Automated ID verification

Automatically verifying someone's ID is the first building block in digital KYC & AML due diligence. So, what should you look for in the tech you use and why is it important?

Posted by: 
Alexis Fox-Mills
Jan 13, 2021

January 13, 2021

Why automate ID checks?

Verifying someone is who they say they are is square one in the Know Your Customer (KYC) due diligence process. Regulated firms can’t (and certainly shouldn’t) get a new customer onboarded until the ID documents are in and verified.

Going through a process of physically reviewing identity documents is old hat though. The days of applying for a new credit card with your passport and driving licence in hand are over.

In-person KYC is impractical in terms of time and efficiency, both for the financial institution and the customer; it’s next to impossible to physically check documents because of the pandemic; and, frankly, customers expect their experience to be digital now anyway.

Sure, some people may feel a little hesitation when it comes to sharing personal documentation online, but everyone is pretty used to it now and it’s unlikely to cause drop-offs with genuine applicants. In fact, it could be said the opposite is true, institutions may risk losing applicants if they are unable to submit information digitally. According to an article by, one of the key reasons people gave for abandoning applications for financial products was that they were asked to provide personal information by post or in branch.

What is being verified?

Financial institutions need a good, reliable way to verify a new customer’s ID online. Getting the basics right is so important because of the risk of fraud and other financial crime.

Cifas reported last year that there were “just under 190,000 cases of identity fraud” in the UK alone. Much of this ID theft was related to applications for plastic cards. Trends show that instances of fraud are only set to increase with the ongoing transition to digital financial services, online applications and automated onboarding pushing this ever forward.

Electronically verifying an official document can really cover some of the basics of automated onboarding and risk management, including for example checking and verifying names and addresses. Other, more sophisticated checks, can look for signs of forgery on an ID document. Or even instances of fraud associated with the particular device used to make the application.

The aim is to swiftly and confidently get a result for these first, fundamental checks. Then there is a clear pass or fail for the person applying for a product and the KYC or AML process can continue from there.

The right KYC tool for the job

Using a platform to automate KYC checks, such as ID verification, creates efficiency for financial services businesses and convenience for customers.

To minimise friction in this part of the due diligence process, you need to use a KYC platform that can do three things:

1.     Capture an individual’s ID document, such as a passport

2.     Access data to automatically check or match the ID document

3.     Confirm whether the check has passed or failed

The best platforms will also be ISO certified to ensure that all customer data is processed and managed securely.

Communicating with customers

Another fundamental to look for in the technology used to automate ID verification is the ability to communicate with customers and request additional documentation. Once that new document is received the platform should attempt to automatically validate the individual’s ID again.

This minimises friction and enables applications to proceed through an onboarding journey with little to no human intervention, known as straight through processing (STP). But they also mean trusted relationships with customers are initiated from the beginning.

The obvious aim is to maximise the number of applications that can be completed using STP. This delivers efficiency, better customer experiences and reduces drop offs. As we know, the number of customers who do abandon applications is impacted by the smooth running (or otherwise) of a KYC process.

The human touch

While automated ID checks and STP are great for customer experience and drive efficiency in financial institutions, the aim should never be to completely do away with human intervention. Firstly, people still enjoy interacting with other people, especially when they have questions or are unsure of something. Secondly, when it comes to ID checks, the “sniff test” i.e. an expert KYC analyst reviewing a case that doesn't seem quite right can add immeasurable value.

The aim should be to use automation in the majority of instances, ensuring a swift onboarding journey in most cases, while reserving the highly skilled and experienced compliance analysts’ time to work on cases that are higher risk. This should create the right balance within the overall due diligence effort.

Get in touch

PassFort has facilitated more than 5 million customer onboarding journeys for financial institutions worldwide. If you would like to talk about automating ID checks or digital transformation of your KYC and AML processes, we would love to hear from you - get in touch anytime!

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