ENTERPRISE SECURITY, FINANCIAL SERVICES

How do you prove who you are? The standard documents are a driver’s license or state-issued identification card, a social security card, and perhaps a passport. But documents that prove your identity can be forged. How many documents should you need to prove who you are and for what purposes? Why is it important to be able to definitively and securely prove your identity?

With identity fraud on the rise and more and more of our lives becoming digital, it’s critical to protect our identity, especially online. Identity fraud cost nearly $17 billion in 2019, thanks to security breaches, related lost resources and revenue, and fines issued to companies not adequately protecting their data. And as the COVID-19 pandemic brought so much more of our working lives online, even more fraudulent activity occurred – more than $77 million just in “fraudulent COVID-19 schemes” in 2020.

What is Identity Proofing?

Identify proofing is a process that allows a financial institution or other business to verify a person’s identity based on their identity history, credentials, or other documents. It’s the process by which an organization verifies someone is who they say they are. Identity proofing aims to ensure that an individual’s identity is real and not fake. A person’s identity doesn’t need to be hacked or stolen to be compromised. Criminals can create entire synthetic identities where they assemble stolen or forged pieces of identifying information and form them into an identity that has been legitimized.

Haven’t we always proved our identities? Every time you go to the airport and show your passport to a security officer, isn’t that proving who you are? Yes. But there isn’t always an in-person opportunity. Businesses now have different identity proofing needs. Historically, for example, a new hire traveled to a company’s home office and provided a passport or driver’s license as proof of their identity. In financial services, banks required in-person presence to open a customer’s new account for the same reason, so identifying documents could be verified as authentic and the account created. As businesses increasingly hired remotely and banking transitioned to branchless, the need for digital identity proofing increased.

Identity proofing can now be completed using digital document capture, whereby those documents are verified against one another or some other authoritative source. That authoritative source might be anything from an HR system to a government’s identity database, depending on the situation and the organization’s need for confidence in one’s identity.

Where is Identity Proofing Required?

The digital platforms, applications, and tools all around us necessitate identity proofing. A new job, a new bank account or financial asset, a new patient in a telemedicine platform or doctor’s office, or a new student enrolling in college for the first time. Each situation requires some level of identity proofing, and other situations might range from buying a new home to buying lottery tickets. These (and a lot more) cases require one or more steps of providing proof of your identity.

Difference Between Identity Proofing and Authentication

Providing proof of your identity isn’t the same as authentication; however, these phrases are sometimes confused. Identity proofing is a process that asks, “who are you?” In some circumstances, that process can accept somewhat nebulous answers. For example, if you have ever opened a social media account or signed up for an online newsletter, you have probably had to verify that you are who you say you are. The catch is that, in some situations, it’s not hard to lie. To open a social media account, you have to provide a valid email address and then reply to a message sent to that email address. Presto, identity “proved.” Nothing is stopping you from creating a false name and email address and pretending to be someone else. Identity verification is the next step in this theoretical process. It’s the part that ensures that a real person is behind the request and proves they are who they claim to be.

Authentication compares someone’s request for access to that person’s identity that exists on file. That might take the shape of someone swiping their membership card at a fitness center or providing their fingerprint to access a secure nurse’s station.

Benefits of Identity Proofing

Identity proofing is essential because the process prevents individuals from doing something without authorization or the proper authorization. Financial institutions operate under strict regulations requiring they Know Their Customer – or KYC – to prevent theft, money laundering, financial fraud, or other crimes. Data breaches are often silent crimes that can go up to six months before they are detected. Beyond what is regulated, customers derive peace of mind in knowing they are authenticated with every banking transaction or online investment. Identity proofing is a critical step in ensuring that customers’ data, money, and identity are safe.

Biometrics can play a part in identity proofing and authentication to help make those processes more secure. Authentication platforms can ensure the validity of identifying documents (like passports). And pairing that proven identity with factors like facial or iris recognition can ensure that those requesting access to a virtual space should have the access they are requesting. The best biometric authentication platforms go even further by guarding against someone trying to spoof biometric identifiers by doing things like presenting a photograph of one’s face or a recording of one’s voice to try to bypass that security.

Future of Identity Proofing

There’s still plenty of room to streamline the identity proofing process, and Estonia may already have a foot in the world of the future of identity proofing. Described as the world’s most highly-developed national ID-card system, Estonia’s national ID card is used to verify identity for national elections, submit tax returns, and check medical records. With one encrypted chip, Estonians can use this card for digital signatures, as their health insurance card, and as proof of identity when logging in to bank accounts.

In the future, other countries may adopt similar strategies. Consider what that would mean for accessing things like medical records or creating a new bank account. Applying for secure accounts would be simplified, quick, and convenient, likely from the comfort of your home or with your mobile device. Soon, proving who you are isn’t going to just be quicker and easier. It’s going to be more secure. And that’s better for businesses and individuals alike.