Identity verification and identity authentication are essential steps in the verification process. While both these approaches are used to confirm a user's identity, there are several key differences that set these methods apart.
Read on to learn more about the key differences, how these approaches work, and future trends in identity management.
Identity Verification vs. Identity Authentication: Definitions and Key Differences
Identity verification is a critical process used by organisations to ensure that an individual is who they claim to be. It plays a key role in preventing fraud, ensuring security, and maintaining compliance with regulatory standards, including anti-money laundering (AML) regulations and Know Your Customer (KYC) laws.
Identity verification is usually the first step in onboarding a new user to a digital service, like an online bank account. The process itself typically involves collecting personal information, such as their full name, date of birth, address, and identity documents. This data is then cross-checked with a trusted source to confirm their identity.
Alternatively, identity authentication is the process of confirming an individual is who they claim to be when accessing a system, service, or resource. Authentication is a crucial aspect of security that ensures only authorised individuals can access sensitive data, systems, or accounts.
With this in mind, identity authentication is typically implemented when a user attempts to access their online account. It often involves verifying credentials, like passwords, security questions, or biometric data.
Ultimately, the key difference between these two processes is that identity verification is used to confirm a user's identity, whereas identity authentication ensures that the person accessing a system or service is the same individual who was previously verified.
Methods for Identity Verification and Authentication
While identity verification and authentication are two distinct processes in themselves, another key factor that sets them apart is the methods they use to confirm a person's identity.
Identity verification typically involves checking official documents, like passports, birth certificates, and driver's licenses. These documents then undergo database verification by cross-referencing the data with trusted external databases. These days, artificial intelligence and machine learning-based verification tools are becoming a more common part of the verification process. For example, facial recognition or video verification tools are often used to match the individual with their government-issued ID.
The identity authentication process typically relies on credentials, like passwords, PINs, tokens, or biometrics, previously set up during the initial account creation stage. This process often includes two-factor authentication (2FA) or multi-factor authentication methods (MFA), which require clients to provide at least two or more authentication factors before the user logs in to their account. As a general rule, authentication factors help to boost security, with Microsoft noting that multi-factor authentication reduced the risk of unauthorised access by up to 99.9%.
Technology and Tools Driving Identity Verification and Authentication
As technology continues to evolve, so do the different types of digital identity verification solutions available. This ultimately allows businesses to make their identity verification and authentication processes more secure and efficient.
Here are just some of the advanced technologies and tools being incorporated into verification systems.
AI and machine learning
AI and machine learning are already playing a key role in the process of verifying user's digital identities online. For instance, AI is often used to identify fraudulent documents by analysing features such as fonts, holograms, barcodes, and signatures. Similarly, machine learning models can be used to detect subtle signs of forgery or tampering that the naked eye could miss, improving accuracy and reducing identity fraud risks.
Facial recognition
Advances in facial recognition technology, powered by AI, allow systems to authenticate users with a quick facial scan. This technology is commonly used in smartphones, airports, online banking, and border control settings, allowing for seamless and secure authentication.
Mobile authentication apps
Tools like Google Authenticator or Microsoft Authenticator generate time-based one-time passwords (OTPs) that users must enter along with their password. These apps are more secure than SMS, as they are not susceptible to SIM swapping or interception.
Hardware tokens
Physical tokens such as USB security keys (EG. YubiKey) act as a form of MFA by requiring users to plug the key into their device and press a button to authenticate. These are popular in industries with high-security needs, including the finance and government sectors.
Ultimately, these technological advancements are revolutionising verification and authentication systems by making processes faster, more secure, and more user-friendly.
Use Cases Across Industries
Identity verification and authentication play a key role in business processes across numerous industries, including:
Financial services, including banks, brokers, credit card providers, and fintech companies,
Healthcare,
Real estate,
Insurance,
E-Commerce, and
Government.
As customers become increasingly concerned with protecting their private information, these processes help to establish trust online. According to the recent Australian Community Attitudes to Privacy Survey (ACAPS), a significant majority of Australians prioritise privacy when selecting a product or service, with 70% considering it ‘extremely’ or ‘very important,’ and an additional 26% rating it as ‘quite important.’
Challenges and Limitations
Although technological advancements have led to a number of developments in terms of verification and authentication, these processes aren't without their challenges and vulnerabilities.
While biometric data are considered one of the most secure ways to prove users' identity, this approach isn't foolproof. Biometric factors, including facial recognition and fingerprint scans, can result in false positives and negatives. Perhaps the most concerning aspect of biometric data is the inability to change these biometric factors in the event they're compromised. Unlike passwords, which can be easily changed, an individual's unique physical traits are immutable.
Challenges also arise when it comes to providing a streamlined user experience. Ultimately, the goal is to balance security with ease of use. Customers expect digital platforms to be quick, so verification and authentication solutions must be frictionless while ensuring security. These days, customers can have their pick when it comes to different services and platforms, so the user onboarding experience can mean the difference between converting a customer or losing them to a competitor.
Future Trends in Identity Management
Identity management is rapidly evolving in response to technological advancements, user demands for convenience, and the need for enhanced security. With the global identity verification market forecast to generate $21.8 billion in revenue by 2028, many organisation are investing heavily in identity management solutions. In fact, we're already seeing several key trends emerging that are set to shape the future of how individuals and organisations manage, verify, and authenticate identities.
Decentralised identity, also known as self-sovereign identity (SSI), gives individuals control over their own identity data, which is stored in a secure digital wallet. Unlike traditional identity systems managed by centralised authorities (EG. governments and companies), decentralised identities leverage blockchain technology, allowing users to decide when and with whom to share their credentials.
Continuous authentication is another emerging trend in identity management that focuses on verifying a user’s identity throughout a session rather than just at the initial login. Unlike traditional authentication methods that validate the user once (EG. via passwords, biometrics, or tokens) at the start of a session, continuous authentication continuously monitors various signals and behaviours to ensure that the person interacting with a system is the same one who initially authenticated.
As a business, it's more important than ever to adopt advanced identity management strategies to protect your data and the personal information of your customers. Data Zoo's modern identity verification solution allows businesses to operate with agility, stay compliant, and onboard their customers faster. Book a free demo with our experts today.