Some of these include biometric designs and knowledge-based authentication (KBA) plans, but the greater thrust of this initiative seems to be related to a pretty easy and widely accessible form of ID verification called multifactor authentication (MFA).
Here's how this usually works – when a company wants to verify a user's identity online, as they use a desktop or laptop computer, the server simply asks the user to enter a code sent to the person's smartphone as a secondary device. That ensures that the person is who they say they are and that the transaction and interaction are legitimate.
Why are businesses investing in these kinds of ID verification? There are some pretty big benefits for businesses that are driving companies to tighten up their ID verification practices.
1. Fighting fraud
Fraud is expensive for business. Illegitimate users can create big headaches for a company, whether it's by hijacking someone's account for purchases or conducting various kinds of hacking activities.
Stricter ID verification prevents a lot of these types of fraud and digital theft and shores up the company's online environment for legitimate customers. That leads us to the next point: better customer experience.
2. Better customer experience and conversion
Better authentication and ID verification can also lead to a better customer experience. Companies can customize platforms in new and high-tech ways. When you are able to more fully integrate ID verification into platforms, you can “speak directly” to a customer in more effective ways, especially with an investment in AI technologies.
Many experts believe that these practices can lead to better conversion. Specifically, some analysis of these improved methods suggests they can help to provide gated services. Other research supports the idea that enhancing ID verification can lead to easier enrollments. Throughout the entire pipeline, ID practices play a role in building that digital connection and the longer-term relationship between the business and the customer. These systems can help with vendor and supplier relations, too, but according to many top insiders, the customer-facing utilities are abundant.
So from that perspective, stricter ID verification can actually improve the business funnel, and the bottom line, by proxy. That can be true in data-intensive fields like banking, or elsewhere, where the exchange of goods and services is supported by new next-generation technologies.
3. Regulatory compliance
Another big reason for better ID verification procedures is that it helps businesses prove their mettle when it comes to outside regulation and audits.
In various industries, there are regulatory standards in place that have to do with knowing your customer. In fact, in finance, you'll see the phrase ‘know your customer’ or the acronym KYC highly prominent in many company materials. Regulators require that companies make an effort to build KYC systems and implement them. But KYC can be important in any industry – and even more important in healthcare and other data-intensive businesses.
Regulatory compliance is so valuable to businesses that they often have whole units and executive-level positions related to making sure that they are meeting all of the standards imposed by agencies or other parties.
4. Chargebacks and other fixes
Many types of unverified user activity can lead to fraudulent transactions, and then the company has to unwind all of that with expensive chargebacks or labor-intensive research into what happened.
Eliminating these problems on the front end is an efficient way to do business, and that's another reason why multifactor authentication and other such processes are so valuable and popular in a business context.
5. Business reputation
Better ID verification also burnishes a company's reputation as a high-tech business leader in a fast-paced business world.
There is a reason why some analysts say that today “every business is a technology business.” In other words, regardless of what you're selling, a business really runs on data and the use of digital environments to gain market share.
So from that perspective, demonstrating thought leadership can have a lot of soft benefits for a company, even if that company is not selling its expertise in technology directly. Even a hospitality company, for example, or a garment manufacturer or a food service business can get a lot of positive buzz or word-of-mouth from investing in better IT architectures, and that includes ID verification systems.
Some of these reasons for companies developing ID verification tools have to do with external demands, and some of them have to do with competitive practices. All of them demonstrate why it's time to get serious about identity management on any business platform, and indicate where our business world is due to go in the years to come.