You want to let the good actors in and keep the bad actors out. Increase revenue and decrease fraud. You can do this at any point within your customer’s journey but the most effective time to do it is during registration and onboarding. A solid comprehensive identity verification process achieves both goals.
Kuppinger Cole estimates that identity related fraud will exceed $10 trillion by 2025. That cost ends up being borne by the consumer that is being onboarded, giving ample incentive to take a few moments to prove their identity during this registration step. The problem is pass rates, due to no fault of the consumer, today’s most common methods usually only pass around 70% of verification attempts. Bad actors do not account for 30% of an organization’s new users so there has to be a way to fix this.
Traditional Identity Verification Methods
There are three common methods to verify a user’s identity, ranked here roughly in order of the ease of the user experience:
- One time passwords (OTP) sent to the user to verify their phone possession (what you have)
- Government ID scan matched against a selfie (what you are and what you have)
- Knowledge based questions (KBA) (what you know)
Each of these methods passes roughly 70% of the users with the rest having to go through some sort of manual process like calling a help desk. We had one customer who previously would have the customer do a zoom call with the help desk and show an ID to their webcam. This is expensive and very very frictionful. You are getting bad security and offering an awful user experience. If you are putting 30% of your customer base through this sort of experience, you are most likely deterring fraudsters but also most definitely deterring real customers who are going to spend their money elsewhere.
Identity Verification Workflows do the work for you
The solution is a workflow, designed to branch from OTPs to Government IDs to KBA if the user is not able to pass the previous test. And there are absolutely valid reasons for not passing each verification step for each user. For the OTP step, if the user is using a work phone not in their name that step can fail. For the Government ID scan, the user might be having technical difficulties with lighting or cannot hold their phone steady for the photo. For KBA, it can be difficult to remember the address of the first place you lived after college. But it is going to be very rare for a user not to be able to pass at least one of these steps.
Let’s do some quick math. If you start with 100 users, 70 of them will pass the first OTP step, leaving 30 to go on to the next step. 70% of that 30 will pass the government ID scan, leaving only 9 to move on to KBA. If 70% then pass that step, you are left with 4 users who did not pass any of the three steps for an approximately 96% pass rate. Some of the 4 left are bad actors, some will give up on the process, and some will call the help desk. But you end up with a very healthy increase in active customers because you offer a flexible, automated and user friendly approach to verifying their identity with the great majority passing during the most frictionless step. More customers = more revenue. Fewer help desk calls = happier customers.
Do you want to try this out yourself? Reach out for a demo and free Proof of Concept and increase your customer acquisition and satisfaction immediately.