What is identity proofing and why does it matter?

Put simply, identity proofing is the process a business undertakes to confirm the identity of a user making an online transaction. But in practice, the process is much more complicated than it sounds.

Article at a glance:

• Identity proofing is the process a business undertakes to confirm the identity of a user making an online transaction.
• Catching fraudsters during the account opening process is incredibly important because of the difficulty of catching fraudsters after they’ve successfully evaded your initial identity proofing measures.
• Businesses can use biometric authentication during and after the identity proofing process to catch fraudsters while also building trust with their user base.

Unlike most other authentication processes, identity proofing primarily takes place during a user’s initial interaction with a business, e.g., when someone opens a new account with a bank through an online portal or mobile app. Verifying the user’s identity is an essential first step if the business wants to build a long-term relationship with the user as a customer. However, fraudsters now leverage a variety of sophisticated tactics that make the identity proofing process much more difficult for businesses.

The good news? By leveraging advanced identity proofing solutions, businesses can curtail account opening fraud while simultaneously building trust with users.

What makes identity proofing so important?

Organizations often overlook the importance of catching fraudsters during the account opening process. But if bad actors sneak by undetected, it becomes much more difficult to catch them down the line.

To bypass traditional identity proofing measures, many fraudsters rely on tactics such as synthetic identity fraud, which involves pulling genuine personal identifiable information (PII) from multiple sources and combining it with fabricated information to create a new identity that appears real. This approach, as well as other types of account opening fraud, can lead to a range of consequences for businesses with lackluster identity proofing measures in place.

To start, there are reputational costs that are incurred following news of a data breach, which can happen when fraudsters are allowed entry into a business’ system and the loss of consumer trust over time. A loss of trust can motivate users to take their business elsewhere and deter potential new users from wanting to work with you in the first place.

To avoid these outcomes, conduct an audit of your identity proofing process and pinpoint any deficiencies that bad actors may look to exploit. After cataloging these deficiencies, it’s time to plug the gaps with a variety of advanced identity proofing solutions. 

A multi-pronged approach to identity proofing

There’s a wide array of methods for verifying a new user’s identity, each of which comes with varying degrees of complexity and success.

The most common methods are PII and document verification. Although regularly used as security measures, PII — such as a user’s social security number or answers to security questions — are easily obtainable by fraudsters. Verifying government documents like driver’s licenses and passports are more secure, yet bad actors can still find ways to steal or fabricate these documents.

While both of these identity verification methods have limitations as stand-alone defenses, pairing them with biometric solutions creates a multi-pronged identity proofing strategy that’s better equipped to combat modern fraudsters. Biometric solutions utilize characteristics like one’s face, fingerprint, or voice to determine if someone is who they claim to be. Because they are distinctive to every person, biometrics are much more difficult for fraudsters to imitate and therefore much safer than passwords alone. These biometric solutions can serve as the final, most in-depth layer of the identity proofing process.

Regardless of which biometric solutions you implement as part of your identity proofing process, continuously monitor your defenses to ensure your practices keep pace with evolving tactics from fraudsters. This is where another form of biometric authentication — behavioral biometrics — comes into play.

Behavioral biometrics develop profiles on users over time by monitoring inherent and unique behaviors like typing cadence, mouse movements and the type of device a customer uses. This technology can flag behaviors that appear non-human or do not match that of the customer. This type of profile makes it easier for your business to monitor users after they make it through the account opening hurdle, adding another layer of defense against fraudsters aiming to bypass your identity proofing measures.

Identity proofing is the foundation for user trust

Effective identity proofing is essential for building trust with new and existing customers and for demonstrating your commitment to security. If fraudsters slip through the cracks, your reputation and bottom line will suffer the consequences.

Biometric authentication can help you catch fraudsters while still building trust with your customers. By using biometrics during and after identity proofing, you can verify who your customers are and prevent fraudulent access to your system.