Technology advancements have simplified people’s activities; fintech is the leading industry due to its massive use of digital media for financial activities. Huge profits and other benefits in this industry have gained the attention of scammers. They are driving new means to hack the accounts of the people and steal all their data. A rising number of cyber crimes is forcing companies to devise ways to deal with these scams. 40% of US citizens have shown concern about data protection from scammers. Hackers quickly get their address, name, social security number and date of birth from the internet, then use this information to steal data. Electronic identity verification is the best solution against all these issues, as this solution enhances the companies’ security.

What is the Fintech Industry?

The fintech industry uses the latest technology for financial activities and competes with the traditional accounting methods. It is a combination of the financials of the company and the technology. For example:

1. Banks and Investment Companies
2. Mobile Banking
3. Insurance Companies
4. Budgeting apps

Types of Frauds in the Fintech Industry

Scammers come with new tricks and techniques to decode the algorithms of the user account, and here we will discuss the types of fraud involved in fintech companies.

Presentation Attack

In this type of account, hackers use the biometric data of the client to hack their bank account; for example, a picture of the customer is used to bypass the e-ID check. Companies that do not implement multiple-step verification usually face this type of scam.

Identity Fraud

Fake identities are used to decode the account; hackers usually get one or two pieces of information from the user and then manipulate the remaining information by themselves. They create dummy accounts of the user and operate these accounts for illegal activities. Children and homeless people are primarily victims of these activities because they get easily scammed, and there are minimal chances they will check their credit card history.

Account Takeover

An account takeover occurs when any illegal person hacks the client’s account. Hackers get access to the credentials of the client and bypass their account.

How is Electronic Identification Verification Used to Mitigate the Scams in Fintech Industry?

E-idv service providers enhance the companies’ security by allowing only verified persons to bypass the account; it discourages fake identities and all illicit activities.

Streamline Customer Onboarding

The E-idv process allows registration of verified users only; in the fintech industry, most scams are done by fake identities. So, when the client’s identity is authentic, scams can be controlled and minimized. This saves the time of both the company and the client, task can be performed in seconds with just a single click.

Prevent Fraudulent Activities

Companies become more secure due to E-idv solutions because every task is performed by advanced machine learning and artificial intelligence. These verifications are free from human error, so they are entirely reliable. Validation and monitoring of clients is done by electronic check verification; they are matched against the previously stored information in the database.

Improved Customer Experience

Prioritizing the client’s privacy is the customers’ fundamental right; businesses must consider it. This helps build improved customer experience, as users trust the companies that keep their information safe and secure. Companies that protect their clients from fraud develop their trust in them.

Cost Saving

Electronic identity verification has lessened the miscellaneous expenses of the companies, as they do not have to spend money on unnecessary documentation. Also, less labor force will be required for this verification. Customers’ traveling cost is reduced through it, as their authentication is done digitally. As the whole activity is performed by electronic identity verification, the company does not have to pay operators for this process; just a one-time investment in these solutions reduces the cost of the businesses.

Compliance with Anti Money Regulations (AML)

Companies’ compliance with AML is mandatory, as it prevents them from penalties. When a company is bankrupt, the economy of the country also suffers. The government has made it essential for companies to follow the AML rules and regulations.

Conclusion

The fintech industry is generating colossal revenue annually; scam in this industry leads to a loss in the overall economy. Regulatory authorities are driving ways to safeguard businesses from all fraudulent activities, as it will protect them from all future losses. Electronic identity verification is the best solution against all these issues as it promotes streamlined customer onboarding, authentication and continuous monitoring. Risk assessment of clients and risk scoring is done to prevent the company from future losses. Companies can improve their brand image and build the trust of the customers through these electronic identity verifications.