Your Primer to Advanced Document Verification in the Digital Age


Who are you? And how do you prove it? Before the digital acceleration of the internet, it was fairly straightforward: At a bank, for example, you would present two pieces of government-issued identification and perhaps a secondary piece of ID, like a credit card or utility bill for good measure, to open an account in person. The account manager could verify the ID to the person because they were right in front of them. Photocopies of the IDs would be taken for the bank records, and the account would be opened. If further verification was required, then the account would be placed on hold, and the prospective customer would wait patiently.

After 2001, with the Patriot Act regulations known as Know Your Customer (KYC) and Anti-Money Laundering (AML), bank account openings became a bit more involved, requiring proof of sources of funds and ensuring that there weren’t any other heightened risk factors in addition to the in-person ID verifications. Then, nearly 20 years later, the coronavirus pandemic happened. Suddenly, the normal, organic growth of the adoption of online account opening was catapulted years into the future. Now, if your organization doesn’t allow for online-only account openings, it risks being left behind by the new, digital age. According to Cornerstone Advisors, during the first half of 2020:

  • Digital banks grew by 67%.
  • Digital banks tripled in new deposit accounts opened from 6% to 18% in 2Q 2020.
  • An estimated 20 million households consider a digital bank as their primary institution.

Efficient document verification for customer onboarding is more critical than ever for banks and organizations. The momentum shift from analog to digital account openings isn’t likely to return to pre-pandemic normal. According to Business Insider, digital-only banks are “forecast to attract 6.5 out of every 10 accounts digitally opened” post-pandemic.

Generally Accepted IDs

There are many documents that can be used to verify ID, including:

Primary or government-issued IDs:

  • State driver’s license or ID card
  • Passport
  • Military ID

 Secondary forms of identification:

  • Bank-issued credit cards
  • Social security card or individual taxpayer identification number (ITIN)
  • Utility bill or proof of address
  • Student ID card

Biometric data:

  • Facial image
  • Fingerprint
  • Voice recognition

The Challenges of Document Verification

One of the more difficult aspects of all-digital customer onboarding is effective document verification. With seemingly endless types of current and historic types of IDs from different states and countries, there are just as many ways to create false positives or expose your organization to unnecessary risks. While the pandemic increased the widespread adoption of digital account openings, it also brought hackers, fraudsters and bad actors along with it. Bank, credit, loan and account fraud are all on the rise.

According to a report developed by the Aite Group:

  • 47% of U.S. consumers experienced identity theft.
  • 37% of U.S. consumers had their identity stolen to open an unauthorized account.
  • 38% of U.S. consumers had an existing account taken over by an unauthorized user.
  • 42% increase in identity-related losses between 2019 and 2020.

Which leads to an interesting conundrum: More customers want online convenience, which drives more digital transactions, which drives more exposure to identity-based attacks. Online document verification risk mitigation is more important than ever.

Digital Onboarding Document Verification Best Practices

There’s currently no uniform standard method of online document verification. However, there many verification methods and general best practices to keep in mind when upgrading your legacy systems. First, the customer or prospective customer uploads the requested information and identification for validation. Next, the validation process varies from company to company, but can include:

  • Data corroboration/validation. Verifying ID data against existing public or shared databases.
  •  Facial match. Government ID photos can be compared to existing internal or shared databases.
  • Document fraud detection. Many systems will detect fraud by scanning IDs for verifiable information, such as ID numbers, names, addresses and barcodes. Some will even validate embedded watermarks and security features dependent on the document type.
  • Selfie verification. Some systems use advanced biometrics verification to validate user selfies or fingerprints, where the user’s liveness is authenticated and used to determine whether or not the person is the rightful user or an imposter.

All This and More — Quickly and Conveniently

A clever system is only useful if it happens conveniently and quickly for your customers. Artificial intelligence (AI) and machine learning (ML) can bolster advanced authentication techniques and protocols faster and more accurately. Machine learning tools learn through use and practice. System administrators can input authentic and fraudulent documents to effectively train the system to look out for mundane and exotic threats or forgeries while mitigating performance lags.

The National Institute of Standards and Technology (NIST) under the U.S. Department of Commerce captures this sentiment, “Digital identity is hard. Proving someone is who they say they are — especially remotely, via a digital service — is fraught with opportunities for an attacker to successfully impersonate someone.” Instead of building a document verification system from the ground up, consider working with a strategic partner where customer onboarding is their core competency and can even protect you for up to $100 million in aggregate annual fraud losses.

Need Help With Document Verification? Instnt Is Here for You

When you work with Instnt, document verification is thoughtfully integrated into the customer onboarding and welcoming process. Our KYC and AML frameworks are built into the beginning of, and throughout, the relationship to properly set your customers’ expectations and mitigate your overall costs.

Instnt is a leader in digital document verification as well as the overall customer onboarding process. After your team sets the compliance parameters custom to your needs, our neural networks go to work reducing false positives, verifying your customers’ data encrypted with your keys as well as being fully compliant with customer identification programs (CIP) and KYC regulations. Our system is so robust, Instnt will even cover qualified losses of up to $100 million annually. Request a demo to see how we can upgrade your customer onboarding process.


About the Author

Instnt's fraud loss insurance platform offers comprehensive protection for businesses for the entire customer lifecycle, from account initiation, and onboarding to subsequent logins, transaction processing, and the broadened accessibility of additional products and services.