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KYC Best Practices02 Jun 2024

Top 10 Identity Verification Methods for Businesses in 2024

Emmanuel Agwu

In 2022, over $189 million was lost due to identity theft in the US alone, a trend which has been on the rise within the last two decades. This makes Identity verification a key part of all operations for businesses in regulated industries. As banking and financial transactions become more digitised, identity verification methods need to be put in place to ensure the system is not taken advantage of by criminals. 


Let’s discuss some of the key identity verification methods available for businesses in 2024. 


What is Identity Verification?


Identity verification refers to the process of validating a customer's identity to ensure they are who they claim to be. It could involve document verification, which is verifying that a document provided by the customer is valid, and legally theirs to use, or a government KYC check, which verifies the information on the document against government databases. Businesses could employ both processes for the best outcome. 


Identity verification is a key part of Know Your Customer (KYC) and Anti-money laundering (AML) compliance today. It sets up the very first defence against money laundering activities by acting as a deterrent against malicious activities like identity fraud and identity theft.

Top 10 Identity Verification Methods for Businesses in 2024

There are several identity verification methods and systems that businesses can employ today. It includes:

1. Document Verification

Document verification is one of the most popular identity verification methods today, especially in financial institutions that have strict KYC requirements. The process typically involves using ID scanning software to capture, extract and verify information from a customer's physical or digital ID. Only government-issued IDS are accepted in this method such as National ID, passports, and driver's licenses among others.


The ID scanning software proceeds to cross-reference the key information on the ID with the government standard to ascertain its authenticity. Security features such as watermarks, machine-readable zones (MZR), holograms, etc, are read and authenticated using machine-learning algorithms against global databases to confirm their legitimacy. Verification solutions can also read magnetic strips and barcodes in documents. 


For example, Smile ID document verification solution empowers financial institutions to scan and verify over 8500 identity documents across 226 countries globally. Book a free demo to learn more.

2. Biometric Verification

Biometric verification makes use of the natural features of an individual such as their fingerprint, voice or facial characteristics to verify their identity. This identity verification method is very convenient to use after initial setup and ensures that fake actors are not able to game the system. Examples of biometric authentication include fingerprint recognition, facial recognition, iris scanning, voice recognition, etc.


Biometric authentication can also be used as a form of two-factor authentication to protect customers from account theft and other vulnerabilities at transaction points. Smile ID biometric authentication solution matches user selfies to registered photos with 99.8% accuracy. Book a free demo to learn more

3. Database Verification

Database verification works by verifying customer information against a reliable pre-established database. It could be a database of customer information that was initially collected or a government database. When using government databases, it is often referred to as a government KYC check. This makes it one of the most reliable identity verification methods especially when verifying user information against government databases. 


Document verification along with database verification can be combined for a more enhanced due diligence procedure. With Smile ID government KYC check, businesses can verify personal information directly from the government with KYC API connections to 20+ government ID databases across Africa. Book a free demo to learn more.

4. Knowledge-based Authentication (KBA)

Knowledge-based authentication (KBA) verifies a customer's identity by demanding a response to preset security questions. These questions and their respective answers are generally chosen and provided by the customer at an initial date, and can then be used in the future for KBA. Examples include “What is the name of your pet?” Or “Who was your favourite teacher in elementary school?”


Although KYB is very simple to set up and easy to use by customers, it has a low-security risk, especially due to the advancement of social engineering. Customers might have subconsciously given away that information on social media for example.

5. Two-factor Authentication

Two-factor or multifactor authentication is very common and widely used in several applications. It employs different methods to validate a customer's identity like sending a code to the customer's registered email or phone number and requesting that they provide it. Although the method is simple and easy for customers to use, it requires their data to have been collected at a previous time. 


Two-factor authentication is especially useful for key account activities like resetting passwords, creating a new account, and logging in and is not necessarily a key identity verification method because it verifies the customer through what platforms they have access to and not exactly their identity, unlike document and database verification. 

6. Credit Bureau-Based Verification

This method relies on data from one or more credit bureaus to verify a customer's identity. Credit bureaus store a large amount of customer information with which they evaluate and assign a credit score. This includes their name, address, national numbers, etc. Such information can be used to verify the customer's identity by a third party through matching the information the individual provides with what is captured on the credit bureau database.  

7. Knowledge-based verification (KBV)

Knowledge-Based Enrollment (KBE) is a method of identity verification that leverages pre-existing information known to both the institution and the individual. This information is typically gathered during initial account setup or through historical interactions with the service. 


During the initial registration process, detailed information about the individual is collected. This can include personal details, account activity, transaction history, security questions, and other relevant data. When identity verification is required, the system generates a series of questions based on the pre-collected information. These questions are usually dynamic and vary depending on the data available.


Knowledge-Based Enrollment (KBE) and Knowledge-Based Authentication (KBA) are both methods of verifying identity-based on information known to the user, but they differ in their applications and the contexts in which they are used. KBE is primarily used during the initial account setup or registration process. KBA, on the other hand, is used during the authentication process.

8. Address Verification

This method requires proof of residence, such as utility bills, bank statements, or lease agreements, to verify an individual’s address. The customer provides such information and the company either sends physical agents to verify the location or looks up the address in the country address database to verify that the customer actually lives there. 

9. Bank Account Verification

This involves confirming an individual's identity through their bank account details. Banking information is generally reliable and is an easy way to verify a customer's identity. Smile ID bank account verification solution compares user details to the personal details returned by the bank to ensure businesses have the correct bank account owner. Book a free demo to learn more.

10. Mobile Phone Verification

This method uses a person’s mobile phone number to send a verification code via SMS or a call, ensuring the person in possession of the phone is the one verifying their identity.

Verifying Customer Identity with Smile ID

There are several identity verification methods available today for KYC processes. However, document, database, address and biometric verification remains among the most reliable for compliance, especially for digital onboarding and proper risk assessment. 


Smile ID identity verification solution empowers financial institutions to verify over 8500 identity documents across 226 countries globally. Businesses can also conduct government KYC check on customers. Our AML screening solution Our AML solution instantly screens users against: 


  • 1100+ global and African sanctions
  • PEP list of approximately 1.5 million individuals across four levels.
  • Adverse media from 75,000+ reputable news sources with a minimum of 2 news sources from every country in the world.


This way, financial institutions can easily spot high-risk customers and place appropriate money laundering prevention processes in place. 


Book a free demo to see how it works.

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