Their new detection technology could be a game changer for the financial sector
Whenever a discussion regarding anonymity online comes up, I always think back to the cartoon where one dog on a computer says to the other, “On the Internet, nobody knows you’re a dog.”
In the years since Peter Steiner first published this cartoon in the New Yorker, the way that we use the Internet has changed and with it, a good portion of the anonymity that marked its first years.
Now we prefer to have more information about who we are talking with online. This is especially true when it comes to financial services that require some form of government issued ID. Spotting forgeries or other potential problems can mean the difference for some companies between losing a lot of cash and their ability to operate, making fast and efficient authentication extremely valuable.
To solidify themselves as a leader in the field of ID authentication, Israel-based AU10TIX announced on Thursday that their technology is now capable of detecting forgeries produced on synthetic devices.
This does not refer to IDs where one of the elements has been altered, but where the fraudster creates a brand new ID, similar to a counterfeiter who prints new dollar bills. These IDs have become increasingly difficult to spot, with most being undetectable to the human eye.
The company is a subsidiary of the international security company ICTS International, whose work has focused primarily on processing travelers securely and quickly through checkpoints like airports. AU10TIX is already working with big name clients like PayPal, Zopa, and Payoneer, as well as more traditional banking institutions. While AU10TIX has had no external financing up until this point, its investors are considering accelerating its growth by seeking outside investment.
Understanding the need for fast and accurate ID processing
Regulation associated with the Know Your Customer (KYC) guidelines require that businesses verify that their customers really are who they say they are to help prevent problems like money laundering, financing of terror groups, and other kinds of fraud.
Traditionally, companies hoping to onboard new clients and customers would have to review IDs manually in a back office with Optical Character Reading (OCR) systems, which can be costly in both time and manpower. When a company receives the identification, nowadays generally sent as a picture taken from a smartphone, they need to ascertain that it is legitimate first before they can onboard the new client. More often than not, this is all done through manual inspection and data entry.
The back office needs to determine if it is an authentic government issued ID or forgery, and if the image quality is good enough to use. The next onboarding steps are to check that the client exists and is not included on restrictions lists such as the politically exposed persons list (PEP), which contains individuals with sanctions against them. It is worth noting that many of these databases themselves have been compromised, such as was seen in the hacking of credit agency data brokers Experian back in October.
Expediting the onboarding process
Confirming that a potential customer is who they say they are can be a serious ordeal for companies working in the highly regulated financial industries. This includes banking, payments, money transfers, remittances, e-wallets, lending, forex, gaming, and other financial services.
According AU10TIX’s VP of Marketing Ofer Friedman, the biggest bottleneck in this industry is customer onboarding due to the verification process. “The fact is that nowadays 50-60% of the people applying for a service are abandoning/churning from the funnel before reaching the end,” he explains to Geektime.
AU10TIX’s solution is a cloud-based platform that is able to process all elements of an ID automatically. If the system receives a decent image, then the ID can be reviewed and its details uploaded in roughly 10 seconds, providing immediately usable data. Beyond having scary levels of forensic detection capabilities, their software is able to pull out additional data from an image that can raise suspicions.
Friedman adds that AU10TIX is the only service provider that is able to process IDs in Chinese and Russian characters, giving them a bigger market reach. He says that systems like his are going to be essential for the future of the financial industry as they encounter greater volume. “This industry isn’t just booming, it’s changing the world,” he tells Geektime.
Since the system works between AU10TIX’s API and the API of their company, they are able to remove humans from the equation, cutting down on time and according to Friedman, 80% of costs associated with this often grueling procedure.
Stacking up to the competition
One of their main competitors is Jumio, which offers an OCR-based platform. While they are working in the same field, it appears that if they are relying on this older technology, they are still dependent on varying amounts of human interaction. This can cause delays in onboarding and cost money in the long run.
Friedman believes that AU10TIX represents the 2nd generation of compliance processing. They are now appealing to global regulators to qualify and accredit their solutions, hoping to gain public recognition of their technological advantage. He says that they want to be labeled as the only 2nd generation provider of these solutions. “We will work with any regulator that is ready to examine this technology,” adding that, “Right now the regulators don’t acknowledge technology in any shape or form.”
AU10TIX’S ID verification software represents the fascinating evolution of technology that was originally built for the security industry and has since blossomed into the financial sector. While I am less than thrilled to see forex companies benefiting from faster onboarding, the repercussions for banks and newer forms of digital financial bodies is very exciting.
As the global trend of moving towards digital continues, we have far less human interactions. While this increases the speed of services, it also creates new gaps that shady characters can take advantage of. Regulators are justifiably concerned and enforcement is a necessity of our times.
AU10TIX appears to be the real leader in this sector with technology and an approach that far outpaces others in the industry. With forgers learning new tricks to beat the system, we are likely to see an expansion of services like AU10TIX that will keep the cogs greased and business running safely and smoothly.