, automate and digitize big parts of the customer onboarding process. 

We look forward to hearing from you!

When signing up for a new account with a company, there’s usually a process of providing personal information. Name, surname, email, ID and more depending on the type of company and account you are opening. 

In most cases, you are asked to take a picture of your ID, front and back. The process of extracting the written information from any document, whether in digital format or physical format, is called Optical Character Recognition (OCR).

This breed of technology has allowed businesses around the globe to speed-up, optimize and streamline their onboarding processes. It is one of the most underrated tools in the era of digital KYC and today we will take a look at both its functionalities and benefits. 

How Does OCR Actually Work?

OCR is the process of scanning, analysing and translating a picture that contains text into actual text. The extracted text comes in a TXT or DOC, machine-readable file.

OCR usually uses an algorithm for feature detection that defines characters by assessing their lines and strokes. Alternatively, the algorithm proceeds into pattern recognition by identifying entire characters.

Optical Character Recognition: How Does It Help With KYC? 

Before diving into the multitude of ways that OCR enhances the KYC process, it would be wise to say that this is the type of technology that translates into many industries and use cases. 

OCR is diverse and malleable enough to improve processes in many different contexts. First, let’s take a look at some prominent use cases.  

• Business documents data: checks, passports, invoices, bank statements, receipts, etc.
• Passport recognition in airports 
• Scanning Insurance documents 
• Create digital images of printed documents searchable: Google Books

Then, you have the different industries in which it can be applied.

• Financial services: checks
• Healthcare: medical history
• Supply chain: quality control documentation
• Legal: affidavits, judgements, filings, statements, wills and other legal documents

Now that we have established the diverse nature of the OCR technology, it’s time to look at the benefits it affords to the KYC process. 

Speed 

Document verification used to be a long and arduous manual process. Can you imagine the stress this would put on an organization with numerous new client inquiries per day? 

This was a logistical nightmare for companies and a reason why some people would abandon the onboarding process and choose a faster alternative. 

With OCR, the process is automated and instantly becomes faster and more efficient. The document is scanned, the information is stored and the verification can happen almost instantly. 

Searchability

Harnessing and storing the necessary information is simply the first part of the process. OCR also allows you to have complete control over your data by converting them into searchable formats such as.doc,.rtf,.txt (simplest), pdf. 

Cost Savings

Following the point made earlier regarding manual work, speed is not the only parameter affected for businesses. Having people manually work on document verification and data extraction puts a stress on your costs. 

By utilizing OCR technology, businesses can either cut back on their spending, or reallocate their human resources into more meaningful tasks. 

From Paper Backups To Bytes

The fact that we would be mentioning storing valuable information into paper form in 2020, is something we could have never predicted. The truth of the matter is that OCR allows you to digitize and store information in a manageable manner. 

Stop looking for colour-coded files and dossiers, and start looking for servers. 

Accuracy & Efficiency

Let’s start with accuracy. By removing the human element from this process, you are essentially decreasing the room for error. Automating the process using technology ensures a uniform result with no discrepancies. 

When it comes to efficiency, there’s a lot to discuss. First and foremost, you are instantly solving a huge headache that is translations. 

Not only did compliance departments had to manually extract information from official documents, they had to pass it on to qualified translators in order to verify what every single word accurately meant. 

With optical character recognition, you are immediately afforded the luxury of searching, digitizing and translating your information in the language of your choosing.

Recap

It comes as no surprise that everyone is quick to jump on the bandwagon of artificial intelligence, blockchain and different digital intetity trends, as they are the hottest commodities in the KYC world. 

Here at Identomat, while we are aware, educated and true believers in the latest technology, we never overlook any steps in the process. OCR is a core part of our offering and while it might not be as “sexy” or trendy as all the other tech advancements, it is equally as important. 

Our team is always available to discuss any questions on how this technology can help your company take the next step in its compliance evolution. Do not hesitate to contact us at any point in time.

The year 2020 has been a rollercoaster so far, and we don’t see any signs of it slowing down. The same can be said for the industry. With all the recent developments, it’s crazy to think that Identomat was launched just 6 months ago. We have pried our CEO David Lomiashvili away from his busy schedule to share his insights from the recent TechCrunch event and its virtual format, what VCs and big-name investors are looking for these days, and what’s next for Identomat.

Can you share your impressions of the TechCrunch Disrupt2020 event? Was it what you originally expected?

The event was good. Granted that it’s our first TechCrunch event, and with the virtual format, introduced due to COVID, I truly didn’t know what to expect. Yet, TechCrunch has managed to assemble a great community, the topics of the sessions have been great, and I truly feel that the week had been well spent - even though I wish it hadn’t been for Covid and we could enjoy the good old-fashioned real life interactions.

Did the virtual format affect overall the experience? What’s your take on this format (since it seems like we’re stuck with it at least for some time).

Of course - the virtual format dictated the whole event experience, and in my opinion it has a lot of pros and cons. For instance, sessions and talks were super easy to attend. There had been a lot of great content, and it was easy to consume. You can easily switch between the topics and speakers, and pick out the aspects you’re most interested in. It would have been impossible to run between the physical pavilions, so in this case, the virtual format was a huge advantage.

And what about the disadvantages?

Those events are usually made awesome by people. We may be living a seemingly comfortable life in the digital space but there’s no substitute for in-person interaction, those random conversations you strike up while having coffee, or something. So, the networking was hard. I found it unnatural, to be honest. Developers of the platform have tried hard to recreate the experience of a physical pavilion, so from time to time people were matched up to chat. But if you, for example, miss that opportunity, there may not be another one. 

Also, the booths didn’t feel the same. Being a digital experience, the booths are easier to prepare - you don’t have to worry about setting up the physical booth and keeping your fingers crossed that there are no last-moment printing mess-ups. Those digital booths do generate traffic and interest from the attendees, however, you cannot get too creative. Of course, no merchandise and branded freebies, and the only type of offer a digital booth could support were discount codes. I wish there had been more but believe that with the pace this online event technology has been developing, we would be in for a better ride in 2021. That said, it would be great for life to get back to normal. 

Tell us more about the Pitchers and Pitches part? What was it like to pitch to the movers and shakers of the industry?

For me personally, the Pitchers and Pitches session was the highlight of the event! It was a unique opportunity to have your pitch examined by the key figures of the industry. Investors were sharing some truly valuable insights, so it was amazing and led to a huge value, especially with the virtual format.

Were you nervous during your pitch, and did it help that you could do it in the comfort of your home?

No, to be honest, it didn’t :). Don’t get me wrong, being able to enjoy this opportunity from the comfort of your couch is amazing and in a way mindblowing. But, when it comes to the actual pitch, this live human interaction is missing. Also, with the pitch being just one minute long, any delay in connection or some kind of a glitch will kill your effort on the spot. So, just thinking of that, got me nervous, even though it wasn’t my first pitch to VCs. However, with this format the margin of error was non-existent, and this just adds another layer of stress. 

You’re not a newbie when it comes to the startup scene and raising funding. Given that, what was the biggest thing you have learned?

I have been sharing some brief takeaways on Identomat’s social media, but of course there’s much more. The startup scene is changing constantly, and some of those changes are happening in real time. For instance, 5 years ago all startups tried to market themselves to investors as “the Uber for X…” (whatever their focus was). Not so long ago, it was all about the sharing economy and untapped business opportunities. We saw this approach backfire more than once, so things have changed. Right now the trend is remote delivery of services.

Does it mean it’s harder to differentiate yourself? What are investors looking for?

Yes - differentiating a startup has become a challenge. But what investors are really looking for these days is the niche product and the niche market. Basically, VCs want you to master something, and then expand. Many startup founders want to hedge their risks and believe that spreading into a wider market could save them if things don’t pan out immediately. That said, this is where you can lose focus, so from an investors’ perspective they want you to be the “big fish in a small pond” - in the niche you know well. One of the questions we heard so much during the event was along the lines of knowing a certain secret. Basically, you need to know something that others don’t, and this will make investors go with you.

Has Covid impacted the investor-startup relations?

It definitely has. Before Covid, you had very low chance of an investor personally looking at your pitch deck. Right now, many of them actually have time to do it. So, your chances of getting in front of someone’s eyes are higher, but so is the competition. 

Are any areas of technology particularly “hot” these days?

Yes. I’ve been told a lot that Artificial Intelligence is THE direction many VCs are looking at. Every technology has its own infliction level, and for AI, it’s now. Investors are looking for projects offering the application for Artificial Intelligence on an enterprise level. And this is exactly what Identomat offers. 

What’s next for Identomat?

Just last week, we were accepted into NVIDIA Inception program for AI startups and are very excited about this opportunity. This virtual accelerator for AI Startups offers go-to-market support, expertise, and technology for program members through deep learning training, exclusive Inception events, preferred pricing on hardware, and more. We’re working on further developing the product and adding new features as we aim for a major expansion in the US market. So, a lot of time is spent on shaping our go-to-market strategy. Our international team is growing, and I feel that we’re in for a truly exciting ride.

Let’s start with some definitions and stats to set the scene. 

What Are False Positives In A KYC/AML Context?

False positives are legal and lawful transactions or customer profiles that are flagged as suspicious by a company’s monitoring system. As a result, the transaction, account or profile associated with a customer is blocked and/or suspended. 

What follows a suspicious activity report (SAR) is the long and arduous process of manual reconciliation. Banks spend an enormous amount of time, money and internal resources to verify whether these alerts are indeed something to worry about. 

61% of finance organizations are “highly dependent” on spreadsheets, according to an IMA survey. We live in a digital era and depending on manual processes is a serious problem. 

The False Positive Problem: Just How Bad Is It?

Here’s a few highlights from a recent Celent white paper:

• “A flood of false positives and heavy reliance on manual processes are making AML programs costly, inefficient, and unsustainable.”
• Banks typically report 90–99% of all alerts are false positives, while those with advanced tuning capabilities report a lower, but still high figure of 80–85%.

Then you have this incredible stat by IBM: 

• As much as 90% of notifications about potential suspicious activities do not result in the filling of a suspicious transaction report.

KPMG adds more reasons for concern by reporting that: 

• Despite recent advancements and investments in new technology, 51% of banks still reported a high rate of false-positives, resulting from their technology solutions, decreasing efficiencies in fraud detection.

As you can see, this is not merely a problem, it’s a plague. FIs are caught between their attempt to follow the letter of the law, protect customers and their own brands, and untangle an operational nightmare. 

Enter artificial intelligence. 

AI is the new frontier to the problem of false positives and today we will examine 3 ways it is going to revolutionise the AML/KYC space. 

Before we dive into it, here’s a 2017 article by McKinsey, foreseeing this change:

“...banks should invest in three areas: efficient data-aggregation platforms, advanced statistical modeling (such as machine learning-based risk scoring and alert-generation engines), and automation of processes (such as investigator visualization tools).

“...false-positive alerts can be brought down from over 90 percent to below 50 percent.”

Now that we have identified both the concept and impact of false positives, let’s look at the solutions. 

Identifying Customer Behavior Changes

Traditional systems use rules-based transaction monitoring solutions. While the rules are configurable, they are not particularly proactive in analysing data and distilling useful insights.  

On the contrary, artificial intelligence has the ability to develop models that track customer behaviour in real time, build specific profiles and identify changes that are deemed to be irregular. 

The system won’t flag a transaction based on a number-threshold but rather on whether it fits the profile and behaviour of the customer in question. 

The most fascinating element about this approach is that the algorithm will keep on learning, becoming more “knowledgeable” as time goes by. The more transactions a customer completes, the more data for the algorithm to make its alert more accurate.  

Harnessing Unstructured Data

Verifying the identity of the new customer is simply the first step of the KYC process. In order to build a comprehensive customer profile before onboarding a new client, companies need to search for and collect a diverse range of information. 

Here is the most common background information and data companies look to collect: 

• Professional 
• Political
• Social
• Institutional
• Financial

The obvious question that comes to mind is, where do they get this information from? Again, the job of harnessing this data is difficult as it is scattered around in different places. 

• Online and offline media
• Public archives
• Social networks
• Open-source data sources
• Firewall libraries
• Paid subscription directories
• Government portals

While locating and gathering this information is a tall task, it is actually not the hardest part of the process. Discovery is only the tip of the iceberg for companies that if and when they do get their hands on this data, they need to make sense of it. 

They need to draw connections, come to meaningful conclusions, connect the dots and distill the meaning from the unstructured data they just gathered. This is where artificial intelligence and natural language processing (NLP) come into play. 

It is the technology that finally gives companies the insights they had to manually had to deduct for themselves all these years. It cross-references information from all these different sources, automating the building of a true risk-based profile for each customer. 

By managing to mirror the most up-to-date profile for each client, companies can decrease their exposure to false positive alerts. They are in the unique position to know the risk-level attached to each entity and validate the truthfulness of the alerts that come from their activity.

Learning, Adapting, & Responding 

Much like NPL, machine learning is yet another subset of artificial intelligence that will play a huge role in battling false positives in the near future. 

Machine learning has the distinct advantage of creating unique fraud detection systems. This allows the technology to make educated predictions without being explicitly programmed to perform a specific task.

What the program essentially does is estimate the behaviour of an entity, anticipating a certain action. If the action falls way outside the predicted framework, the technology can then begin to assess the risk factor associated with the entity. 

Takeaways

Is this actually working or is it just a beautiful idea that can’t be implemented? 

Well, if numbers are anything to go by, machine learning is actually producing results. A case study from Teradata showed that the implementation of machine learning reduced false positives by 60%, and was expected to rise to 80% as the model continued to learn. 

That’s both impressive and promising. Artificial intelligence is revolutionizing the entire KYC/AML industry one but at a time. At Identomat, we leverage the powers of AI on a daily basis when building our proprietary technology. 

We understand the value it brings to your company and we strive to stay on top of the latest advancements and developments in the field. If you have any questions about the technology, our solutions or the ways it can help your company, do not hesitate to reach out and inquire. 

Our team is always ready and willing to give you the answers and solutions you’re looking for.

Blockchain technology is mostly associated with cryptocurrencies. That’s what brought attention to it and what most people think it’s synonymous to. The truth of the matter is that blockchain is a new breed of technology with limitless potential, able to redefine entire industries. 

It is a network that encrypts and stores all types of data in blocks, making it diverse enough to be used across many industries. 

Whilst most people associate it with financial institutions and currencies, the KYC industry has something to say about that. Today, we’ll look at how blockchain is changing the KYC process and more specifically, client onboarding.

How Does Client Onboarding Actually Work On The Blockchain? 

According to Deloitte, 38% of new banking customers will abandon the onboarding process if it takes too long or requires more information than they are prepared to disclose. 

At least 26% of those customers feel that “easy enrolment and login” are the most important criteria on which they decide who to bank with. 

Client onboarding is a business driver. It can make or break your business and this is exactly why interested stakeholders have been looking to improve it for quite some time now. 

It comes as no surprise that the European Commission has been funding blockchain projects through the European Union's research programmes FP7 and Horizon 2020 since 2013. Up to 2020, it will fund projects that could draw on blockchain technologies for up to €340 million.

Client onboarding is one of the most challenging parts of KYC for businesses and FIs alike. Before opening an account, a prospect needs to be vetted in more than one way in order to assess their viability. 

Here are some of the boxes that need to be ticked before onboarding a customer:

• Identity verification
• PEPs screening
• Sanctions screening
• Beneficial ownership or Director in a Company

Companies and FIs are currently using an amalgamation of online platforms and manual processes to check these boxes. This process is time-consuming, complex, costly, prone to error and redundancy. 

What Distributed Ledger Technology (DTL) can do to change that is allow companies and businesses to upload data on the network's blocks, where they can be updated by consensus between the participants. 

By design, DTL maintains only “one version of truth” for sensitive client data. When an employee is searching for a piece of data on the blockchain, they only get the one version that actually exists. 

That version is checked and verified automatically by the blockchain platform. Employees don’t need to talk to their coworkers, look for older versions of the customer profile or try and combine information from different databases. 

The code itself is taking care of maintaining one truthful client profile with all the necessary information. 

What Is The Value Of a Blockchain-KYC Pairing?

What that manages to accomplish is information that is transparent, auditable, immutable and cannot be changed on a whim. 

Apart from the business side of things, there is the customer side of things to consider. Users are guaranteed control over data, elevated security and freedom of choice as to how their data are used. 

Examples of the successful pairing between KYC and blockchain are confirming our analysis. OCBC Bank, HSBC and Mitsubishi UFJ Financial Group (MUFG), together with the Infocomm Media Development Authority (IMDA), managed to complete a proof of concept for (KYC) blockchain. 

Customer’ information encrypted on the shared ledger is cross-referenced with government registries, tax authorities, credit bureaus and other sources of information to update profiles. 

Another parameter that is important to consider is the one of regulation. The blockchain solution is not only streamlining the process for businesses and customers, but also for regulators. 

According to KPMG’s white paper “Could blockchain be the foundation of a viable KYC utility?”, the value for regulators is immense: 

“A blockchain KYC utility could also offer regulators a better understanding of how customers have been onboarded and the application of underlying KYC information. This would, in turn, enable regulators to better understand customer activity. All actions by financial institutions and customers would be fully recorded and tracked, while activity data on the platform would be fully auditable. 

From a customer standpoint, a financial institution's use of a KYC utility would enhance the customer experience and improve their overall satisfaction by making processes more timely and efficient.”

Recap

KYC and client onboarding are evolving, and blockchain technology is offering the industry a great chance to do that in a manner that is efficient, scalable and trackable. 

This relationship is relatively new but is already showing signs of promise and it is something we will keep an eye on. Stay tuned for more updates.

Following our highly-coveted participation at the Pre-Disrupt 2020 Masterclass, Pitchers & Pitches! at the beginning of the month and the ongoing TechCrunch Disrupt 2020 event, we come bearing more exciting news.

Identomat will be represented in the 2nd StrategEast “State and IT” Eurasian Forum taking place in Tbilisi on the 15-16 of September. Today our CLO, Natia Gvazava will be featured in a panel of experts discussing "The Digital Financial Solutions", alongside the Deputy Minister of Finance of Georgia, the Co-Founder/CEO of the Georgian Information Security Association and other esteemed industry executives.

The panel will assess the new state of affairs for the financial industry after the Coronavirus pandemic. Financial institutions and consumers were forced to utilize online services during the lockdown and whilst that is encouraging, it does pose some challenges. How can FIs maintain the proper level of cybersecurity and what steps should they take to ensure consumers do not lose trust in them? 

Identomat is proud to be involved in such an influential and impactful technology conversation, sharing our expertise to promote meaningful change. 

The event is becoming one of the most influential IT events in the Eurasian region, giving professionals, governments and businesses the opportunity to join their powers and share valuable knowledge regarding IT, its relationship with governing bodies, legislation, taxation and IPR and more. This year’s event will look at technology as a remedy and what needs to happen in order to help the economy of the region take the next step.

The Forum features a wide array of participants such as senior representatives of the USA and the EU governments, global IT companies, VC funds, investment banks, heads of IT associations and thought-leaders of the IT sector from the region.

We believe that the month of September is only a precursor of what is to follow for Identomat as our team is working relentlessly behind the scenes to deliver some noteworthy results. 

Stay tuned. 

The omnichannel principle refers to a user’s seamless experience across different platforms, channels and devices. 

Whether a user chooses to interact with your company through their tablet, their phone, a browser or an app, the experience should ideally be characterised by continuity. 

Here are some interesting stats regarding the impact of the omnichannel principle in business: 

• The purchase rate of campaigns using three or more channels during a campaign is 287% higher than those using a single channel. (Omnisend) 
• Omnichannel strategies drive an 80% higher rate of incremental store visits. (Google) 
• 9 out of 10 consumers want an omnichannel experience with seamless service between communication methods. (UC Today)

Omnichannel commerce and user experience are a real thing. They already have a big impact but what’s even more impressive, is their potential going forward. 

This is not something businesses can overlook or look the other way from. It’s not a trend but a reality and sooner or later, any business that wants to stay competitive will embrace the omnichannel principle. 

Omnichannel Verification: A Unique Challenge 

What’s the challenge of omnichannel customer verification? The countless touchpoints between business and customer. 

Whilst offering the customer the opportunity to interact with the company and seamlessly switch between platforms during their user journey, that’s a security and logistical nightmare in the backend. 

Just pay some attention to the different point of interaction between business and customer and try to imagine the considerations regarding platforms, devices and channels: 

• Web
• Mobile
• In-store
• Over-the-phone
• ATMs 
• Chatbots
• Digital assistants (Siri, Alexa) 
• Social media

How can you automate this matrix? 

Goodbye Passwords, Hello Biometrics

Passwords have never been the optimal way of verifying user identity. It was more of a means to an end and everyone involved in tech and business it wouldn’t be long before the new frontier of identity verification will arrive and it seems like it has. 

In one of our recent articles, we identified the “Top 3 Digital ID Trends Heading Into 2021” and biometrics were one of the three trends to make the list. Why? Because they offer an elevated security product and a more user-friendly experience. 

What we can now add to the list of biometrics advantages is their technical malleability and modality. They are adaptable pieces of technology that make them ideal to plug into a comprehensive, omnichannel presence.

The industry findings on the state of omnichannel fraud and the potential impact of biometrics are staggering. 

In a recent study by Forrester titled “Navigating The Omnichannel Fraud And Authentication Landscape”, results show that a business employing an omnichannel strategy is more vulnerable to online fraud and attacks. 

Let’s look at some numbers: 

• 82% of firms agree that authentication across channels is increasingly critical to fraud prevention. 
• 84% say their ability to prevent fraud on any one channel is nearly or fully optimized, showing a worrying overconfidence.
• 45% of firms experienced a 4% or greater increase in the rate of fraud on their mobile applications and websites in the past 24 months.

Whilst legacy identification methods like passwords and personally identifiable information still rank at the top of the list when it comes ro preferred identification methods, it’s encouraging to see that biometrics are not far behind: 

• 73% fingerprint biometric authentication 
• 73% behavioral biometric authentication 
• 66% voice biometric authentication 
• 64% face biometric authentication

Biometrics are a natural fit for omnichannel authentication. It’s not a matter of if businesses should use them, but a question of how. 

Biometrics are separated into two categories: server-based and device-based. 

The differences between the two are probably the subject of a different blog post but we if you really want to dig deeper, have a look at this white paper by Aware, titled “Mobile biometric authentication: Device-centric vs. server-centric architecture.”

Recap

The bad news is that omnichannel verification is a beast of a challenge for any business. The good news is that not only is there a solution, there are companies that have taken it upon themselves to develop and perfect it. 

Identomat’s proprietary technology was built to facilitate an omnichannel presence, ensuring that customer onboarding and the overall customer experience are smooth, intuitive and seamless. 

Have a chat with our team and tap into their experience regarding this very technical and sensitive issue. Remember that managing to set up a robust omnichannel verification process will help your business with:

• Cost reduction for fraud investigation
• Higher customer satisfaction
• Reduction in reputational costs
• Decrease in direct monetary losses due to fraud

Looking forward to chatting with you! 

We come bearing some exciting news: Identomat has been selected to participate in the pre-Disrupt 2020 pitching masterclass, Pitchers & Pitches! Our company will be one of 6 startups to participate in this high-profile event with our CEO, David Lomiashvili representing us at the event.

This fintech gathering brings together six early-stage startups with a panel of top venture capitalists and savvy TechCrunch editors, for a rapid-fire pitch competition with comprehensive advice to turn the pitches into the key to unlock the opportunity.

The participants have been selected from exhibitors in the Digital Startup Alley, and are now putting final touches to their pitches. The judges will critique each pitch and offer tips to sharpen it to perfection.   

The prize? The winning startup will get an exclusive coaching session with cela, a company that brings together early-stage startups and accelerators/incubators in order to help them grow and expand. 

The panel of judges waiting to be impressed includes two top VCs — Konstantine Buhler, partner at Sequoia Capital, Anne Gifford, investor at Tusk Ventures — and two pitch-savvy TechCrunch editors, Anthony Ha and Darrell Etherington.

The best part? The master class can be watched online, and the tickets are FREE. You can REGISTER HERE and watch the event at at 4 p.m. ET / 1 p.m. PT. Free advice from experts of this caliber does not come by often, and we’re more than ready to take notes, learn, grow and take the next step in our journey.

Startups need as much advice, guidance and feedback in the early stages of their lifetime in order to pivot, adapt and grow. Here at Identomat, we don’t take events like this for granted. It’s an amazing opportunity to show the world what we have been working on relentlessly for the past couple of months and at the same time, a chance to learn from some of the brightest minds in the industry. 

May this be the first of many similar events. See you at the masterclass!

According to McKinsey:

• 110 billion hours could be potentially saved through streamlined e-government services, including social protection, enabled by digital ID.

In a different report by McKinsey, these digital identity stats come to light: 

• In Estonia, over 30% of individuals vote online, of whom 20% say they would not vote at a physical polling place.
• In 2030, digital ID has the potential to create economic value equivalent to 6% of GDP in emerging economies on a per-country basis and 3% in mature economies, assuming high levels of adoption.
• The state of adoption of digital ID is mixed, indicating room for improvement and growth. Forty or more national or non-national digital identity programs exist today.

These stats reveal a few important things about the future of digital identity verification:

• It has untapped potential
• Its value to the private and public sector is unquestionable 
• It’s something that will continue to develop over the coming years

Today, we will investigate 6 trends that will drive digital identity in the years to come. 

Digital Identity Reason #1: Mobile-First Solutions

52% of global internet traffic is mobile. (Statista)

The way we consume the Internet is officially, more than 50% mobile. This is a trend that won’t decelerate any time soon. 

Tech giants such as Google frequently drop hints about the growing adoption and potential of mobile usage. 

This reality is something that will directly affect digital identity solutions moving forward. 

Much like responsive web design has been integral for the digital viability of businesses, adapting, adjusting and streamlining identity solutions for mobile, will be key.

Digital Identity Reason #2: Security, Security, Security

Securing personal data and information has been one of the hottest topics across the globe for the past two years. 

These are the events that have brought security at the forefront of the tech world:

• Cambridge Analytica scandal - Facebook’s biggest mishap to date saw millions of user profiles collected without consent by Cambridge Analytica for political advertising. 
• Canva - Graphic design tool Canva endured a cyber-attack that exposed email addresses, usernames, names and cities of residence of their clientbase. 
• Sina Weibo - China’s version of Twitter suffered one of the most notable data breaches to date. The real names, site usernames, gender, location, and phone numbers of 172 million users were auctioned for sale on the dark web.

The General Data Protection Regulation of May 2018 (GDPR) for the European Member States is a great sign of where things are headed. 

The GDPR’s main goal aims to give EU citizens more control over their own personal data, improving their security both online and offline.

The past couple of years have seen a global turn towards legislation that will secure digital  identity and it’s a trend that will continue picking up steam. 

Digital Identity Reason #3: Smart Cities

It started with the smartphone - a device that gives us access to digital versions of our finances, entertainment and communication.

It continued with smart houses - a house that obeys the smartphone and allows us control over the TV, heating, water temperature, music and so many other amenities. 

Now, the next step to this digital evolution is the smart city - an urban area that through the use of the internet can automate services and resources that previously needed manual involvement. 

How does digital identity feed into that? It’s the key that unlocks the smart city. 

Digital identity in conjunction with e-government can unlock the true potential of cities, making it possible to achieve a more luxurious and seamless way of living. Here are two examples:

Example #1: Healthcare

We are turning to healthcare for an example as it is something everyone can relate to and it can shed some light on the meaningful impact of digital identity to society.

Imagine a world where medical practitioners can access detailed medical records whenever they need them, while patients can be tracked in the comfort of their own home and supplied the right medication at the right time. 

Healthcare is by nature a very admin-heavy sector and the introduction of a digital identity can surpass the admin hurdles and create a simpler path to healthcare services. 

Example #2: Parking

This might seem as something trivial, but it's more of an example showcasing the potential of digital identity rather than the actual parking solution. 

Picture a scenario where you park in dedicated parking spots and your bank account is automatically debited with the parking fee. No parking ticket, no machine, no manual labour. 

Digital Identity Reason #4: Public Authorities Assume Responsibility

Digital identity exists as a product or a service in the private sector but the truth of the matter is that in order to become a legitimate idea, governments need to be actively involved. 

Here’s an example of what authorities can do. The European Union’s eIDAS Implementing Regulation (2015/1501) established that the minimum data set of unique identity attributes for a natural (i.e. a physical) person: 

• Current family name(s) 
• Current first name(s)
• Date of birth
• A unique identifier which is as persistent as possible in time 
• Place of birth
• Current address
• Gender

This is merely an example of what is expected of the government. In order to create a viable  digital identity ecosystem with strong privacy and security safeguards, it is necessary to have: 

• Statutory regulation that will clearly define the reasons for the processing of personal data.
• Enhanced security requirements and sanctions for data breaches and security incidents in general.
• Protocols and standards that empower government bodies to oversee procedures and incidents of data breaches. 

Government and international governing bodies need to be fully immersed in the definition, application and management of the digital identification process if this is going to flourish. 

Digital Identity Reason #5: Millennials Will Drive The Change

The millennial generation is disrupting the digital identity field and is considered to be the main driver behind this change. 

The IBM Security : Future of Identity Study surveyed nearly 4,000 adults from across the U.S., Asia Pacific (APAC) and Europe and the findings are eye-opening: 

The study showed that while 75% of millennials are at ease with using biometrics today, less than half are using complex passwords, and 41% reuse passwords. 

Millennials are trending to become the largest generation in today’s workforce. Their input and preferences regarding digital identity will directly impact the way technology companies develop their products and services. 

Takeaways

The industry is changing in the near future and we’ve compiled the reasons this change will come about: 

• Mobile-First Solutions
• Security
• Smart Cities
• Public Authority Involvement
• Millennials 

Our team here at Identomat is always open and available to discuss the possible impact these changes might have on your business and bottomline. More importantly, our team is equipped with both the knowledge and the experience to advise you about the most suitable course of action.  

We are excited to announce that the Identomat team will be attending TechCrunch Disrupt conference, which will take place on September 14-18, 2020. 

We had a perfect headline for this announcement, had the year 2020 gone differently. If it was not for COVID, we would have written something like “San Francisco Calling”, or ‘When you’re Going to San Francisco...”, to announce our participation in one of the industry’s hottest events, TechCrunch Disrupt 2020. And we’ll still be doing that - albeit in a virtual format, as Disrupt 2020 is going virtual this year, due to the global pandemic. 

Here’s a word from the organizers: ‘As you can imagine, this is largely due to the impact that the coronavirus has had on the world. But it also gives us a chance to make our event even more accessible to more people than ever before, and we’re incredibly excited about that. And Disrupt will stretch over five days — September 14-18 — in order to make it easier for everyone to take in all the amazing programming.‘

Identomat will be exhibiting in Startup Alley, and we are incredibly excited to present and pitch our AI-Powered KYC and Identity Verification Technology. Virtual or not, what’s more exciting for a fresh tech startup than presenting its brand and technology at the event that had launched the glory of brands like Dropbox, Cloudflare, and Fitbit, to name a few? 

As Disrupt puts it, ‘Zuckerberg, Benioff, Musk, Kalanick, Mayer, Dorsey and many other startup stars have been on the Disrupt stage long before they were in the headlines. TechCrunch continues to keep the pulse of the startup world and knowing which rising stars to cast for the bright lights of our stage is what makes Disrupt the must-attend event for the ecosystem. Disrupt delivers for founders who want to master Silicon Valley’s equations and provides an experience for enthusiasts who want to be a part of what's happening and relevant now.’

‘Kicking off Identomat’s publicity at Disrupt 2020 is absolutely invigorating”, says Identomat’s CEO David Lommiashvili. “It’s true, we envisioned introducing the company to the world in the format of real-life interactions with the audience, but, after all, the technology gives us luxury to make the most of the launch even in these tough times.”

Stay tuned as we'll be bringing you full TechCrunch Disrupt 2020 event coverage.

If it wasn’t obvious that digital identification procedures were becoming a focal point for businesses, the Coronavirus pandemic made sure to shed some light on it. 

During the lockdown, companies turned the online key to full blast and it didn’t take long for the digital identification part of the equation to reveal its importance. Companies need a robust, trustworthy, and seamless digital onboarding process in order to have a fighting chance in the digital world. 

Data scandals such as the Facebook scandal and the Marriot data breach are perfect examples that even the biggest players in the game are susceptible to online threats. Finding the answer to the security conundrum is a never ending battle for players no matter of size and experience. 

It seems that if there’s ever going to be a sustainable solution to this problem, it’s going to be regulation. In order to create a secure data-processing world, digital identity needs regulation to be its ally and slowly yet steadily, build a framework where this technology can thrive. 

Today, we’ll investigate the current regulatory environment surrounding the technology and the friction it causes with user experience. 

Comfort vs Safety: A Neverending Story

This idea isn’t new - the safer something is, the longer it takes, the more it costs and the less fun it is. The most advanced and latest iteration of digital identity verification is video KYC in conjunction to liveness checks. 

This is definitely a step up from the humble beginning of online KYC, but it’s still far from perfect. These processes are usually expensive to acquire and you are essentially sacrificing a slice of comfort in the alter of safety.

To put it simply, the process is still long and not particularly enjoyable for the end-user. 

Financial Sector Can Act As a Guide...of Sorts

The financial sector is one of the most highly regulated sectors regarding KYC, AML and digital identification. Here are the most notable FI regulations:

• AMLD6 - The European Commission’s Latest Directive on AML
• The FATF Guidance on Digital Identity - A guide to help governments, financial institutions, virtual asset service providers and other regulated entities determine whether a digital identity (ID) is appropriate for use for customer due diligence (CDD)
• eIDAS (electronic IDentification, Authentication, and Trust Services) - An EU Regulation that sets out rules for electronic identification and trust services. These services help verify the identity of individuals and businesses online or the authenticity of electronic documents

As you can see, the financial services sector is not leaving anything chance. It seems that this would be the ideal place to start a digital identity regulation crusade, right? Yes and no. 

Yes, it is a good place to start because the financial sector has been proactive and has paved the way for setting industry standards. No, it’s not a good place to start because despite it being a heavily regulated sector, financial institutions “boast” the biggest scandals and mishaps. 

A recent study from Juniper Research showed that businesses in eCommerce, airline ticketing, money transfer, and banking services, will cumulatively lose over $200 billion to online payment fraud between 2020 and 2024. 

Numbers like that do make you scratch your head and wonder why fraud is escalating at a crazy pace when more and more regulation is set in place to prevent exactly that. If we had to create a reasonable argument as to why this is happening, our answer would go like this. 

It’s a matter of speed. The speed at which regulation is created, but most importantly enforced, is much slower than the speed at which fraudsters are able to decipher and break through the newest technology. 

If the digital identity sector has anything to learn from FI regulation, is that it needs to be more flexible, adaptable, and quicker to respond. 

If you’re looking for a good sign on where things are headed, here’s one. 

The European Commission recently launched a public consultation on the eIDAS regulation, taking into consideration the latest technological and policy developments, such as the increased reliance on doing business online.

Want another one? 

Onfido’s latest report calls for a unified EU regulatory framework for digital identity verification. A system that supports different use cases across different industries. 

Signs are promising but the volatility of this industry will never let it take a breather. Regulation is a huge factor in how vendors and technology companies will evolve their offerings. What will happen remains to be seen but you can rest assured we will be here to pick it up and relay it back to you. 

In a business world where finding a unique selling point is as hard as finding a needle in a haystack, digital identity verification might just be the market with the most untapped potential. 

Digital identity verification has long been seen as a necessity rather than a business driver. A process deemed obligatory for the operation of any business with an online presence. 

The coronavirus pandemic came to change this notion completely. Businesses were forced to operate remotely and embrace the online world, putting even more weight and emphasis on digital identity verification. 

Suddenly, onboarding customers from remote locations became a business driver and an area that could literally make or break your business. Looking closely at recent stats and surveys, it becomes very apparent that digital identity verification is a deciding factor in whether customers choose to stay with your brand. 

The stats show an impressive inefficiency of the current onboarding methods which means only one thing: opportunity. The market is currently underserved and the businesses that manage to figure it out first will be the ones to come out victorious. 

Now let’s look at some stats.

Digital Identity Verification is a USP in The Making

IDology’s Third Annual Consumer Digital Identity Study has revealed some impressive stats regarding the ineffectiveness of the current identity verification process and its impact on business: 

Percentage of American adults who abandon the signup process for a new online account: 

• 2018 - 42%
• 2019 - 37%
• 2020 - 48%

Here are more stats that highlight the opportunity at hand: 

• 57% of online adults are extremely worried that they will be victims of new account fraud (NAF)
• 2/3 of Americans want companies to do more to safeguard their personal information 
• 77% of participants are more likely to do business with a brand that uses advanced digital identity verification methods

According to a report by McKinsey Global Institute (MGI), using digital ID verification processes could reduce customer onboarding spending by approximately 90%.

We could keep unearthing stats and surveys for you but it’s not hard to get the gist. People value the onboarding process and give it more attention than you think. 

If you are of the mindset that this is something customers have to do in order to open an account, which means it doesn’t matter how arduous or unrefined the process is, you’re mistaken. 

People have a choice and they won’t hesitate to abandon their online verification process if they find it too challenging in order to give another vendor a shot. 

Here’s where your mind should be at: 

• People are seeing the online verification process as a “test” of whether they will stay or not with the company
• We, as a company, should revisit the process and try to make it simpler, easier, and faster
• User experience and design should be driving the rethinking exercise
• Let’s turn digital identity verification into a USP
• We should be tracking conversion rates and measuring at which part of the process people are falling off in order to fix it

Successful businesses are the ones that focus and execute on details and take every opportunity they get to become better. Customer service, digital identity verification, and payment checkout are parts of almost every company in the world and the reason why companies don’t pay as much attention to them. 

This is where the opportunity lies. Taking something the whole world is overlooking and redefining it. 

Trust is Not Bound To One Location

If we had to play the word association game, “trust” would be the first word that comes to mind when talking about digital identity verification. The digital identity verification process is essentially a trust-building exercise between company and client. 

The company is trying to verify whether the client is eligible to do business with and the client is gauging comfort, offering, and value. 

To validate this theory comes a recent  PwC survey showing that only 25% of consumers believe companies handle their sensitive information responsibly. Additionally, 87% will choose a competitor if they don’t trust a company to handle their personal information as they should.

Achieving to automate and streamline this process won’t just get you brand loyalty but it will open the doors to acquiring new business. Trust knows no boundaries and tuning the digital identity process into your USP will be a driver for new business.

It’s the passport every business is looking for in order to operate globally. Building such a transparent, trustworthy onboarding process gives customers all around the world the confidence to place their faith in you.

But how exactly do you build that solution?

Finding The Right Dance Partner 

The theory is great - turn the digital onboarding process into your USP. How do you it, though? Where do you start? Where should you be looking at?

The answer is simpler than you think - find the right technology provider. Digital identity verification is a beast of its own and a breed of technology that’s developing fast. To try and do it on your own would be an entirely new business venture in its own right.

Thankfully, the eKYC market is growing and the choice is aplenty. Before you take a shot at a prospective provider, make sure they tick some boxes. Make sure they bring to the table a solution that fulfills your needs and will truly give you a USP. 

What you should be looking for in your digital identity verification provider are the following: 

• Agility - The ability to tweak and tailor their offering to your needs
• Proprietary technology -  Someone who created their platform from scratch. It shows skill, dedication, and knowledge. 
• Evolution - A company that enhances and develops its offering as time goes by. 
• Constant support - Look for a company that doesn’t sell you a product, it helps you find a solution. Meaningful customer support is as crucial as the platform itself.

Our team here at Identomat is always available for a chat. Reach out and start a conversation that might change your company’s onboarding process forever. 

We’re passed the halfway point of 2020 but it might as well be the year 2023 with all that has transpired this year. 

From Brexit and the US-China trade to a worldwide pandemic that’s still spreading insecurity and volatility, we’ve been through a lot.  

To try and predict what the future world for Digital ID, or any other topic for that matter, is indeed optimistic on our part. What we’ll do instead of predicting, is engage in informed guessing, based on the information we have right now. 

Let’s dive right in.

1.Access To Data Is The Name Of The Game

We might be living in the golden age of information, but when it comes to KYC/AML, Google will simply not do the job. 

When it comes to identity verification, anti-money laundering checks, and fraud prevention, companies are looking for information that is not readily available on the world wide web. When conducting a background check, a company is usually looking for information in:

• Corporate registries
• Sanctions lists
• PEP lists
• Government documents 
• Dark web

Access to these information sources usually requires passwords, verification steps, and several other highly impenetrable steps. Couple that with the fact that this kind of data is spread across different territories and languages, and you immediately realize that accessing data is far removed from a simple Google search. 

Googling information for KYC purposes might sound laughable to you but it’s a sad reality. A recent survey by KYC/FinTech powerhouse Arachnys has revealed that 85% of AML & KYC analysts use Google for due diligence purposes. 

The number is staggering and it goes to show that we’re still at beginning of a trend that will change the way digital identification is executed. 

2021 onwards will probably see digital ID verification companies partnering with FinTech platforms and vendors such as Arachnys in order to broaden their access to data. Digital ID providers will essentially have to enhance their offering by not just identifying that the person who they are onboarding is who they’re saying they are, but also ensuring that they have a past that doesn’t incriminate them or make them a threat for the company in any way.

2. Artificial Intelligence Will Continue To Drive The Industry

Much has been said about AI and the eKYC sector and believe us when we say that the hype is real. Artificial Intelligence has been commercialized and commonly accepted as the technology that will drive the sector forward for years to come. 

The FATF Guidance on Digital Identity was a major step in normalizing and legitimizing AI within the digital ID community but there’s more to come where that came from. 

All you have to do is look at the White Paper on Artificial Intelligence: a European approach to excellence and trust from the European Commission and you quickly realize that this is not a trend that will spike and fall. This is the new state of affairs. 

What will become more apparent in the years to come, is the human role in the digital ID process. A common misconception about AI, in general, is that it replaces people in the workplace. 

This couldn’t be furthest from the truth and it’s surely not the case in the KYC vertical. As AI continues to evolve, so will the role of compliance professionals. 

The space of Behaviour Analysis is becoming more and more prominent as a result of AI use in ID verification. Companies are now trying to understand their users and create a balance between security and convenience. 

Let’s give you an example. 

If you buy your lunch from the same place, every single working day and you are suddenly buying lunch in another country, the system will be able to pick up on the irregularity and immediately request an extra layer of identity authentication.

3. Biometrics Are The New Tech Frontier To Look Out For

For those of you not familiar with the term, biometrics are processes of identity verification that identify physical and behavioral patterns. Iris recognition, face recognition, and finger geometry recognition are some of the most popular biometric examples. 

Biometrics became a prominent topic of discussion during the coronavirus pandemic. The social distancing and remote working conditions enforced in most major markets created a breeding ground for online fraud. 

This new state of affairs created the need for new, improved digital identity solutions. 

Enter Biometrics. 

This new breed of technology is coined to be the ideal solution for the situation created by the virus for a number of reasons. First and foremost, it provides an extremely high level of security and assurance as everyone has access to a unique set of biometrics. It makes it virtually impossible to steal or fake someone’s “credentials”.  

Then, there’s user experience - an area where biometrics excel with their convenient and fast offering. Users can simply use their phones to scan their physicals characteristics and give the platform the data is needs to confirm their identity. 

The seed has been planted and it seems that 2021 onwards, biometrics will start to become even more of a commercial solution. 

According to Technavio, by 2024 the demand for mobile biometrics and m-commerce, combined with the technology’s efficiency in preventing fraud, will be the main driver for the increase in the global mobile biometrics market. The estimated increase is $15.63 billion at a CAGR of 19%.  

Not only is the industry set to boom in terms of commercial demand and supply, but regulation will come into play too. The regulations surrounding AML and KYC, including 5AMLD and 6AMLD, make provisions and have clear pointers for remote authentication, opening the door at biometric usage even more. 

Recap

There you have it: an informed assessment of what the future might hold for the digital ID sector. If history is anything to go by, you can never be sure about what’s in store in business but what you can do, is prepare. 

Companies that had remote working protocols in place where the ones to do well during the crisis, showing once again how being proactive will always serve you well rather than be reactive. 

Whether these trends will pan out, only time will show but what you can do, is consider them in your planning going forward.

The process of vetting customers before onboarding them is not a novel idea. 

Know Your Customer (KYC) and Anti-Money Laundering (AML) processes have been around for a long time but since merchants have started moving their businesses online, the world of KYC is changing. 

Now, businesses need to factor in the digital element of these processes and embrace the era of eKYC and online identity verification. Let’s dive right into it. 

eKYC is Becoming a Regulatory Prerequisite 

One could argue that a few years back, electronic know-your-customer processes were nice to have. Today, that is no longer the case. 

The dynamic regulatory environment is asking more of compliance teams and the only way to stay in line with these demands is through eKYC. Automating the online verification process is not just a sales tool - its meaning to the company goes well beyond onboarding clients faster. 

FAFT’s guidance paper for digital ID systems is a prime example of that. The paper paves the way for regulatory technology and eKYC. 

Then you have the AMLD 6. The Sixth Anti-Money Laundering Directive opens up the scope and money-laundering offenses list, creating more work for compliance teams around the globe. 

If you take into consideration that these events took place in 2019, it becomes very apparent that sorting out your compliance process isn’t really an option, it’s a necessity. 

eKYC is capable of automating previously manual procedures, processing more information in less time and ensuring that the company and employees alike, fall in line with the growing scrutiny and regulation. 

eKYC is Already Making Some Noise

The fear of the unknown is a real thing and when it comes to reimagining your entire KYC process, it’s no surprise that you wouldn’t know where to start or how to go about it. 

Thankfully, others have done it before you and there’s a lot you can learn from them.

Bank Negara Malaysia released their eKYC Guidelines draft in December 2019. On June 30th, 2020, the Bank took the next step and released the first part of their official Electronic Know-Your-Customer (e-KYC) Guidelines. 

Here’s one of the many important points made in the document: 

“e-KYC solutions may utilise artificial intelligence, machine learning, or other forms of predictive algorithms to ensure accurate identification and verification. This may result in the automation of the decision-making process for customer identification and verification, thus reducing the need for human intervention.”

The significance of such moves is massive as it shows that eKYC is no longer an idea, but a plausible, enforceable and very much real solution to digital identification and customer onboarding. 

eKYC Cuts Costs & Increases Profit Margin For Companies

Companies exist to make money and there’s no other way around it. eKYC can be a major contributor to that cause and there are facts to prove that. 

A recent World Bank report points out the reduction in average verification cost per customer from $23 to a staggering $0.50. 

If that’s not enough to prove the jaw-dropping effect of eKYC on the businesses’ balance sheet, then how about this? Electronic customer verification will take a few seconds to take place compared to 5-7 days when done manually. Jaw-dropping. 

Customer Acquisition or Customer Retention? How About Both?

It’s a rare phenomenon to come across a piece of technology that serves as both customer acquisition and a customer retention tool - eKYC does both. 

Onboarding customers has traditionally been a customer acquisition nightmare for the following reasons:

• It required the physical presence of the client in opening a new account
• It was time-consuming
• It was complicated

Companies would invest a lot of money in their marketing efforts, driving interested clients to their websites/physical store, only to have them drop out at the onboarding stage. 

Enter eKYC. 

By digitizing the process, companies are essentially investing in a conversion tool. The onboarding process is the first real interaction between the company and the client and the first real opportunity to win them over. 

By offering them a fast, easy and intuitive process, eKYC becomes as much of a sales channel as it is a compliance one. 

And then there’s retention. 

Online identity verification is your first retention test. Getting customers over the line and making part of your company’s ecosystem counts as a retention win as you’re essentially earning their trust. 

KYC is by its very nature a very tedious and tiresome process. Managing to turn it into a quick, seamless procedure will only win you brownie points. 

Conclusion

The online identity verification frontier is no longer a novelty, but common practice. Companies that understand the value-altering capabilities of this new technology have a head start over their counterparts.

In an era where getting an advantage over competition comes at a premium, eKYC gives you the opportunity to increase the value of both your brand and offering. 

Our team here at Identomat is focused on building identity verification for businesses from the ground up. We don’t create products that we then try and sell to businesses. We build products according to business needs and then help businesses implement them. 

Reach out and let’s start putting together the eKYC process that will propel your business.