Identity Verification in the Age of Big Data and APIs

As the phrase goes, “Data is King”; indeed, it has the potential to reshape entire industries. It is true that organizations now possess enormous quantities of data on most everything today; utilizing this data to make decisions, however, still remains a challenge.

With entire industries becoming digitalized over the last two decades, it became possible to record and map all business interactions; indeed, there emerged a system of record for everything – from customer communication and accounting to marketing and regulatory compliance. Further, all that data could now be used across a variety of business contexts thanks to the emergence of the API ecosystem, which provided the necessary connective tissue to facilitate the flow of data between disparate systems.

Despite such paradigmatic shifts, however, there still remained obstacles preventing many industries from utilizing data to make quick and sound decisions.

How can data be used to build trust?

Consider customer onboarding, for instance. Even as traditional financial institutions offer digital banking services, enabling new customers to create accounts from their remote devices, their customer onboarding process is still marked with delays and difficulties. As regulated entities, financial institutions must verify the identity of their customers – a crucial yet necessary step which protracts the customer onboarding process. Often times, customers are expected to physically visit a branch or location to submit their identity documents for verification; in other cases, they may be asked to forward scans of their ID documentation for scrutiny. Either of these cases does a disservice to the term “digital banking” because the service, in question, isn’t digital in the full sense of the word.

Even with massive amounts of data available, secure access to reliable data sources for identity verification can be challenging in today’s digital economy. As a result, many financial institutions have been slow to grow and expand into new markets simply because they cannot establish trust with customers who cannot be verified.

Data and the “unbanked”

Even in countries that are digital-centric, there are billions of people who are “unbanked” or “underbanked,” stemming from various reasons. One reason is the lack of traditional identification forms. In fact, more than one billion people lack a formal ID, which makes it nearly impossible to open an account and gain access to vital financial services.  Moreover, of the 120 countries that have digital passports and the more than 60 countries with national eID cards, their approach to digital identity differ greatly, pointing to a dire need for standardization in a currently messy environment.

Despite these challenges, developments in AI and machine learning are making inroads to creating real-world results by automatically detecting patterns in data, particularly in the field of digital identity.

APIs paving the way forward

Today, we’re seeing better data analysis, which is leading to faster and more accurate identity verification. This is also moving the needle on more powerful regulatory compliance processes and procedures, enabling financial institutions to mitigate risk without burdening the onboarding experience. Additionally, the new API ecosystem is increasing the ability to effectively authenticate and verify individuals who are transacting, trading or talking online. APIs can help businesses quickly verify identities and reduce fraud in today’s online, borderless economy. With these advancements, financial institutions can grow and expand into new markets, regardless of where that customer lives.

We are now ringing in a new era of the data economy for trusted identities, which will deliver a significant and much-needed global impact where more individuals in more countries can become a part of the financial system. As a result, we are taking a massive leap towards financial inclusion.

The solution to global financial inclusion and reducing extreme poverty, along with sustainable growth for financial institutions, lies within digital identities and machine learning, coupled with APIs.  With machine learning, organizations can quickly spot patterns to more accurately identify customers. With APIs, organizations can gain access to data sources from across the world to verify the identity of their customers, enabling them to take advantage of more opportunities and grow faster.

Ultimately, we are entering an era where big data can be analyzed and structured to offer greater value when leveraged with modern technology, creating a true global data economy.