Transforming the World through AI-Driven Identity Verification Services

Digitization has benefited modern industries in various ways. But it has also enabled cybercriminals to exploit companies through sophisticated techniques. In the crypto industry, there was a financial fraud of around $600 million because of loopholes in the security protocols. Demand for powerful digital solutions is not only increasing in the crypto exchanges but also in the other financial sectors as well. In this context, organizations must pay attention to the shortcomings in regulatory and safety issues. Following AML/KYC standards is the only way for businesses to ensure security for their clients. Pressures from regulatory bodies and the requirement to maintain clientele have resulted in the application of AI-backed identity verification solutions.

Incorporating KYC Checks into De-Centralized Finance (DeFi) and Centralized Finance (CeFi) Systems

European Union (EU) has constitutionalized KYC checks for crypto-based businesses, which means Decentralized Finance (DeFi) systems have become the prime focus due to poor security measures. The financial loss in DeFi hacking has reached $1.4 billion, but there are millions of investors who still trust the system. Digital identity authentication arose as a solution for issues in Centralized Finance (CeFi). DeFi system will also benefit from the perks of KYC checks. However, there are differences in both financial systems, but they must work on building trust with clients while securing their transactions. In this regard, AML/KYC regulations will help both financial systems tackle their respective issues. Some DeFi services will adopt KYC checks to enhance client identity verification systems. Whereas CeFi will embrace blockchain technology and a shared networks approach.

In the coming years, technological advancements will continue to support financial institutions in their implementation of KYC verification systems. Point-based identity authentication services that served outdated financial and AML requirements will lead to digital-native authentication services. Organizations building digital identity infrastructures will highly likely adopt privacy and smart contract ideas from DeFi to facilitate clients better.

Revolutionizing the Corporate World through Interoperability

Previously, there were several solutions introduced to handle identities on online platforms. For instance, password managers and government-issued e-identities for identity authentication service providers. Industries working on Self-Sovereign Identity (SSI), digital identity tackled in a decentralized way, also benefited from the aforementioned solutions. One of the big obstacles to client acceptance has been interoperability. The need for online identity and asset management reached a critical point in the previous year, with high demand for e-vaccination certificates.

Such progressive steps, encouraged by government advocacy for identity verification systems and clients’ need for convenient services will continue to prevail.

Organizations collaborating with identity authentication partners will have a competitive advantage because of expanding network effect. Shifting from point-based digital solutions to interoperable identities will eventually be advantageous for both clients and organizations that desire more trust in financial transactions.

Latest AML/KYC Regulations will Become more Pragmatic

The modern wave of AML/KYC standards across the world can guide digital industries into secure standardizations. However, their application will still be a challenge. In the European Union (EU), the 6th AML directive introduced online asset service sector to the list of obligated parties. The Infrastructure Investment and Jobs Act in the USA have come under investigation for the vague definition of broker and tax-related conditions for crypto-based exchanges exceeding the amount of $10,000. Such latest guidelines must be pragmatic for implementation.

Progressing forward, advanced regulatory burdens impact not only industries but also government institutions. The operational demands of legislation, for instance, the practicality of inheritance reporting standards will become clearer. There will be new approaches to create the stability that will guarantee easy adherence to compliances for industries around the globe.

Consequently, organizations will highly likely move from reactive KYC programs to proactive regulation approaches. In the future, organizations will never settle for KYC providers that only check regulatory requirement boxes. Instead, industries will choose identity verification services that will meet operational demands, for instance, convenient setup and automation needs.

The Future of AI-Driven Identity Verification Services

AI-backed Identity verification solutions are critical in blockchain technology and crypto-oriented businesses. In the digital world, consumers do not want to compromise their identity credentials and want better security. Undoubtedly, such kinds of demands will discourage bad actors while ensuring a positive experience for clients. Let’s have a general look at the innovations.

Biometric Verification Services

Biometrics technology will become more widespread in the coming years, replacing passwords and PINs. In the time ahead, behavioral biometrics will become popular, which is about decoding the behavioral pattern of consumers. It will not only benefit law enforcement agencies in investigations but also financial service providers in monitoring consumers’ activities.

Blockchain Technology

Investors will invest in advanced technologies like blockchain to support decentralization of identity data and motivate government institutions for aid. According to reports, the blockchain industry was expected to reach $5 billion in 2021 and is forecasted to achieve $67 billion by 2026. The predicted period shows the Compound Annual Growth Rate (CAGR) of 68.4% for the industry. The application of blockchain technology will facilitate identity verification service providers in securing the sensitive data of clients such as COVID-19 vaccination cards, licenses, and academic qualifications. This approach will not only improve security but also ensure trust from consumers.

Facial Recognition Technology

Law enforcement agency has been improving identity and access management systems by using facial verification solutions with liveness detection feature. For instance, the accuracy rate of the algorithm behind the facial recognition system has increased significantly. As per recent statistics, the financial worth of face verification market was around $5 billion in 2021. It will grow to achieve $13 billion in 2028 with a CAGR of 14.2% for the predicted time period.

The Final Verdict

Identity verification services will keep evolving in the future because of the demands for more effectiveness, interoperability, and privacy needs. Altogether online companies and authentication service providers must build a powerful identity infrastructure that separates identity from the digital ecosystem. Freeing the system from mandatory go-betweens who only want to secure their profit. The capability to authenticate online identity only one time will save a lot of time, and resources for the companies. This step will be truly transforming to win the trust of clients in the global digital village.

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Researcher, Fraud Preventer, Traveller, Reader, Writer, Thinker :)

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Candice Spencer

Researcher, Fraud Preventer, Traveller, Reader, Writer, Thinker :)