Over time, fraudsters have become more sophisticated than one could have imagined. They have become strategically stronger than they used to be. For the same reason, the identity fraud rate soared skyhigh in 2020. Furthermore, the first quarter of 2021 proved to be more lethal with criminals using biometrics for their illicit gains. Nevertheless, there is always a way out and to fight criminal entities, identity verification is what companies are depending on. Did you know that the forecasted size of the identity verification market is USD 18.12 billion by the end of 2027? There have been many ups and downs in the identity verification market. Let’s take a look at the trends that we can expect in 2021.
NFC-based Identity Verification to Make its Way
Near field communication technology has been bringing many innovative solutions in the digital world. From cashless payments to touchless data transfers, NFC has brought a lot of convenience in various sectors of the world. Now, it is making its way through the identity verification market. All it takes is a chip-based ID document and an NFC-enabled device to validate the identity of an individual and streamline the customer onboarding process. More than 20% of the world population has access to devices with the NFC feature. It is a great opportunity for the IDV market to make its move and turn the verification process more effortless.
Ethnicity Issues will Hit Biometric Authentication
According to Shufti Pro’s Global Identity Fraud Report 2020, fraudsters made many attempts to dodge biometrics and they have grown dramatically and strategically in their moves to fool identity verification systems. Some experts are claiming that the biometric system is not strong enough to verify every ethnicity. Hence, biometric authentication will face ethnicity issues, especially service providers who fail to train their AI models now and then.
Identity Frauds will Continue to Increase
According to a report from Statista, identity fraud is forecasted to increase by 82% this year. Sounds scary, doesn’t it? Have you wondered about the frauds that are likely to increase this year? Well, account takeover fraud and synthetic identity fraud are on top of the list. Criminals of 2021 are technologically equipped giving businesses a tough time. Apart from ATO and synthetic identity fraud, there is a new breed of scams being cooked in the world of fraudsters. Want to know about this new fraud? Keep reading to find out.
New Breed of Scams Is All Set to Increase Challenges
‘Replay attacks’ is what we are talking about. You might have encountered the name before but that was the manual one. This year, digital replay attacks will take over. Since businesses may not know about this, it is likely to fall prey to the new breed of scams. Fraudsters submit the same identity document multiple times. What’s the scam here? Well, they change a chunk of information in the document every time, so the online identity verification system may not be able to identify it on time.
Criminals Will Lay Hands on AI and ML
As mentioned earlier, criminals of 2021 have access to Artificial Intelligence and Machine Learning. Their enemy (the ID verification system) is also backed by AI making the war fatal between both parties.
KYC/AML Regulations to Become More Rigid
The global regulatory landscape for businesses has become more rigid than it used to be. Last year, approximately EUR 12.09 billion were issued in non-compliance penalties. The corporate infrastructure failed to comply with the AML regulations that ultimately led to hefty fines. Apart from the fines and damaged reputation, fraud rate skyrocketed. To ensure that history doesn’t repeat itself, regulatory bodies have stepped up and imposed more rigid KYC/AML regulations. For instance, the 6AMLD is in action in the European Region, whereas the threshold for international transactions has decreased as well.
It All Narrows Down to…
The fact that fraudsters have become more active and they are using advanced technologies to fulfill their illegal aims. The identity verification market is currently facing a dramatic turn of events and the post-pandemic situation may not be as favorable as everyone is expecting. The 2021 trends for the identity verification service providers are astonishing.
- The KYC/AML regulations are becoming rigid with every passing day
- NFC-based identity verification is all set to bring convenience to the process
- A sharp increase in identity fraud is expected in 2021
- Digital replay attacks will cause more trouble for businesses
- Ethnicity issues are no longer limited to humans. Biometric authentication will face the same problem
Before the situation gets worse, the corporate ecosystem has to take all necessary steps to comply with the laws, prevent fraudsters from achieving their illicit goals and combat all the emerging facets of identity frauds.
Meta: Identity verification systems have evolved over time and the 2021 trends for this market are surprising. Give this blog a read to know more.