Remote document processing in the finance industry is a two-sided coin. It empowers faster application acceptance and improves customer service. Although, ease of document submission also directs to a substantial increase in workload. Additionally, the requirement to verify documents before processing adds an endless headache to the procedure.
From 2017 to 2027, the global expenditure on identity verification is forecasted to witness significant growth, exceeding $13 Billion. The market is forecasted to grow from 4.93 Billion in 2017 to more than 18 Billion by 2027. Identity verification plays a vital role in information security by authorising access only to approved individuals. Therefore, stopping unauthorised and potentially harmful intrusions into safeguarded information.
The document verification procedure includes using identity documents such as national ID cards, passports, utility bills, tax statements and government-issued papers. The process ensures that actual photos of the user are evaluated, enabling foolproof identity verification and eliminating the risk of potential impersonation. It serves as a crucial safeguard, ensuring that only those with authority can access sensitive data.
Why Document Verification is Essential?
Failing to authenticate documents reveals financial institutions to risk falling victim to scammer activities. They continuously use tactics to deceive credit card companies, banks, and loan agencies to extort money. Their methods often involve a combination of stolen and counterfeit documents.
When a con artist successfully secures a credit card or loan, they instantly utilise the funds and disappear. If these instances of default gather, they can eventually lead the financial institutions to face bankruptcy.
Poorly, this issue prevails within the financial sector. Studies conducted in 2020 indicated staggering losses of $43 billion due to identity fraud, notably exceeding the typical annual loss of more than $13 Billion. Additionally, the pandemic has contributed to advancement in fraud incidents impacting government agencies, such as submitting false unemployment claims.
Verification of Financial Information by Lenders
The most prevalent types of financial information that lenders usually verify include:
● Verifying the account number ensures the bank account's existence and ownership.
● Account holder name to match the applicant with the account owner.
● Assessing balance information to determine the availability of funds for a deposit and/or evaluate the borrower's savings habits.
● Reviewing the account closure date and balance to ascertain whether a loan has been fully repaid and the duration since its closure.
● Examining the length of the loan term to evaluate the borrower's track record of making timely payments consistently over an extended period.
●Verifying the account type, such as personal or business checking account or savings account, as it holds significance based on the lender's specific criteria.
●Checking the open/closed status of accounts to assess whether a borrower has an excessive number of open accounts or an insufficient number of accounts based on the lender's criteria.
Document Verification in the Financial Services Industry
Securing against identity theft is essential in the financial services industry, requiring reliable methods of document verification. In circumstances where an individual with a stolen identity manages to commit fraud and penetrates the system, the responsibility of recognising the culprit falls on the financial institutions.
While conventional methods like fingerprinting and building cameras were once effective and efficient for identity verification, the advancement of online submissions has rendered them inadequate. Therefore, financial institutions now depend upon digital identity verification to fight money laundering, cybercrime and identity theft. Real-time ID verification is essential as lenders strive to offer quick approval times.
Benefits of Identity Verification in the Financial Services Industry
Financial organisations aim to enhance application approvals while efficiently eliminating the risks associated with financial losses and fraud. Adopting document verification software provides a reliable solution, providing different benefits. Below are some key advantages:
1. Fraud Prevention: Identity verification operates as an essential tool for financial institutions to analyse diverse types of document frauds. It includes recognising cases where loans are used for criminal activities or where individuals steal identity documents to submit false information. Financial institutions can efficiently eliminate the risks linked with such scamming activities by simply verifying identities and securing their operations.
2. Age Verification: One of the crucial aspects of document verification for financial institutions is ensuring that applicants are 18 years or older. It’s critical to discourage legal effects that may arise from granting minors loans and other financial services to minors. By absolutely verifying the applicant's age, financial institutions can bypass legal issues and comply with appropriate regulations.
3. Criminal Activity Protection: In the financial services industry, executing robust measures to stop identity theft, money laundering and other fraudulent activities is crucial to avoid legal troubles. Financial institutions can immensely reduce their vulnerability to such illegal activities by prioritising document verification and utilising effective measures. Protecting against these risks helps ensure compliance with regulatory requirements and secure the company’s financial stability and reputation.
Key Takeaways
In summary, the adoption of identity verification software and the implementation of document verification practices offer numerous benefits to the financial services industry. It enables fraud prevention, age verification, and protection against criminal activities. This ultimately leads to improved application approvals while mitigating risks linked with financial losses and fraud risks. By prioritising document verification, financial institutions ensure secure and trustworthy operations in an ever-evolving digital landscape.
