Identity Verification In CryptoMay 26, 2022
While it’s crucial for security — and because regulators require it — cumbersome verification processes tend to contribute to high user drop-out rates. However, companies can tremendously shorten their verification processes without compromising security and compliance. Find out how.
The crypto economy has come a long way. From being a fringe preoccupation of internet geeks to becoming a mainstream segment of the global economy.
Different crypto services can offer different levels of security and privacy, depending on the user’s needs. Some popular crypto services include Cryptocurrency wallets which help users store their digital currency offline in a secure location, away from potential hackers. Cryptocurrency exchanges deal in different types of digital currency, using fiat currency or other cryptocurrencies. ICO services help startups launch their Initial Coin Offerings, providing a way to raise funds through cryptocurrency. and mining services that include users in the mining process of different cryptocurrencies, earning rewards for their efforts.
One would expect that this increasing shift of money towards digital currency would attract some scrutiny, and rightly so. As millions of investors globally began plowing their nickels and dimes into crypto, regulators across both continents came up with regulations designed to help safeguard crypto users’ funds and combat money laundering, crypto scams and terrorist financing.
At the center of these regulations are the KYC & AML stipulations. The EU’s Anti-money laundering regulations that govern “virtual currencies” also cover crypto exchanges—it mandates crypto companies to perform KYC/CDD on their users.
Put simply, companies operating within the “cryptosphere” must verify that users are who they say they are.
Typically, verification is processed by requesting users to submit emails and other personal identification details. This data is then reviewed and verified between 5 minutes and 2 hours—or up to 5 business days, in extremely rare cases where issues arise and there’s a need for manual review.
Available data from multiple customer surveys indicate that they prefer onboarding processes only to be 60 seconds long or less. To reinforce this sentiment, prolonged verification processes lead to high user dropout rates, negatively impacting significantly on projected revenues.
By integrating AI-powered verification solutions into user onboarding flow, crypto businesses can shorten the duration to a small sliver of time, making it as convenient and frictionless as possible for users.
Why AI-driven automated identity verification?
There are many upsides to deploying automated identity verification.
Granted. Not losing business due to customer churn in the face of unduly lengthy waiting time tends to be right up. However, more deep-running benefits stem from building user trust and fraud prevention while ensuring you’re not facing sanctions or paying penalties due to non-compliance.
Besides sizably cutting down the waiting time in the user onboarding process, there’re many other advantages. Here are the most important ones:
Speed of verification
There’s a significant cutback on waiting time because there’s no human in the loop. An increase in the speed of user onboarding is an obvious benefit of AI-powered verification.
Identity Verification leverages machine learning to get users through the verification flow as quickly as possible — without compromising security. How to recognize ML in identity verification? It’s visible in every step. First, It looks like automatic scanning, recognition and data extraction of a personal document. After getting all the data from the ID card, you can see it in the liveness check and face matching, ensuring that the customer is there and the person it says it is.
Rather than have users submit documents and wait for as long as five business days, users can scan their IDs with their phone cameras and have them verified within seconds.
Improved user experience
Digital transformation has completely changed how companies relate to customers. Where previously, customers mainly compared only prices of different solutions, they have begun to prioritize user experience quality equally.
AI-assisted solutions significantly improve the verification experience — you can see it through real-time feedback messages guiding users every step or using a camera to scan the ID to fill out a form, etc.
Increased data security to combat financial crimes
Security is key to the operation of any crypto company. It is a vital requirement of regulators and is also central to the stability of the business.
With crypto exchanges facing increasingly frequent cyberattacks, security has never been more important. Last year alone, over $4.25 Billion in crypto assets was lost to cyber breaches, a 145% increase from the previous year.
But with the in-built security standards of AI-powered verification solutions, businesses can more accurately verify the identity of users and everyone else interacting with their sites, reducing the likelihood of security breaches as much as possible.
One significant impact of digitalization is how it has enabled businesses to reach multiple audiences across geographies. An obvious downside to this is that companies have had to tiptoe around cultural differences and language barriers. It’s important to choose a global provider, like Identity Verification, on the other hand, can seamlessly communicate with users in ten languages, including English, Croatian, French, German, Hungarian, Italian, Slovak, Slovenian, Spanish and Serbian (Android only).
How to verify customers for crypto services?
AI-powered verification is simple and runs in three easy steps;
- ID scanning and document verification
First, users need to scan their identifying documents with their phone cameras. After a series of on-screen instructions, the algorithm automatically picks out the user’s unique information.
- Selfie capture and liveness detection
Next, users are asked to use the front camera to take a photo of their face. The AI then captures a 3D scan of the user’s face.
- Face matching
The final step of the process happens in the background. The software then compares the captured scan of the user’s face with the scanned document to ensure that the faces match. Once the faces match, we can then confirm with a high amount of certainty that the user is really who they claim they are.
Deliver digital trust with Microblink
In the crypto space, user verification is a hot button issue. This report by Ciphertrace indicated that two-thirds of the top 120 crypto exchanges lack a strong KYC crypto process. One-third of them were further found to have weak KYC processes.
There’s no dodging it. AML compliance is fast-becoming the be all and end all of cryptocurrency exchanges & custodian services. There’s no achieving AML compliance without KYC procedures.
Manual KYC processes have major drawbacks — first, they are more expensive as you’d have to include a human who video calls a customer, which directly influences long wait times and increases the risk of a data breach.
Our state-of-the-art solution hands your crypto exchange keys to a swift and easy identity verification. Faster onboarding without jeopardizing personal data makes customers happy and puts them right where they need to be – in your app.
Looking to onboard more customers and build trust within your crypto user base?
Take a proactive approach and think about your current customer verification process. Can it be faster? Easier to use? Are there any unnecessary steps customers have to take?
Tell us all about the way you verify your customers and we’ll show you how to make it even better. Let’s start a conversation.