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Remote identity verification solutions have become more widely used following the Covid-19 pandemic, when many governments embraced the use of this technology to give proof of identity and vaccination status among the general public.
Since then, businesses have broadened their approach to identity verification use. For instance, when remote working became more widespread during the pandemic, and in-person verification was not an option, many organisations needed to develop entirely new processes to onboard and verify candidates online. This was understandably difficult for many businesses which didn’t have the resources, staff, or capability to create such processes or adopt new technology. As a result, these companies chose to loosen their fraud controls in an attempt to reduce friction and simplify onboarding.
Those loose fraud controls, when combined with the added confusion of the pandemic and the appearance of more sophisticated phishing and scamming schemes, led to fraud becoming a major issue during 2020-2021. IDology found a 53% rise in fraud attempts across almost all channels in 2020, with mobile fraud attempts experiencing a significant 89% increase among those channels.
Moreover, IDology has reported that the foremost challenge in combating fraud is identity verification. This has led to expectations that the identity verification market will grow to $43.45 billion by 2026, with a projected CAGR of 12.44%.
In this article, we take a closer look at the burgeoning identity verification industry, particularly at how this technology is being used in a number of industries to provide employers with increased security, flexibility, and convenience.
Financial services and banking
One of the clearest use cases for identity verification is in the financial services and banking industry. Due to the nature of the industry, identity requirements are heavily regulated in order to minimise money laundering and other illegal purposes. Know Your Customer (KYC) and Anti Money Laundering (AML) processes are legislated in most nations to verify that new and existing customers are not associated with illegal dealings.
Australia’s Digital ID system, developed by the Department of Finance, offers a voluntary, secure, and convenient way for Australians to verify their identity online. It aims to reduce the need for repeated physical ID checks and to minimize data breaches. The system does not create a centralized database but uses existing ID documents verified against official records. It’s part of broader efforts to enhance cyber security and privacy, including the National Strategy on Identity Resilience and the Identity Verification Services Act 2023.
HR professionals in the banking sector can leverage Australia’s Digital ID system to enhance their candidate screening processes by integrating Digital ID verification into their existing hiring and onboarding processes. This can streamline tasks such as verifying candidate identities, reducing the risk of fraud, and ensuring compliance with regulatory requirements.
Cryptocurrency
The Australian Securities and Investments Commission (ASIC) is pushing for cryptocurrency start-ups to obtain financial services licenses. This move aims to enhance regulatory oversight and ensure consumer protection in the rapidly-evolving crypto market. ASIC’s proposal comes amid growing concerns about the risks associated with unregulated digital assets and the need for a more robust regulatory framework to safeguard investors. The initiative reflects a broader trend towards stricter regulation of the cryptocurrency industry globally.
With this influx in usage and regulation comes increased need for verification and monitoring. Companies facilitating the setting up of cryptocurrency accounts, digital asset issuers, and cryptocurrency exchanges are under increased scrutiny to minimise money laundering and ensure the same high levels of verification as traditional financial services whilst maintaining the flexibility and convenience that cryptocurrency users expect. Businesses are looking to digital identity verification solutions in order to satisfy these needs. Such innovative, digital solutions provide them with a way to securely and seamlessly onboard new customers whilst meeting their compliance obligations.
Real estate
The Student Accommodation Council (SAC) report highlights that international students constitute only 4% of the total rental market in Australia, based on 2021 Census data. However, this figure is outdated, as the number of student visa holders has surged by 91.3% since then, suggesting the current proportion is actually closer to 7%.
The concentration of international students is significantly higher in inner-city areas, with some Local Government Areas (LGAs) having over 15% of their rental population as international students. Approximately 50% of international students reside in the private rental market, with a notable impact on housing demand and rental prices, especially in major cities. The Reserve Bank of Australia notes that even small changes in housing demand can significantly affect rental prices, underscoring the influence of international students on the rental market.
Digital identity verification technology provides all parties with a more convenient and flexible way to provide or collect this identification. This technology speeds up the administrative processes and enables real estate staff to have more time to concentrate on manual tasks.
The real estate industry has historically been a manual industry, but the digital identity technology has offered businesses the opportunity to reconsider how processes can be automated, freeing up valuable time for staff.
Government services, e.g. education and health
The Australian Government has recently been informed by MediSecure of a cyber security incident exposing the personal and health information of approximately 12.9 million individuals. This breach, affecting data related to prescriptions distributed by MediSecure’s systems until November 2023, includes contact and health information collected from both individuals and healthcare providers. This incident underscores the vulnerability of digital records and the importance of robust cyber security measures to protect sensitive information.
Along with this data capturing came the need to equip citizens with evidence of their identity and associated vaccination status to gain access to facilities like shops, workplaces, hospitals, and more. Societies around the world have therefore become rapidly accustomed to this kind of identity and health status verification, and we predict that the breadth of this technology will increase in application for healthcare services over time in order to make healthcare access more accurate and efficient.
Another government service in which we see the application of identity verification is education, particularly in the large-scale examinations at high school and universities. The effective use of identity verification at these locations will enable examiners to quickly and accurately verify the participation of certain students and also allocate results accordingly. In the aftermath of Covid-19, Australia is witnessing a notable rise in international student enrolments. According to data from the federal Department of Education, there were 833,280 international enrolments recorded between January and July 2023. Universities in particular are transitioning to a wholly digital experience for students, and we believe digital identity verification will become vital for wider educational service accessibility.
Ecommerce and online shopping
Online shopping has become integral to Australian consumers, with the country experiencing one of the fastest-growing e-commerce markets globally. The Covid-19 pandemic accelerated this growth, as lockdowns pushed many Australians to shift from physical stores to online shopping for both discretionary items and necessities. Although growth plateaued in 2023, online retail is expected to continue expanding, gradually taking a larger share of the retail market as consumers increasingly appreciate the benefits of online and omnichannel shopping.One concern from this boom in online transactions is the equivalent increase in phishing and scams targeting transactions and vulnerable customers. Digital identity verification is one solution to this scourge by acting as an extra layer of protection to ensure that the purchaser is indeed the person they claim to be prior to the transaction being completed. The incorporation of digital identity verification will help provide customers with safety and security when transacting online.
Driven by the in online transactions and digital lifestyles, the demand for digital identity verification solutions is growing at pace. Even after the initial pandemic surge, online shopping continued to grow. By 2024, 17.08 million Australians were using online shopping websites monthly, a 45% increase from 2020.
Businesses are moving online and realising that they need to implement identity verification solutions for their own financial and data security, as well as the safety of their customers and users. We can see how identity verification is currently required in a wide range of industries, and this is projected to keep growing as more businesses look for growth opportunities and become digital-only.
National Crime Check provides a range of digital identity verification and criminal background screening solutions. To discuss how our screening services can be applied effectively at your business, contact us here!