How Accurate is Identity Verification for Banking?

When it comes to ID verification, it is more than just checking a person’s photo ID. There is a complex technology behind the scenes that allows financial institutions, health and insurance companies, government agencies, and other industries to detect fraud and prevent it all together. Many companies implement a verification technology that uses facial recognition. Specifically, banks use these high-tech measures to ensure the safety of themselves and their customers, as dealing with money is not something to take lightly.

ID Verification and Facial Recognition

ID verification is used to prove an individual’s identity. Thanks to modern technology, this can be done electronically. Using information provided by the customer, along with public police records, banks use their verification and authentication service to compare it with the real identity of the person. Acceptable documentation customers provide would include a driver’s license, birth certificate, social security card, passport, and more. These measures are taken very seriously and must comply with Know Your Customer (KYC) and Anti Money Laundering (AML) regulations. Facial recognition technology is able to analyze faces with an algorithm that detects the person’s facial data. Using AI technology and biometrics, it can detect unique facial features like the distance between features, skin texture, and various thermal temperatures of areas of the face and connect it all to an individual identity. Once all the different parts of the face are connected, the person can be identified. Just like everyone has their own unique fingerprint, everyone has their own unique facial composition. Facial recognition can then be used for banks to identify and verify any customer.

How Accurate is ID Verification?

In perfect conditions with perfect lighting and perfect quality photos, verification algorithms used to match subjects to reference images can reach an accuracy level up to 99.97% on assessments like NIST’s Facial Recognition Vendor Test (FRVT). This can also be matched with results from iris scanners (pattern recognition on an individual’s eyes). With such reliable face verification, banks have become comfortable relying on it to give users account login access online. However, in real-life circumstances of the average person, perfect lighting and a perfect setting is not always possible. The FRVT found the error rate from a major algorithm rose from 0.1% to 9.3% when matching pictures captured “in the wild” as opposed to high-quality photos. Some reasons for more error could be because the individual is not looking directly at the camera, obscure objects in the background, or shadows. Additionally, as a person gets older, their face changes, making it more difficult to match photos that were taken years apart. However, despite these small possible errors, facial recognition, and ID verification technology will always be important. With such a high chance of accuracy, it becomes a suitable choice for financial institutions conducting ID verification. It brings significant benefits to security, safety, and accessibility.

When Would Banks Need ID Verification?

With banks starting to digitize and go through a digital transformation, much of their customer actions are being done remotely. So, there are less in-person meetings and more eSigning and eForms. As a result, it is important to ensure the person you are working with online is who they claim to be. When it comes to banking, ID verification is necessary in numerous instances such as:

• Customer onboarding/opening new accounts
• Applying for a loan
• Transferring funds
• Electronic payments
• Account changes

How Does Facial Recognition Work in ID Verification?

In the instances listed above, along with other banking processes, the customer’s photo is taken to be compared to an official photo to be analyzed with facial recognition technology. Here’s how it works:

1. The individual’s photo is taken with the most clarity possible.
2. Facial recognition technology analyzes the unique facial features.
3. A facial signature, basically a mathematical algorithm, is created.
4. The algorithm is compared to a publicly available database of previously identified faces. In fact, if you are from the US, there is a 50% chance that a picture of your face is in one or more databases used in police facial-recognition systems.
5. A match can then be made between the newly captured image and database images.

This process is useful for determining if the customer is trustworthy and has criminal ties. However, there are now other solutions for facial recognition in ID verification that are more used for detecting fraud. For example, Lightico’s ID verification solution uses a method of photo ID verification to detect a person’s identity in real-time. Here’s how it works:

1. Customer receives a text message containing a link to a secure Lightico session. The link has a request for photo ID (driver’s license, passport, etc.).
2. Customer takes a photo of their ID and submits it.
3. Customer takes a live selfie to be compared to the ID provided. This will immediately be used to confirm the person on the phone is the same person in the photo ID.
4. Customer ID and photo is matched and verified.

This makes it simple and easy for customers and businesses to trust each other online. It does not rely on a pre-existing database, but is accurate enough to detect any suspicious and major differences between the person’s ID and selfie.

The Bottom Line

The high accuracy rates of facial recognition technology makes it a satisfactory choice for financial institutions using ID verification. Furthermore, the newest uses of photo ID verification make it easy to use for both businesses and customers, ensuring the extensive adoption will become nearly impossible to resist. Lightico’s photo ID verification solution uses the latest AI technology, allowing bank customers to verify their identity through their mobile phones in real-time. This is just one of Lightico’s many customer transaction solutions. Learn more about Lightico’s capabilities in eSignatures, eForms, digital payments, and more at Lightico.com.