How will identity verification look in the future?
Published on July 12, 2021
Summary:
The European Union recently started considering digital identity verification for all EU citizens. Many countries are proposing similar frameworks, so the identity verification process is certainly shifting online which will likely change the industry as a whole.
In this article, Dmitri Laush, CEO of GetID tries to imagine how identity verification might look in the future and which technologies will be on top.
The European Union recently started considering digital identity verification for all EU citizens. Many countries are proposing similar frameworks, so the identity verification process is certainly shifting online which will likely change the industry as a whole.
In this article, Dmitri Laush, CEO of GetID tries to imagine how identity verification might look in the future and which technologies will be on top.
The use of Blockchain
Regtech and cybersecurity experts are still arguing about the safest way to store the personal data: whether it should be centralized or decentralized. If you choose a decentralized way to store the data so no third party can have access to the sensitive information, then blockchain technology is perfect for it. It will be very difficult to hack all the data not collected and stored in one place. Maybe soon there will be regulations regarding technology used to store the data like we have now in, for instance, GDPR. Besides that, the other benefits of blockchain use for identity verification are the increased transparency due to a distributed ledger, which has enhanced security through cryptography. There could even be some common or private network on blockchain where all the client’s personal data from different countries might be stored.
Another good use case of blockchain is the use of special tokens, like NFTs, to prove your identity. Since the tokens are non-fungible, they can easily prove the holder's identity.
There is another use case of blockchain for identity verification. Right now, many European countries are looking to create digital or mobile IDs which in the future might replace physical ID cards. However, every country has its own rules and technologies. For example, Estonia has mobile ID, while other countries don’t allow it. Blockchain could be used to unify these countries in one key, so people could be able to confirm that they have a Smart ID in Estonia or a digital ID in Spain, etc., so they would all be combined into one network.
However, some experts argue that use of blockchain cannot help to detect, for example, synthetic identity, because it is basically a ledger and it can just store the data in a decentralized way. I agree with that, but it might be used in the future to solve part of the identity verification a provider needs.
Another good use case of blockchain is the use of special tokens, like NFTs, to prove your identity. Since the tokens are non-fungible, they can easily prove the holder's identity.
There is another use case of blockchain for identity verification. Right now, many European countries are looking to create digital or mobile IDs which in the future might replace physical ID cards. However, every country has its own rules and technologies. For example, Estonia has mobile ID, while other countries don’t allow it. Blockchain could be used to unify these countries in one key, so people could be able to confirm that they have a Smart ID in Estonia or a digital ID in Spain, etc., so they would all be combined into one network.
However, some experts argue that use of blockchain cannot help to detect, for example, synthetic identity, because it is basically a ledger and it can just store the data in a decentralized way. I agree with that, but it might be used in the future to solve part of the identity verification a provider needs.
The rise of automation in identity verification
Nowadays, both companies and KYC vendors understand that manual identity checks are more expensive than automated checks. Sometimes, but not always, it is also not accurate. Human error is not something rare, and even highly qualified professionals sometimes make a mistake. Also, it is hard to scale only using manual labor for identity checks; humans can only monitor a limited amount of identification documents at a time. I’m not even talking about maintenance of working spots and wages. However, sometimes there is a need to do manual checks after the automated one.
In my opinion, in the future the number of manual checks will be greatly reduced. This will lead to the development of more advanced AI algorithms and machine learning to make automated KYC checks the most effective and eliminate the possibility of forged document usage or synthetic identities. AI can recognize many things: from voice and biometric features to a typing pattern. The development of technology is certainly the future of identity verification.
In my opinion, in the future the number of manual checks will be greatly reduced. This will lead to the development of more advanced AI algorithms and machine learning to make automated KYC checks the most effective and eliminate the possibility of forged document usage or synthetic identities. AI can recognize many things: from voice and biometric features to a typing pattern. The development of technology is certainly the future of identity verification.
More trust to regtech companies
FCA England made a research where they found out that the most popular option for RegTech onboarding is a combination of outsourcing augmented by in-house development (41%). I think that most companies will still trust vendors in the future. There are several advantages of outsourcing. First, you need to trust your KYC to qualified professionals. It is more cost-efficient and productive to work with highly qualified professionals that have the solutions for certain problems. Vendors are familiar with global and local regulations and can help organizations align with regulatory requirements. It might also take some time to achieve high-quality and full compliance in case of internal client identity checks.
Rise of biometric identification and authentication
The use of biometric authentication is rising from year to year. Facial recognition and fingerprints are already widely used in electronic devices; financial services have also started to adopt biometrics for identification and authentication. Smartphones are using facial recognition and fingerprints nowadays, as well as financial services and other industries which are obliged to check the client’s identity by the law. According to Statista, the market for biometric technologies will steadily grow over the next few years to reach $55.42 billion by 2027. Biometric authentication is a good alternative to passwords, especially if the service is being accessed from the smartphone (e.g. Apple Pay, Samsung Pay). Biometric authentication includes facial recognition, voice recognition, liveness detection, fingerprint scans, and other checks using biometric features.
Biometric features are hard to fake, which is why the technology is in such high demand. Although some people disapprove of the technology (based on a recent Reservations.com survey, for instance, 32.5% of Americans disapprove of it), I believe the technology will only be developing and taking over markets. Biometric authentication is already used to verify identities in the airports throughout the US, some banks, and other services. It is also used by law enforcement to prove someone’s guilt (fingerprints at the crime scene, for example), smart homes, and the military (to access certain areas or military objects by scanning your biometric features). Civil services might also use biometric authentication to make sure that citizens and residents are identified correctly. For example, sometimes it is used for voter registration at the elections.
Biometric features are hard to fake, which is why the technology is in such high demand. Although some people disapprove of the technology (based on a recent Reservations.com survey, for instance, 32.5% of Americans disapprove of it), I believe the technology will only be developing and taking over markets. Biometric authentication is already used to verify identities in the airports throughout the US, some banks, and other services. It is also used by law enforcement to prove someone’s guilt (fingerprints at the crime scene, for example), smart homes, and the military (to access certain areas or military objects by scanning your biometric features). Civil services might also use biometric authentication to make sure that citizens and residents are identified correctly. For example, sometimes it is used for voter registration at the elections.
Other technologies to rise in the future
When it comes to identity verification, AI and machine learning will inevitably rise in use. First of all, it will be new technologies that will help detect deepfakes (deepfake videos). This will spread to identity verification so fraudsters won’t be able to use deepfakes to gain access to services.
The rising role of AI will be systematically helping to further improve and automate the onboarding process by detecting various fraud patterns.
The rising role of AI will be systematically helping to further improve and automate the onboarding process by detecting various fraud patterns.
All to digital
Right now, there are approximately 7 billion internet-connected devices. This number is expected to grow to 22 billion by 2025. There is no doubt that very soon any services will be available online and identity verification is not the exception. The only identity verification people might still have to do in person are the ones at the hospitals and while crossing the border. Although if we really come to digitalizing ID documents, the process might look very different with biometric authentication and paperless documents.
The future is hard to predict. But the world is changing at a fast pace and we need to keep up with these changes. Identity verification will certainly change and the regulations will be changing as well following the new technologies stepping up in the regtech industry. Also, identity verification solutions might become more and more aggregated; in some cases it is already built into other services. In short, vendors of the future will be providing a much smoother customer experience.
The future is hard to predict. But the world is changing at a fast pace and we need to keep up with these changes. Identity verification will certainly change and the regulations will be changing as well following the new technologies stepping up in the regtech industry. Also, identity verification solutions might become more and more aggregated; in some cases it is already built into other services. In short, vendors of the future will be providing a much smoother customer experience.
Written by Dmitri Laush, CEO of GetID - an all-in-one identity verification service that helps other businesses streamline their customer onboarding process.