In today’s digital age there’s a new wealth of data ready to be mined, analysed and referenced to help prove customer identity and achieve KYC compliance. Courtesy of how we all shop, bank, chat, post and meet online, every day we all create a digital footprint that offers a rich source of identity attributes. In this blog post we examine the value of a digital footprint to help regulated firms comply with Customer Due Diligence requirements.
The need for new methods of KYC
There are compelling reasons to use additional means to prove customer identity. In this age where data breaches are a common occurrence and fraudsters have ready access to data, just because a customer has matched to a name and an address database doesn’t mean that customer is who they say they are. Likewise, checking an identity document in isolation doesn’t mean that the owner of that ID document is behind that account application or transaction.
At the same time, banks and financial services firms are struggling with traditional database verification processes that can only verify c. 70% of their customer applications. The alternative is to ask a customer to send in a copy of their ID document or trudge into a branch to hand over documentation. The result? Friction, customer abandonment and an inflated cost per customer acquisition.
Industry regulators are now embracing “Reg-Tech” (aka Regulatory Technology) as a way to give confidence to their regulated merchants to use new KYC technologies to implement their “target hardening” policy towards financial crime, to support fintech growth and to help prevent financial exclusion.
How does digital footprint data compare with traditional data sources?
Data from digital footprints offer several advantages over traditional data footprints in terms of its breadth, depth, recency, historical value and how hard it is to spoof a digital footprint…
Breadth of data to allow verification against multiple sources
HooYu Identify is integrated into a range of online shopping, payments and social media providers that enable and allow us to perform identity checks against their customer data. Our data sources include Facebook, LinkedIn, Google+, Amazon, PayPal, Microsoft Live, Yahoo, Instagram and VK (Facebook equivalent in Russia).
Depth of data
A traditional data source will typically only be able to check a name and an address. On the other hand, identity data checked against a digital footprint from a source can prove attributes such as name, address, date of birth, gender, email address, phone number, nationality, occupation, employer and a wealth of other attributes…
Recency – digital footprint data is dynamic not static
Traditional data verification sources such as voter’s rolls are only updated every year whilst credit reference agency sources are updated with varying frequency, some monthly, others weekly and some daily. Compare this with the frequency that we create digital data through our Facebook, PayPal or Amazon accounts. In fact, 1.09 billion people log onto Facebook daily building on their digital footprint.
History is important!
Once somebody moves house, a source that ties the subject to that address diminishes in value. Digital data by comparison is always being built upon and revolves around the same entity meaning that digital data sources don’t diminish in value like static data. On average, consumers have around seven years of online history whilst some early online adopters have 12 years’ worth of digital footprint.
Digital footprints are harder to fake
Before HooYu Identify uses a digital identity source, it first checks that it’s a valid digital footprint belonging to a real person by analysing the footprint’s age, history and level of activity. Digital sources with little history or minimal activity don’t provide enough proof to show there’s a real person behind that digital identity source and as such aren’t admissible as evidence to build confidence in that identity.
What does your digital footprint say about you?
HooYu Identify compares identity attributes extracted from valid digital footprint sources against attributes extracted from verified identity documents and then references this against customer application data to provide an identity confidence score.
Digital footprints are fast becoming a key way to verify customers that would otherwise have been rejected and to detect fraudsters that would otherwise have sneaked past traditional data sources.
If you want to see what your digital footprint says about you, email firstname.lastname@example.org and we’ll send you a HooYu request so you can see first-hand how your digital footprint helps achieve KYC compliance.