Best practices for verifying and onboarding customers in digital finance

Ahead of the Unchain Fintech Festival, Lyubomir Tankishev from Evotrust shares best practices in customer onboarding for financial services.

In the evolving landscape of digital finance, customer verification and onboarding are pivotal processes. Ensuring these are conducted efficiently and securely not only builds consumer trust but also mitigates risks associated with fraud and non-compliance. This article delves into best practices from the perspective of an expert in electronic identification and qualified trust services, with a focus on EU regulations and the solutions offered by Evrotrust.

Consumer trust is the bedrock of digital financial services. To foster this trust, financial institutions must prioritise transparency, security, and user experience. Evrotrust's electronic identification (eID) solutions, compliant with eIDAS regulations, ensure secure and efficient onboarding processes while maintaining a seamless customer experience. By using robust identification protocols, such as biometric verification and Qualified Electronic Signatures (QES), Evrotrust enhances the reliability and security of digital transactions, thereby instilling confidence in consumers.

Identifying users and ensuring the authenticity of their documents are critical challenges in digital finance. Traditional methods often involve cumbersome and time-consuming processes, which can deter potential customers. Technology providers can addresses these challenges through a streamlined, fully remote identification process that includes automated ID document verification and biometric checks. If automated verification fails, a seamless switch to live operator-assisted verification ensures that no customer is left behind.

Fraud in digital finance can take many forms, including identity theft, document forgery, and account takeover. Generative AI (GenAI) can potentially exacerbate these threats by creating highly convincing fake identities and documents. To combat this, companies employ advanced AI-driven biometric verification and document authenticity checks. These measures are designed to detect fraudulent activities and ensure that only genuine customers can access financial services. Evrotrust’s solution has been tested by independent laboratories beyond the scope of existing standards and requirements for prevention against presentation and injection attacks.

Digital identity wallets, like the European Digital Identity Wallet (EDIW) mandated by eIDAS 2.0, play a crucial role in modern identity verification. These wallets allow users to securely store and share their identity and personal attributes for various transactions. Evrotrust is one of the schemes for electronic identity and a provider of trust services and qualified attribute attestation. The next building block is to offer the Evrotrust users a EDIW, enabling them to perform secure, cross-border transactions effortlessly. This integration will streamline KYC processes and enhance user convenience by providing a reusable digital identity.

Technological advancements are at the heart of efficient and secure customer onboarding. Biometrics, APIs, and AI technologies facilitate real-time, accurate identity verification. Technology companies leverage these technologies to offer end-to-end digital identity verification and QES solutions. Biometric verification ensures that the person presenting the ID is the legitimate holder, while APIs enable seamless integration with existing financial systems. AI enhances the accuracy and speed of verification processes, significantly reducing the risk of fraud. Biometrics are further used to create an ecosystem that provides high security against malicious activities and social engineering, both of which are relevant in the context of digitalisation.

Compliance with regulatory frameworks is essential for the credibility and legal standing of digital financial services. The eIDAS regulation, along with the European Banking Authority's (EBA) guidelines on remote customer onboarding and the Anti-Money Laundering Directives (AMLD), set stringent standards for data privacy and security. Evrotrust's solutions are fully compliant with these regulations, ensuring that all personal data is handled securely and that identity verification processes meet the highest standards of reliability and legal validity. The company's services include QES, which provides the highest level of legal assurance for electronic signatures.

Conclusion

In conclusion, verifying and onboarding customers in digital finance require a multifaceted approach that combines advanced technology, regulatory compliance, and a focus on user experience. 

Lyubomir will be speaking about digital trust at the Unchain Fintech Festival in Oradea, Romania, on June 19-20, 2024.

About Lyubomir Tankishev

Lyubomir Tankishev drives innovation and growth at Evrotrust, specialising in strategic partnerships, business development, and digital trust.