What is identity verification?
While the principle of “trust but verify” might work for personal relationships, “verifying before trusting” is a more appropriate approach for businesses. With consumers and companies leading more of their lives online, the use of online identity verification methods is becoming increasingly important.
According to Experian’s 2021 Global Identity and Fraud Report, 90 percent of businesses now have a digital customer journey strategy. But almost half of those were implemented during the pandemic, and many customers still aren’t feeling seen. A streamlined initial verification process and continual authentication can help you build consumer trust and loyalty, as well as protect your business.
What is online identity verification?
Online identity verification is the process of digitally confirming the identity of a user. Whether you’re reviewing an account application or approving an online transaction, you need to know that the person you’re dealing with is who they claim to be.
Technology can help bring traditional identification verification methods online, such as checking a photo ID. Additionally, people and organizations have more digital “fingerprints” than ever before, which digital identity verification tools can use to authenticate users with increased accuracy and less friction.
What problems do digital identity verification help solve?
A well-designed and implemented online identity verification process can help address fraud, compliance and customer demands all at once.
Verifying someone’s identity when they first create an account could be an important part of the know your customer (KYC) and customer identification program (CIP) requirements. From that moment on, continuous authentication can help detect and prevent fraud.
A proactive approach can also appeal to your customers, who may have an increasing awareness of and desire for security. Experian’s 2021 Global Identity and Fraud Report found that approximately one-third of consumers say they’re worried about online privacy and identity theft — representing roughly a 5 percent increase compared to the years before the COVID-19 pandemic.
Balancing the need for identity verification with a smooth online experience can be challenging. Customers may abandon a cart if identification requirements aren’t easy and fast, and may look for new services altogether if they’re repeatedly asked to authenticate themselves. But the challenge also presents an opportunity for companies that can leverage online identity verification methods to accurately and discreetly verify users’ identities.
Online identity verification methods
There are multiple ways to verify someone’s identity, but some of the most popular online identity verification methods include:
- Personally identifiable information. Including their name, address, email address and phone number that can be checked against existing databases.
- Mobile network operator data. A service that verifies a person’s mobile phone identity. For instance, this can help verify the name, address, device details and other information associated with a phone number.
- Document verification. There are services that ask consumers to snap and upload a picture of the required document, like a driver’s license, passport, visa or national ID card. These may be verified with 2D or 3D facial recognition with liveness detection (e.g., verifying the user is human) or validating whether the document is real by verifying things like magnetic ink, the machine-readable zone and the barcode are genuine.
- One-time passwords. A one-time password is sent to a user’s phone or email during an application process to verify that they can access the account or device.
- Multi-factor authentication. A service for existing users who can verify their identity with a combination of different factors, such as a password or biometrics (a method that measures unique physiological characteristics using fingerprints and face recognition).
- Knowledge-based association questions. These are questions that users answer to verify their identity. The questions may be based on their previous answers to “secret questions” or information from a credit bureau.
- Behavioral analysis. A service that verifies identity by comparing how a user interacts with a website or app to their previous behavior or an average user’s behavior. Environmental attributes, such as time and location, may also be considered. This technique requires no effort from the consumer.
To keep up with increasing consumer and business demand, online identity verification processes may use artificial intelligence and machine learning techniques to complement the digital and manual processes.
Some methods, such as consistency checks on a device and behavioral biometric assessments, can also help offer an “invisible” approach to verification. Even small behavioral traits, such as a user’s scrolling style or finger pressure, could be important data points.
These invisible methods may be welcomed as a low-friction approach by consumers, who are increasingly aware of the lack of security that comes from only using passwords as an identity verification method. In Experian’s 2021 Global Insights Report, 75 percent of consumers said they felt most secure using physical biometrics, followed by one-time PIN codes (72 percent) and behavioral analytics (66 percent), respectively. 
How Experian can help
Experian is a global leader in identity verification and fraud detection services. We offer a layered approach that draws on different verification methods, including credit, device, non-traditional and user-provided data. Step-up authentication can add additional verification requirements based on how risky a user appears or the action they’re trying to take.
The approach gives your trusted users a lower-friction experience while helping you detect multiple types of fraud and address CIP discrepancies.
At the same time, your customers are assigned a unique and persistent identity, which can give you a single, consolidated view of your customers based on data from different platforms. Use the insight to deliver a personalized experience that surprises and delights.
Given that 55 percent of consumers say that security is the most important aspect of their online experience, doubling down on the use of online identity verification methods is a smart business practice. 
 Experian (2021). 2021 Global Identity and Fraud Report: Protecting and enabling customer engagements in the new digital era [White paper].
https://www.experian.com/decision-analytics/global-fraud-report Experian (2018). From fraud prevention to identity verification: Know your customer and spot the fraud [White paper].