By Siddharth Kukatlapalli, Co-founder and CBO at Syntizen Technologies
Digital identity refers to the collection of information that uniquely identifies an individual or entity in the digital world. It includes all the data that is associated with a person’s online activities, such as their usernames, passwords, email addresses, social media profiles, online purchase histories, and other digital footprints.
Digital identity is important because it is often used as a means of verifying the identity of an individual online. This can be used for a variety of purposes, such as accessing online services or making secure transactions. However, it also raises concerns about privacy and security, as individuals may not always have control over how their digital identity is used or shared by others. However, its growth also raises concerns about privacy, security, and the potential misuse of personal information.
Ensuring a secure niche of digital identity
The establishment of digital identity is only possible through a secure means of verification of the credentials. Following modern technological developments and their deployment will play a major role in enabling more secure, convenient, and privacy-focused with the increased use of biometric authentication, decentralised identity systems, advanced verification techniques, and improved data privacy measures in the year 2023.
Mentioned below are some major trends that will play an important role in securing digital identity:
e-KYC: e-KYC solutions streamline the entire verification process by involving the use of digital technologies, such as biometric authentication, digital signatures, and electronic identity verification systems, to verify a customer’s identity remotely. In addition to helping to reduce data breaches and identity thefts, e-KYCl KYC prevents sensitive information from being stolen by fraudsters. A major boost to the e-KYC verification in 2023 can be face-powered verification enabled by Aadhar, which will allow institutes to capture live faces to ensure their digital identity if it gets approval from the regulatory authorities.
AML (Anti Money Laundering): In the year 2023, anti-money laundering (AML) solutions will be a key trend in the digital realm. As a result, financial institutions and government agencies can track, examine, and report individuals’ data and transactions in order to identify, stop, and report shady money laundering operations and improve compliance with anti-money laundering laws. In addition, the organisation’s readiness for AML compliance will be strengthened by deploying AML solutions that leverage advanced analytics, artificial intelligence, and machine learning. Overall, AML compliance is an essential aspect of digital identity management, as it helps to ensure the security and integrity of online transactions and protect against financial crime.
Forensic checks (Artificial Intelligence): AI has become an increasingly popular tool for digital identity verification and will continue to be a major trend in the year 2023, particularly in the financial services industry. AI-powered digital identity verification typically involves the use of machine learning algorithms to analyse a variety of data sources, such as government-issued identification documents, biometric data, and behavioural patterns. AI monitoring technology will empower financial institutes to reduce fraud and provide a secure digital channel and help them to derive profit.
Digital KYC: Along with e-KYC, the adoption of digital KYC, also called video KYC, in the year 2023 will be one of the main channels for financial institutes to scrutinise the identity of individuals during the digital onboarding process. The approval of the utilisation of assisted and non–assisted modes of verification from regulatory authorities will empower the financial institutes further for the effective establishment of customer identity.
Furthermore, the digital KYC trend in 2023 will get further support from the recently amended Prevention of Money Laundering (PMLA) Act 2002 by the Ministry of Finance which has provided several options for electronically capturing customer details like initiating Video KYC to capture customer details. A video KYC authentication process has subsequently been endorsed by the RBI for the verification of customers, enabling video KYC authentication.
The use of digital identities is increasing globally due to technological advancements, internet use, and mobile devices. Consumers can complete identification services remotely or more conveniently with digital IDs using digital devices like mobile phones. In addition to automating operations, digital management solution providers help identify fraud and reduce the risk of cybercrime within data systems.
Additionally, the advent of fintech companies or digital solution providers is helping financial institutions reduce integration headaches, provide a multilayer digital onboarding experience and secure digital identity with OVD, sanctions screening, KYC, and AML checks that are supported by a single, stable, and extensible API.