What is biometric verification, and why is it used in KYC?

What is biometric verification, and why is it used in KYC?

One of the most common types of fraud is identity theft. The U.S. Federal Trade Commission (FTC), for example, received 2.8 million reports about fraud in 2021. 50% of those complaints were about identity theft, and most of them occurred online.

As we are transferring more and more services to digital platforms, it has become crucial to verify and authenticate that people are who they claim to be. This holds especially true for industries that are subject to anti-money laundering (AML), General Data Privacy Regulations (GDPR), and Know Your Customer (KYC) policies.

It’s essential to understand how challenging it is to avoid identity fraud and the risks related to it, like money laundering. Deep fake and other technologies to steal and fake identities is a direct threat to all of us. And companies that want to increase their business online, need to find ways to safeguard themselves from these threats.

Luckily, there are solutions that your organization can implement to differentiate every individual by their physical patterns and characteristics. Biometric identity verification software identifies individuals via these unique characteristics. It helps to validate who they claim to be in a digital environment.

In this blog, we will explain what biometric verification is, how it works and why you should start using it in your KYC processes.

What is biometric verification?

We all have distinguishable physical characteristics that are unique and matchless, which are also known as biometric features. The well-known biometric features that are often used in identity verification are fingerprints, voice and facial characteristics.

So what is biometric verification, then? Biometric verification is the process of identifying individuals through these unique, above-mentioned characteristics. This way, you can prove who you are in both a digital and physical environment. For some systems, this is the only way for you to get access to the desired service, device, or location.

Biometric verification is typically used in two workflows:

  1. Onboarding customers: As a new customer, you often need to verify your identity by proving that you are who you claim to be. Let’s say you want to open a bank account. The bank would ask you for your identity document and set up your biometric features by scanning your face.

    The biometric verification system analyzes and creates a machine-readable file, so next time you want to have access to your services, you can prove who you are by scanning your biometrics.

  2. Granting access: After the onboarding process, getting access to your account or services should be easier and should take no more than a couple of seconds. In order to verify your identity, your biometric features are compared and analyzed in real time to the data from the onboarding process. If the biometrics match, then you gain access to your account, services, or systems.

How does biometric ID verification work?

The whole process of biometric authentication is based on comparison. Biometric systems use Computer Vision (a branch of AI) to capture individual characteristics that remain constant over time and store the data for future checks.

When a user makes an authentication request, the system compares their biometrics with the data in the database. This is also called biometric recognition. If there’s an accurate match, access is granted. All biometric systems consist of three basic components:

  1. A scanner or reader for recording and scanning the biometric factor is used for identification.
  2. A software that converts the recorded or scanned data into digital formats and compares any new data with the stored data with AI and Machine Learning.
  3. A database that holds the biometric data, so the program can run a comparison check if necessary.

Biometrics can be measured with devices like scanners, but more and more organizations are doing this with a smartphone. Next to having hardware like a smartphone or a scanner, it’s necessary to have a software that allows the users to scan their biometrics for identity verification. 

Now that you know how biometric ID verification works and what is required, let’s take a look at the different types of biometric verification.

Types of biometric verification 

There are multiple biometric ID verification types. Some differ from others in the level of safety they provide. Some depend on the accessibility of scanners, sensors, or cameras. 

Below, we have listed the most commonly used types of biometric recognition:

  • Facial recognition
  • Selfie verification
  • Video ID verification (liveness checks)
  • Fingerprint recognition

Facial recognition

Facial recognition is used to verify identities of users by recognizing and measuring facial patterns from an image. Those data points of the face are digitized, and then compared by AI and Machine Learning against a database or a photo of an identity document.

Biometric verification software uses facial recognition technology to measure distinguishable landmarks of your face. These include, among others:

  • Eye size
  • Eye spacing
  • Shape of your cheekbones
  • Nose length
  • Nose width
  • Pupil size  

Based on those measurements, the software turns the information into a digital format. The data is then used every single time the software does biometric verification by matching it with the user’s picture of the ID document. 

Of all the biometric measurements, facial recognition is considered the most natural since we typically recognize ourselves and others by looking at faces, rather than fingerprints or eye irises.

Selfie verification

Selfie verification is also often used in biometric verification procedures. Among other steps, it requires users to take and submit a selfie. Generally, the process is done with a smartphone, as it allows you to take a selfie in real time. 

Biometric ID verification software analyzes the selfie and compares it to a database or a submitted ID document. 

With such software, you can use selfie identity verification to streamline your customer onboarding process by measuring, comparing, and matching data from your customer’s facial characteristics.

Video ID verification (liveness checks)

A video can be used to check the liveness of the person behind the camera, making sure that it is not someone with a printed picture of someone else’s face, for example. 

A liveness check or facial liveness detection is a 3D active biometric method. Liveness checks work by taking a video or a number of selfies to validate the user and determine if it’s a real person or a passive fake in real time.

The biometric software instructs the end user to move their heads in multiple directions. It can be randomized, so the user can’t predict in which direction they need to move their heads.

This biometric solution adds another layer of security to an identity verification process and helps to determine if the person submitting the identity document is real.

Fingerprint recognition

A fingerprint is also a unique physical characteristic. For using this biometric method, it is necessary to have a sensor to capture a high quality image of the fingerprint. Also, it is required to have software capable of matching fingerprints based on a set of algorithms. 

Fingerprint sensors serve as an important component of data acquisition. For biometric ID verification software to work, it needs a highly precise digital image of a user’s fingerprint. 

So how does it look in practice?

  1. A customer has their fingerprint scanned with a device
  2. The biometric identity verification software compares the biometric features of the fingerprint with already registered data with a set of AI algorithms 

For this to happen, it would require your customers to register their fingerprints first, similarly to any onboarding process.  

At the end, the purpose of fingerprint recognition is to speed up the process of login into a system or gaining access to services. It’s a favorite solution for speed, but the downside is that not every smartphone is equipped with a fingerprint sensor.

Why you should use biometric verification

According to the Crime Museum, 15 million people in the US experience identity theft every single year. This results in $50 billion in financial losses, which you can save with a proper biometric verification solution.

Moreover, as a company, it is vital to have systems in place to ensure the security of information and to maintain the integrity of data. It is as important as providing a solution to your end users where they can safely share their information.

With new technologies like AI and machine learning embedded in a biometric verification solution, you can do that. Smart, computerized systems provide opportunities to protect your organization and your customers against identity fraud and fight the occurrence of this practice.

If you are in a business where AML regulations or KYC policies are your concerns, using biometric identity verification software can benefit you in various ways: 

  • Improve security
  • Enhance compliance
  • Reduce costs
  • Decrease turnaround time
  • Minimize the risk of fraud

Are you convinced about biometric ID verification? In the final section, you will learn how we can help you out!

Use Klippa for your online biometric verification

Klippa DocHorizon is a multi-solution platform that can help you with biometric verification. Our KYC software is enhanced with technologies such as OCR, AI, machine learning and computer vision, which provides biometric verification features that you need for KYC checks and digital customer onboarding.

One of DocHorizon’s solutions, our Identity Verification SDK, enables you to verify your customer’s identities with facial recognition through a biometric selfie scan, real-time liveness checks, and ID document verification.

If you want to go one step further and need the safest remote onboarding solution, you can implement our NFC-based identity verification. The NFC ID verification technology is used to read encrypted data in the chip of identity documents, ensuring 100% data accuracy. NFC technology is used to access a user’s data from identity documents and validate the document’s authenticity.

By combining biometric recognition and NFC ID verification, you can safeguard your organization against fraud attempts.

Learn more about NFC ID verification by watching the video below:

Lastly, what’s important to know is that Klippa’s solutions are built with GDPR in mind. No data is stored on Klippa’s servers, and the solutions can even be installed on your premises upon request.

We would gladly hear about your specific case and talk about how we can improve your organization’s onboarding process and safeguard it against fraud.

If you want to know more about our solutions, plan a demo below or get in touch with us.

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