Navigating regulations and securing your business against fraud while competing to deliver smooth user experiences is a tall order. This, however, doesn’t mean that it’s impossible. Our webinar on June 24, 2021 set out to tackle the question of how companies can ensure a secure experience for their users without jeopardizing their customer conversion rate.
Passbase hosted a discussion between Cameron D’Ambrosi, Managing Director of One World Identity, a market strategy and research firm that specializes in digital identity and its impact on businesses and Moiz Malik, CEO of Nooklyn, a marketplace for finding housing and roommates in New York City. We are covering event highlights to outline how identity verification can be used to securely scale businesses and support businesses undergoing digital transformation in traditional sectors, such as real estate and property rentals.
Digital identity today: key to combating rising fraud
While the pandemic may have helped to accelerate digitization processes, digital alternatives created by businesses, in many cases, prioritized swiftness over security. Last year, identity theft made up 30% of complaints reported to the Federal Trade Commission in the United States. In light of the increase in identity theft and fraud in online ecosystems, user and identity verification is no longer exclusively being conducted by regulated entities but has been attracting attention in digital services across a variety of industries.
While a myriad of ID verification solutions already exist, many of these come with their own sets of drawbacks including a lack of customization options, complex integration processes and lock-in contracts. Rising demand for identity verification and KYC services is shifting how the products are being built, with some services focusing on ease of integration and developer experiences.
While every business has its own unique requirements, Passbase recommends that business leaders and product managers these three focus areas for evaluating identity verification solutions:
- security
- compatibility
- user experience
Trends in approaches to digital identities and identity verification
“Trust is maybe one of the most critical elements to building a business in 2021, especially if it is a platform that has interactions in the physical world.” – Cameron D’Ambrosi, Managing Director of One World Identity
With his experience in the digital identity industry, Cameron shared that companies are no longer just ticking a regulatory box. Instead, he noted that companies increasingly wanted to understand who their customers are so they can serve them better.
Cameron observed that as the digital identity landscape is maturing, the level of assurance required for identity verification is moving down from being a tool for the highest level of assurance — regulatory requirements legal standard for KYC — to a feature that helps build trust and safety, such as identity verification age verification for restricted goods and services, or mitigating risks that businesses face when they don’t know who their customer is from a fraud perspective.
Cameron advised that a phased approach for companies looking to integrate ID verification into their product and those companies should develop an effective informational campaign in order to make sure that both current and prospective users view this step as a help rather than a hindrance.
How Nooklyn incorporated identity verification into their digital transformation
“When we removed Facebook and brought in ID verification, the conversions went up and it’s been smooth sailing for us since.” – Moiz Malik, CEO of Nooklyn
The rental market is an example of a traditional industry that does not necessarily have regulatory requirements for KYC, but benefits from identity verification to promote customer safety. Moiz shared how Nooklyn is an arbiter of trust in the rental economy and helps establish relationships among different actors, such as property owners, flat seekers and potential flatmates.
The first part of building a foundation of trust for landlords, renters or potential roommates is making certain that all parties involved are who they say they are. Moiz shared how many of their processes were offline, involving handling physical documents that were an operational cost to handle.
Adding an identity verification option with Passbase onto the Nooklyn platform built trust with end users as interactions could run more smoothly and all parties can be held accountable from start to finish. Moiz noted that far from being incompatible with user experience, adding an online identity verification option increased security and became an asset and value proposition that increased conversions.
Key takeaways
Shift from a fragmented approach to a unified approach when handling digital identities
Digital identities shouldn’t be the sole concern of risk and compliance teams, but rather a domain of interest for teams across the entire organization. Cameron noted that established companies may have data silos between departments and that a fragmented approach that requires multiple verification processes of the same documents that is not only costly, but also increases the risk of fraud by creating more channels for fraudulent activity to occur. Moreover, a fragmented approach has consequences for granularity in understanding user and data handling. Companies should adopt a 360-degree view of customers by having a unified digital identity that accompanies users throughout their entire lifecycle.
Use smooth identity verification flows to delight your customers
A unified approach to digital identity is not only beneficial for companies, it is also a way of providing a delightful experience for customers. A unified digital identity allows customers to access new products and services without the hassle of resubmitting documents, thus allowing them to get to the purchase page with the least amount of clicks. A customer-centric mindset means asking, “How can we provide our goods or services with as little friction as possible?“
Build trust with transparency and communication
While digital identity verification provides benefits for both companies and users, its implementation requires first gaining the trust of customers. This is especially true for companies that are not subjected to regulatory requirements. Communicating why your company is collecting sensitive information and how it is being used can help dispel any doubts that customers might initially have. Providing an FAQ page, seeking active and ongoing consent from users and offering an opt-in option are all ways to build trust amongst your user base and allow them to confidently participate in the digital identity verification process.
Digital businesses now have an opportunity to provide users with a more secure experience. Should they decide not to take it, they run the risk of not only losing their customer’s trust, but ultimately their business as well.
Considering an ID verification solution for your business? Sign up with Passbase now.
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