Identity Theft in Neobanks: How We're Ending This Fraud

Key takeaways

 

1. Digital Banking and Identity Theft: The growth of digital banking has led to increased convenience but also heightened risks of identity theft, emphasizing the need for robust security measures.

2. The Impact of Identity Theft: Identity theft in digital banking can lead to significant financial losses, with fraud expected to reach $19.6 billion by 2025, highlighting the critical need for effective identity protection strategies.

3. Enhancing User Experience and Security: The onboarding process in neobanks is crucial for both user experience and security, with seamless and solid KYC methods ensuring the safety and convenience of users.

4. Robust Identity Verification with Didit: Didit offers a comprehensive identity verification system, utilizing NFC technology and AI-enhanced facial biometrics, significantly reducing the risk of identity fraud in neobanks.

The rise of digital banking has ushered in a new era of convenience and financial accessibility for people. However, this transformation has also fostered the emergence of new forms of crime, with identity theft being one of the main threats to both neobanks and their users.

Because where there's profit, there's also risk. Scammers take advantage of the ability to create accounts remotely using false credentials that go unnoticed by banking systems, making the fraud rate in digital banks double (0.30%) that of credit card companies (0.15%), according to a study by Unit21.

This issue, identity theft in neobanks, can be solved with a robust and reliable identity verification system like Didit. But let's delve deeper.

The Problem of Identity Theft in Neobanks

The main issue of identity theft in this digital banking sector is the use of a third party's private information to commit illegal acts, endangering both the impersonated individual and the bank itself.

There are many ways to steal someone's data and impersonate them online, like phishing, Dark Web data banks, etc. However, the goal is often the same: engage in fraudulent activity that typically starts with opening an account at the neobank and continues with applying for a loan that is never repaid.

This problem highlights the need for robust identity verification systems or KYC, capable of clamping down on this fraud, which according to a report by Jupiter Research, is estimated to reach $19.6 billion by 2025, a 350% increase compared to the $4.4 billion lost in 2020. As we've seen with the latest artificial intelligence-generated documents, crime never rests.

How Neobanks Can Detect Identity Theft

The onboarding process is crucial in all sectors, but especially in banking and neobanking, where identity and financial fraud can cause significant issues. Besides providing a great user experience, this phase should also validate and verify the identity of the person on the other side, with a seamless and solid KYC method, yet focused on the individual's convenience.

How do we do it at Didit? Our IDV system is based on NFC technology, with which we read the chip of official documentation issued by the National Police (or competent authority), and then verify that the person is who they claim to be using facial biometrics enhanced with Artificial Intelligence. This KYC solution has a 99% success rate, making it the safest option to combat any identity fraud online.

Moreover, this is a technology that is continuously learning thanks to our Machine Learning technology, which improves its capabilities with each verification process it performs.

Business Application, the Platform to Ensure Everything Goes Smoothly in Your Business

Didit's Business Application is the simplest way to check the health of your business at any time. In this console, you will have access to a lot of information and, for example, you can check the status of each user's verification who wanted to access your service or organization, as well as download a comprehensive report of each specific case, where you'll find advanced information about it.

To access our Business Application, you will need to create your Didit Business plan.

How Didit Helps Reduce Identity Theft in Neobanks

At Didit Business, our mission is to humanize the internet and reduce online fraud. To achieve this, we've created a 360 infrastructure focused on digital identity, where identity theft has no place. That's why we're equipped with the most advanced technology to combat this issue.

Thanks to this, we can offer a robust system of identity verification for neobanks and any financial entity, which also complies with all regulations regarding individuals' information privacy.