IDV for Business Growth: Choosing an effective partner to drive your ROI

Incode converts good users and stops the bad with the technology and performance to back it up

Walking the line isn’t just for Johnny Cash. When it comes to compliance, it’s also the most cost-effective way.

Circumvented identity processes rolled out the red carpet for $38 billion in attempted and actual fraudulent activity at banks and financial institutions in 2021, according to a Financial Crimes Enforcement Network (FinCEN) analysis released this year. Shortcuts, erroneous and altogether missing verifications represented almost 10% of the 3.6 million Suspicious Activity Reports filed in the U.S. that year.

Knowing your customers by using proper identity verification practices not only can lessen your losses to lawbreakers as well as unwanted regulatory scrutiny, it can even add to your bottom line when done well.

In this article, we look at how identity verification (IDV) can drive a positive ROI and the importance of selecting a strong partner for this cornerstone of one of your company’s most important cost considerations.

Customer acquisition is expensive

Let’s face it: You can spend a large portion of your budget to bring in new customers, especially in a commoditized industry like financial services. To get the upper-hand for the best prospects, you need to invest a lot of time, money and effort into the up-front marketing process: You can’t afford not to convert as many users as possible from your marketing funnel to the finish line.

But you also need to maintain processes that comply with regulatory requirements, most notably the Bank Secrecy Act (BSA), the umbrella U.S. law in the anti-money laundering (AML) crusade. Among the provisions under the BSA is having a Customer Identification Program (CIP), which requires that banks and financial institutions complete various verification processes on their customers to achieve certainty that every customer is known along with any potential fraud risks. CIP forms the basis of most Know Your Customer (KYC) compliance programs at banks, financial institutions and a growing number of other industries targeted by money launderers.

Filtering genuine users from bad actors is a critical step in acquisition and one fraught with pitfalls. Too fine a mesh and you can reject valuable customers. But too broad a net and you may be left expending even more resources to ensure your company is safe and free from fraud: “Bad actors exploit identity processes to perpetrate crimes,” FinCEN wrote in its report.

Even worse, the best-intentioned processes can leave you spinning your wheels on time-intensive manual reviews. Good customers know they have many options; frustration from a poor user experience can send them searching for a new option.

Seamless customer conversion

When you are seeking a verification solution, you want to know that your money is well spent. Good customer conversion requires creativity and the nature of the verification process demands excellence.

A good user experience means that their needs have been anticipated. Does the customer want immediate access? Then you need to respond in-kind with a low time-to-verify. Does the customer need to feel comfort with the process? Then you provide prompts and security assurances.

Conversely, are their challenges fully understood? Prospective customers hit pause at the verification stage for a variety of reasons — the phone rings, a battery dies, the wallet is in yesterday’s pants. In other words, life happens. Do you have a tested method for re-engaging and reconnecting with a distracted user? Have you considered how you can deploy Artificial Intelligence (AI) tools in the effort?

Accuracy is everything

In verification, accuracy is everything. Missing a red flag can be catastrophic if, say, a fraudster gains access to a legitimate account to house their illegitimate funds. And if a simple error with an ID can mislabel a good user as a bad one, you could lose a client for life.

A dynamic verification product featuring AI for deep learning and fraud expertise can greatly increase accuracy. But anyone can re-package AI these days.

This is complex technology and it’s important to understand what you are buying. It’s even more important that your chosen product partner understands it. Sure, it may look shiny and impressive on the outside, but can anyone open the engine and tell you how it works?

The closer you can get to the nuts and bolts — or, in this case, the coding and AI inputs — the more confident you can be that it will be the right fit. Proprietary technology won’t steer you wrong. Nor will in-house AI and fraud teams who can provide real-time support when you need it. You should seek out a certified system that has aced its exams and is proud to share the proof.

When looking for a compliance partner, consider the following capabilities:

Facial recognition

“It’s all in the eyes,” goes the saying. But when it comes to facial recognition, it’s a combination of all of the features, their conversion to a mathematical blueprint, and their comparison to database images.

Some questions to ask a potential service provider:

• How many images has your platform processed?
• What is the average rate for results?
• Are you testing based on recognized government standards such as the National Institute of Standards and Technology (NIST)?
• Has the rise of Gen AI & deepfakes impacted your approach to fraud prevention?

Passive liveness detection

In this era of deep fake deception, you need top-notch preventative measures to catch criminals from the start. Passive liveness detection uses machine learning to determine if a face belongs to a live person or if it was a digital creation.

Some questions to ask a potential service provider:

• Is your technology fully automated or do users have to interact to prove they’re real?
• What role does AI play in the scanning and matching process?
• Is your process quality control certified, such as by iBeta?
• What percentage of your customers are currently completing the IDV process?

ID validation

Gone are the days when you could get into a bar using a barely plausible fake ID from a far-away state. Validating IDs is a science now and the risks of failing to do – or using sub-par software carry swift penalties from regulators.

Some questions to ask a potential service provider:

• Are you experiencing high levels of user drop-offs?
• Are you using deterministic verifications against the government systems of record or identity issuer?
• How many checks are you using to verify ID authenticity?
• How quickly can you create a new ID template if a user provides a document that is not in your supported documents?

User experience is paramount

Your customers’ comfort with your processes can make or break a relationship: You want a software solution that makes verification simple. Excess steps and unnecessary clicks can waste precious time and impact a user’s experience.

Easy

Too close. Too far. Not enough light. Not a dark enough background. Remote check deposits might look simple in the commercials, but they can be fiddly in reality. Document scanning doesn’t have to be so difficult. When it comes to IDs, smart technology exists to extract information from a simple picture, provide immediate and clear feedback for optimal document orientation for automatic capture and document detection. If you need facial verification, look no further than a selfie. Using advancements with live selfies, AI can immediately confirm it is a real person without requiring users to mimic “America’s Next Top Model” with up, down, and side profiling.

Speedy

We are conditioned to expect websites to immediately appear, rides to be ordered in seconds, and food to be delivered in minutes. We should have the same expectations for instantaneous document scanning and identity recognition. No one has time for time-intensive and temperamental uploads.

Responsive

Just like a good self-checkout can read even a crinkled SKU on your bag of barbeque chips, you want a system that utilizes automation to ensure a frustration-free user. A good verification system will have a thorough data capture that incorporates OCR, NFC and barcode and broad international capabilities to ensure extensive regulatory compliance.

Bespoke is best

Identity fraud increases businesses’ costs, damages reputation, and erodes consumer trust. When you are selecting a partner in crime-fighting, look for:

Customizability

Key to a customized experience is having a team of experts that can tailor a program to your business objectives, industry and customer profile. Proprietary technology can further ensure that you are getting the exact specifications that you need when you need it. There is no waiting for a third-party IDV provider to make updates on their own timeline. When you work directly with the developers, you should expect to get personalized solutions.

Simple setup

You turned to an expert for a reason: To avoid complications. It is only right that you receive the turn-key solution and guaranteed SLAs that you paid for. Let the specialists set it up right the first time and on time so you can focus on more mission-critical matters.

Support and security

In-house support can ensure reliability and responsiveness as well ongoing adaptation to evolving fraud threats, including systemic attacks like phishing.

Why Incode?

At Incode, we simplify the process, adapt to your industry needs, and provide unmatched support — so you can concentrate on running your business. Our proprietary technology powers a fully automated AI-first verification platform to combat even the most sophisticated fraud.

• Incode is 4x better at identifying fraud and minimizing false positives than competitors
• Incode is 3x better at converting genuine users than the industry with our highly-precise IDV solution

Enterprises and leading customer-centric companies turn to Incode when they want a user experience their clients can trust. Low friction of genuine users plus instant verification and re-engagement tools equals a successful conversion.

Instant Verification

Re-engagement tools

Raise your ROI

Want to see the impact that Incode can have? Try our Value & Growth Calculator to get a personalized report that works out how an increase in onboarded users will grow revenue while a lower fraud rate and automated verification process can lead to a cost savings.

Using your average number of onboardings, customer long-term values, and cost of fraud incidents, your free report will include outputs of KPIs including completion rate, true positive and true negative rates.

Learn more by contacting an Incode identity expert or booking a demo.