Identity is the most unique characteristic of a particular individual. These aspects of human personality serve as a form of identity and help in verifying the user. Identity of customers is significant for enterprises since it adds value to end-user satisfaction. Online solutions for identity verification are becoming increasingly popular over a wide range of industries including FinTech, e-gaming, banking and blockchain, and the medical sector. A review by Statista states that the overall income produced by identity verification services is nearly 4.93 billion USD and will increase to about 18 billion USD in 2027.
Identity verification solutions have several products which assist online businesses to carry out their daily operations including customer onboarding and secure transactions. Facial recognition is a popular technology when it comes to validating user identity over the internet. It incorporates the facial features of the verifying user, and the photo on an identity document to perform verification checks to confirm customer authenticity.
Importance of Identity in Facial Recognition
User identity is important because of the two reasons: (i) It is the most effective means of knowing your client which creates trust at both ends and reduces the threat of potential impersonation. (ii) It helps practice worldwide financing regulations sanctioned by RegTech authorities like the Financial Crimes Enforcement Network (FinCen), European Union (EU) and Financial Action Task Force (FATF) which help in preventing illicit funding of terrorists and other money laundering activities.
Facial recognition systems take into account the facial identity of the user to carry out safe and secure verification procedures. These verification solutions create a faceprint against the user’s facial features which serve as a reliable means of complying with KYC standards and AML obligations. The importance of both is highlighted below:
Know Your Customer (KYC) is a collection of rules and regulations which a business utilizes to perceive their customer’s identity in the best possible way. Online enterprises usually hire the services of identity verification vendors to secure and automate customer enrolments. This not just helps reduce manual labour cost spent on length verification procedures but also helps cut on operational expenses for that business. Thus, KYC strategies guarantee that the client is not a potential fraudster and a threat to the enterprise.
AML, otherwise called Anti Money Laundering, is a combination of globally acclaimed rules which is administered by the EU and other notable authorities. These are useful in protecting a business against criminals who wish to harm a business by utilizing unethical practices. The fundamental goal of these standards is to reduce monetary crimes like illegal tax avoidance and criminal financing which are a constant threat to financial institutes.
Facial Recognition Applications
Facial Recognition vendors offer a wide range of services which can be used to verify customers at the ease of their homes. You might be surprised but facial recognition technologies could actually perform customer identification by using a set of parameters including facial features and identity photos on official documents. The verification process works like this:
- The user is asked to display their face in the webcam or their smartphone camera, while the facial recognition technology scans unique characteristics and makes a faceprint against their identity.
- Then, the user is prompted to display their identity document with a genuine photo of themselves for identification purposes. The facial recognition system uses OCR to assess document elements and extracts relevant facial information.
- Identity checks are performed by comparing the photo acquired from the identity document and the faceprint saved in the first place.
- The verification result is successful if both images have enough correspondence for satisfactory accuracy. The results are shared with the clients as soon as the process is complete. This way, both the document authentication and the facial identity of the client is validated in a single process.
To sum it all up, facial recognition technology provides a good means of complying with international regulatory KYC/AML standards and performing secure customer identification.