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Online Address Verification: Potential Method to Shun Financial Scams

Digital trends are on the rise, which is encouraging, but the financial sector needs to show concern about fraudulent activities. People are more likely to use digital apps for better customer service, but the crime rate reveals the abundance of financial system loopholes. In this digital age, e-commerce platforms and food delivery apps are generally more popular. Mechanisms for KYC compliance must be in place to prevent financial mishaps. The protocols to verify address for secure business transactions is one of the most crucial KYC features. 

 

Financial Times reveals a 39% hike in the scam rate, mainly with reference to KYC and counterfeit online address verification. Criminals use illegal channels for criminal objectives. The article would emphasize how important the verification process is for reducing crime. 

What does “Address Verification System” mean? 

Financial security is a major concern for businesses, and digital models offer ways to validate address for better data security.  Prior to conducting any transactions, the primary goal of verifying address is to confirm the customer’s address. Whether the address is accurate or not, it is crucial to demonstrate identity. Verification of address has become necessary over time to fend off dirty tricks. 

 

Importance of Address Verification

For safety reasons, businesses and the financial sector advise address verification online. Without an address, a customer’s information is incomplete, and if there is a mistake, the company as well as the digital onboarding customer are accountable. Being aware of the importance and characteristics of address verification as well as the pertinent documents is one of the most crucial KYC components. In the digital age, accepting crime is not an option.  Every industry, including those in travel, hospitality, services, business, etc., demands complete customer data, including up-to-date address information. The intention is to contact the fraudster in the event of any undesirable circumstance, such as a credit card default or cybercrime, etc. 

 

Verifying an Address: Comprehensive Checklist 

The number of financial channels is growing daily, and digitization is a top priority for them. It is crucial to be aware of the list of documents needed for accurate address verification. The checklist of documents included a passport, identity card, driver’s license, insurance policy, utility bill, bank statement, rent agreement, tax bill, etc. For proof of address validation all of these documents require automated verification.  Systematic proofing makes use of OCR software. The software processes the documents for precise and error-free validity. It extracts the person’s name for verification while checking. The AI-enabled software immediately detects whether a document has been altered or falsified. Additionally, the documents proving your address shouldn’t be older than three months. It implies that all the information must be updated to allow for ongoing oversight. 

 

Benefits of Customer Address Verification 

For significant benefits, businesses are expanding the scope of their protocols. A number of benefits are below.

 

Reduces the Crime Rate

It’s critical to comprehend that increasing fraud is the reason businesses are looking for  effective address verification approaches. Bloomberg reveals that online address verification uncovers the majority of chargebacks and shows that a digital verification service provider ensures 100% verification to stop fraudulent acts. It represents the requirement for thorough verification in the multibillion-dollar banking, insurance, and other financial industries. 

 

Drop in the Number of Shipments Return

If a customer has a negative experience, the business will lose money, and no company is equipped to handle repeated package returns. The Financial Times reports an upsurge in the number of returned package frauds of 78% in 2021. Products sent back totaled an estimated $760 billion. 

Improved Customer Experience 

In addition to business objectives, businesses prioritize customer expectations. Valid customer information, including an accurate address, is indispensable for a customer-friendly experience. An updated customer database is necessary to prevent fraudsters and improve the user experience. 

Compliance with Regulatory Bodies 

FATF is at the top of the list for regulatory compliance measures to stop money laundering and terrorism financing. The address verification feature’s installation guarantees business security. Although not all of the features have been fully implemented, FATF is tightening the rules for stakeholders who are not compliant. The World Bank, the IMF, and other financial institutions have serious concerns about compliance with online address verification policies. 

Final Thoughts 

All the business partners should be on board to thwart fraudulent activities. Strict laws must be put in place in both developed and developing nations to guarantee KYC in every industry. Digital advancement is changing the global financial dynamics. The financial industry is increasingly using address verification.  Due to the risk involved with handling sensitive data and transactions, manual verification is no longer immune to the system. AI models are used to ensure the efficacy of the process and to secure the financial platform. To make sure the procedure is effective and to secure the financial platform, AI models are used. 

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