The three key pillars of financial services are security, compliance, and trust. It is key for all financial institutions to stay in line with these three pillars. These help to develop not only better relationships with customers and clients but also boost legal compliance. One of the easiest tools to effectively set up these regulations is EIDV. Electronic Identity Verification (EIDV) is a vital tool for improving customer onboarding, avoiding fraud, and guaranteeing regulatory conformance.
Understanding Electronic Identity Verification
Electronic Identity Verification or EIDV refers to a system of processes that work together to harness advanced technology. This helps to verify the authenticity of individuals’ identities in the online world. Electronic identity verification goes beyond traditional methods and takes the lead by far. This is done by utilizing electronic verification systems to confirm identities, preventing unauthorized and limited access and reducing the risk of fraudulent activities.
Today, the electronic identity verification system market is rapidly growing. With a current value of $9.5 billion, the market is growing at a CAGR of 14.4%. When it comes to banks and other financial institutions, EIDV is essential as per various different regulations and laws. There are various external local and international bodies responsible for regulating and implementing these regulations.
Benefits of EIDV for Financial Institutions
Financial institutions are not banks only, but rather include a range of institutions. These include fintech businesses, brokerage firms, credit unions, and insurance companies, among many others.
For all these businesses, electronic id check is essential. Financial institutions must carry out effective electronic identity verification before new sign ups as well as financial transactions. This is important for a range of different reasons.
Enhanced Customer Onboarding
Customer sign ups on financial platforms must be run through processing systems only after thorough EIDV. A lack of proper electronic identification verification can be disastrous. Financial institutions must be well aware of who they are dealing with as well as their financial behavior. Electronic identity verifications streamlines the customer onboarding process by accelerating identity verification. This helps to speed up processes relating to account creation and also improves the overall customer experience.
Banks and all other financial institutions are subject to stringent regulations which vary according to business types. However, to a certain extent, these are basic or standard and apply to all businesses and institutions. Such regulations include the Know Your Customer or KYC and the Anti-Money Laundering or AML regulations and laws, among others. Electronic identity verification helps to make sure that banks stay in accordance effectively and wholly with all these regulations. Since any error can have disastrous effects, law of compliance is punishable by fines, penalties, etc. Thus, EIDV reduces the risk of penalties and legal consequences.
Financial institutions, especially banks, are particularly susceptible to scams and frauds. These businesses act as prime targets for fraudulent individuals because of the volume of money they deal with. Where fraudulent activities are a major threat, electronic verification services step in to keep the business and users safe.
EIDV verifies the authenticity of customer information. When a bank or any other business is aware entirely of who its users are as well as about their personal information, it is less likely for it to become a target of criminal activity. Criminals don’t act when their identity is bare. This can prevent account takeovers, data breaches, and unauthorized transactions.
Electronic identity verification systems take charge to evaluate the risks that may be in association with specific clients, or modes of transfer. This helps in assisting banks in making smart and knowledgeable choices and decisions while providing financial services, loans, or credit.
Building Up on Operational Efficiency
Financial processing is extremely extensive. There is almost a never ending number of data involved. Add to it manual processing for identity verification and this can multiply the burden. Additionally, if the number of employees aren’t enough this can result in major errors. For example, an employee who has to work overtime everyday and is under the burden of excessive work is going to make human errors. When everything isn’t well sorted out, business efficiency suffers. Furthermore, customer experience also takes a serious hit.
Electronic identity verification helps to accelerate and automate such exhaustive processes. This frees up important resources including both time and money for other crucial duties.
Fostering Trust and Building Reputation
An institution that does not authenticate its users effectively, is never going to have users trust it with their own money. Nobody wants to lose their money to sources who can’t even promise safe tracking in case of an issue.
Customers, investors, and stakeholders, etc. are all much more likely to believe in a business if the environment associated with it is secure and compliant. Through electronic verification of identity, we can ensure that every onboarding user is legitimate. When a business has a good reputation, the audience naturally shows inclination towards it. This ultimately boosts profits.
Electronic Identity Verification or EIDV solutions are an essential step in a modern financial institution’s onboarding process. It offers benefits that go far beyond security and extend to regulatory compliance, risk management, and operational efficiency. In today’s age when online interactions are more valuable than real-life interactions, EIDV ensures that financial institutions remain steadfast against threats all while delivering safe and secure user experiences.