What is Identity Proofing?

Identity proofing is the process of validating and authenticating the identity of a user attempting to access a service or system. Identity proofing, also known as identity verification, establishes the existence of an identity in the actual world and that the person presenting it is the authentic owner. In financial services, identity verification is frequently focused on new or unknown consumers dealing with a bank for the first time, such as during the account opening, application, registration, or enrollment procedure.

How identity proofing works

Identity proofing is the process of determining if a person is who they claim to be. This is a critical stage in many secure transactions and systems that prevents fraud and unauthorized access. Here's a straightforward description of how identity proofing usually works: 

• Identity document verification: Determines if an ID (such as a driver's license, passport, or another form of government issued ID) is valid. 
• Biometric verification:  Unique physical characteristics, such as fingerprints or facial features, are used to authenticate an individual's identification. It provides excellent protection and ease, making it difficult for fraudsters to mimic others.
• Liveness detection: It assures that the biometric sample, such as a face or fingerprint, comes from a living person rather than a duplicate or photograph. This provides an additional degree of protection by blocking spoofing attempts.

• Knowledge-based Authentication (KBA): Generates "out of wallet" questions based on information from the applicant's personal credit file.  

• One-time Passcode (OTP) verification: Sends the applicant a one-time passcode via SMS or email throughout the verification procedure.  

• Trusted identification networks: Uses the applicant's current bank credentials to authenticate their identification and reduces friction during onboarding. 

Benefits of identity proofing

• Enhanced security: Lowers the danger of identity theft and fraud. 
  
• Regulatory compliance: Assists organizations in complying with requirements such as KYC (Know Your Customer) and AML (Anti-Money Laundering).
• Improved customer trust: Customers feel more confident knowing their identities are safe.

• Streamlined procedures: Automates verification procedures, minimizing manual labor and accelerating transactions. 

Why identity proofing is essential

Identity proofing is crucial because it prevents fraud and identity theft by assuring that people are who they say they are. This method assists organizations in complying with regulatory obligations such as KYC and AML, hence avoiding legal fines. Verifying identities improves security by safeguarding critical information and organizational assets from unauthorized access and cyberattacks. Furthermore, identity proofing enhances client trust by demonstrating a commitment to data protection, hence increasing satisfaction and loyalty. It also facilitates the safe delivery of digital services and remote work, optimizing verification procedures using new technology to ensure efficiency and dependability. 

What's the difference between identity proofing and authentication?

Identity proofing and authentication are both methods of determining who a user is; the essential distinction is at what step of the connection the check is performed. ID verification is most typically required while onboarding or establishing a partnership. A firm must ensure that this identity exists (i.e., is genuine, not fake) and is being provided by the legitimate owner by requesting further information from the claimant (most importantly, biometric verification that matches the ID document).

In contrast, authentication is reserved for returning users. A firm must constantly verify that the individual requesting access is the same person who established the relationship.