Ahead of regulations: 5 ways KYC has improved product UX

How digital services have introduced identity verification to increase trust, security, and operational efficiency

In 2021, Passbase has seen more and more companies sign up for our identity verification services in industries that range from traditional sectors like legal services and real estate to digital-native industries such as cryptocurrency and eSports.

Overnight demands for online services to replace everything from medical consultations to restaurant dining in the past year has spurred a new wave of online businesses that need to think about security and trust from day one. The services that are gaining rapid adoption do not just look at verifying people’s identity and documents as a checklist item, but an opportunity to delight customers and reduce operational costs.

In this post, we will cover five ways that Passbase has seen leading businesses introduce identity verification into the products and services to educate and convert customers, built trust between end users, and reshape user experiences:

  1. Simplifying operations and elevating customer experience
  2. Educating customers on why KYC is required
  3. Upgrading user verification to reduce fraud and build trust
  4. Securing authenticity to attract creators and fans
  5. Reusing digital identities to create a seamless brand experience

Simplifying operations and elevating customer experience

Home page for New York rental platform Nooklyn. Black background with a gallery of apartment listings.

Traditional sectors stand to gain the most from strategic digital transformation. In industries such as real estate and property rentals, collecting enough information about a customer provides assurance to go through with a transaction, even without regulatory considerations. Processes such as collecting and verifying documents and performing KYC checks can be reduced from days to a matter of minutes for companies that incorporate the right solutions. Incorporating online identity verification and KYC checks can be one part of a phased digital transformation effort that reduces operational costs for the business, while also delighting customers with a convenient online way to prove who they are and submit the relevant supporting materials.

As a Brooklyn-based rental platform founded in 2012, Nooklyn needed to collect, check, and properly dispose of sensitive physical documents, which took time and was also a potential liability. Nooklyn removed both the risk and operational costs by integrating Passbase’s identity verification so that their end users had the option to verify their identity with their government-issued photo ID and taking a video selfie that could also double as a liveness detection tool. Offering customers a choice built trust with end users as well as rental companies that gained assurance on potential renters. Since the feature launch, Nooklyn has found that customers not only opted in for the benefits, but that it also increased conversions.

Educating customers on why KYC is required

Home page for Bounce Health in the US serving customers who would like medical services and products for sexual performance. Banner image with a smiling black woman holding a red medicine ball and a white man doing the same behind behind her.

Healthcare is a sector that has largely remained offline due to challenges around verifying patient identity, insurance information, and securing patient data. Demand for online solutions to these essential services during the Covid-19 pandemic has spurred a new wave of online businesses that need to think about security and trust from day one. Using digital identity solutions that process thousands of documents, including insurance cards, helps businesses pair the documents they are verifying with the identity of the customer they are serving.

Given that consumers are becoming warier of personal data collection, successful businesses prepare information to be transparent and build trust. The health care platform Bounce includes clear information in its website FAQ section that explains why a picture of a government-issued photo ID and a selfie are required. Addressing common concerns, such as whether a person’s information is secure and what information is collected for the identity verification process and why it is necessary, helps businesses convert new customers.

Upgrading user verification to reduce fraud and build trust

Home page for 1-vs-1 eSports gaming platform One Up. Dark background with a 3D visual of rooms with screens and the one up logo. Header line that says "It Pays to Play" The eSports industry is booming and also reshaping how transactions and interactions can happen online. Industries like online gaming need to navigate a myriad of regulatory considerations depending on what services they offer and where they operate. But rather than figure out age-restrictions, cryptocurrency regulations, or other anti-money laundering (AML) considerations, forward-thinking online gaming platforms are covering their bases with quick KYC checks. To an end user, identity verification can be done with quick photos of a government-issued ID and a selfie, but the information submitted can be processed for multiple security and compliance checks.

KYC checks and identity verification can happen at user signup, account verification, or payout. Proactive gaming platforms will often include identity verification as part of their commitment to fraud prevention and fair play, which includes other features such as cheat detection. Companies like One Up that use Passbase’s video selfie benefit from not only identity verification, but liveness detection to reduce the chances of a fake photo being uploaded. In addition, there is no added step for end users to verify their age since their ID submission also includes a date of birth, meeting the age 18 minimum to participate in a One Up tournament.

Securing authenticity to attract creators and fans

Home page for Bitsong, a blockchain platform for music artists to share their work and get paid directly by fans. Dark purple background with pink text. Header text: A new chain of sound. Web player button. Buy BTSG button. Favicons for discord, telegram, twitter, reddit, and facebook.

Secure identity verification solutions are also quickly becoming cornerstones for content creator platforms to attract both creators and the audiences that want to directly support them. The latest generation of content platforms are addressing the broken trust left by social media platforms by requiring that users prove who they are in order to participate in niche communities or become content creators who can receive payouts and royalties for their content.

Some platforms, such as ones for adult content, use identity verification as a way to ensure exclusive access and preserve creator privacy, as well as for screening minors. Other platforms combine identity verification with blockchain technology to ensure the authorship and authenticity of a piece of work. For example, Bitsong uses blockchain to give musical artists a way to secure their intellectual property and connect with fans, who can also support creators by buying NTFs or Artist Fan Tokens. Platforms can also choose to only use identity verification for a specific purpose, such as when Bitsong performed KYC checks with Passbase for its token offering, so as to maximize the number of users who may use the platform.

Reusing digital identities to create a seamless brand experience

While many businesses introduce identity verification for one specific step in the user journey, such as account creation or user verification, allowing end users to reuse their digital identity has compound benefits.

Brands that can offer their end users a convenient, secure, and unified way to access their services will set the standard for the next generation of online services. For example, a crypto company can allow their end users who have verified their identity for a previous ICO may to accelerate future logins, transactions, or document submissions with a selfie. Companies can also allow end users to resubmit previously used documents for new services or packages. With Passbase’s biometric authentication and reusable documents features, an end user’s relationship with a company grows more seamless over time because they can access their account with a selfie and only upload required documents that have not previously been submitted.

These identity verifications are also recorded in an end user’s identity timeline on the Passbase dashboard that gives the relevant departments a unified context to handle situations, such as customer success reaching out to support failed authentications or fraud prevention identifying suspicious login attempts.

Just as importantly, end users need to authorize reusing their documents because they retain control over their digital credentials and are choosing to share them for a specific purpose. This also frees businesses from worrying about storing sensitive personal data and data breaches, which are on the rise.

While regulatory compliance has historically driven KYC programs and identity verification, the next generation of digital services have understood the importance of secured digital identities. Businesses now are giving customers more intuitive, convenient, and reliable ways to prove that they are who they say they are. Successful companies will be the ones that combine security and user experience to reduce fraud, future-proof against regulations, and delight customers.

Passbase provides a suite of identity verification solutions that can be integrated into web, mobile, and cross-platform products. You can get started with the Passbase API or with SDKs for iOS, Android, and web. To see how you can incorporate a branded identity verification for your business, sign up with Passbase today or book a demo.

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Passbase is an identity verification solution that makes facial recognition, liveness detection, ID verification and KYC and AML compliance accessible through a suite of flexible developer tools. A zero-knowledge architecture ensures that companies using Passbase can securely verify users from over 190 countries without having to store their data. Built for developers, it can be integrated with just a few lines of code on iOS, Android, and Web.