Anyone who’s been paying attention to fraud trends in recent years will acknowledge that remote identity verification (IDV) has become a key component for businesses across various sectors to remain competitive. But beware: choosing the wrong IDV technology can have catastrophic consequences for your company’s bottom line.
Don’t be fooled by surface-level similarities—while many IDV solutions appear to use the same AI and machine learning approaches, disparities in their effectiveness can mean the difference between thriving and deep financial pain.
This post examines the top three most devastating financial consequences of failing to properly vet your IDV provider.
1) The crippling cost of inflexibility
Inflexible IDV systems are a ticking time bomb for your business. When fraud patterns shift overnight or new regulations emerge, rigid solutions leave you exposed and non-compliant. The consequences? Massive fines, reputational damage, and the urgent need for costly system overhauls.
Generic, one-size-fits-all technology is particularly dangerous. These systems are like an open book for cybercriminals, who exploit their well-known weaknesses. The resulting fraud losses can far exceed any initial savings, potentially crippling your business.
Vendors relying on third-party technology pose another severe risk. While fraud tactics can evolve on a daily basis, these providers might take months to update their solutions. During this lag, your business is a sitting duck for emerging threats.
On the other hand, IDV companies that develop their own technology can react rapidly to new fraud trends—often in under 24 hours—by training and releasing updated versions of their solutions that their customers can benefit from immediately. Companies should therefore look for vendors who invest heavily in research and development, continuously updating their proprietary technology.
Be sure to ask you provider the following questions:
- Do you develop and own your solution’s technology or do you license it from another provider?
- How is your solution able to be tailored to meet my business’ unique needs?
- How quickly are you able to adapt your solution to new fraud tactics?
- How do you train and update your solution to manage emerging fraud threats?
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2) The hidden drain of manual reviews
Manual reviews in IDV aren’t just inefficient—they’re a financial black hole. Every moment of delay in verification translates directly to lost revenue. A mere one-second delay can slash conversions significantly, with losses compounded during high-volume periods.
For context, manual review is commonplace, even for IDV solutions that profess they are “fully automated.” Ask your vendor how they deal with IDV transactions that are challenged—do they kick to manual review? And what is the average percentage of transactions they flow to a human eye?
Moving back to the cost of manual review: The labor expenses for such reviews are equally alarming. Maintaining a 24/7 global review team is an enormous, ongoing expense that eats into your profits.
But the real danger lies in human error. False positives reject valid customers, while false negatives let fraudsters slip through. Both scenarios lead to significant financial losses and damaged customer relationships.
With the rise of AI-generated deepfakes, the situation is becoming especially dire. Deloitte predicts $40 billion in GenAI-enabled fraud losses by 2027 in the US alone. Human reviewers simply cannot keep up with this threat. In contrast, top automated IDV solutions—like IDVerse—are able to identify 100% of spoof attacks with a 0% error rate for liveness detection.
Businesses must accordingly prioritize vendors offering highly automated solutions powered by advanced AI and machine learning algorithms. These systems can process verifications in seconds, maintain consistency, and continuously improve their accuracy over time.
Be sure to ask you provider the following questions:
- How does your solution handle flagged transactions? Is manual review involved?
- On average, what percentage of transactions involve manual review?
- What are the false rejection and acceptance rates of your solution?
- From a technology perspective, how are you dealing with the emergence of AI-generated deepfakes?
3) The high price of data insecurity
Partnering with an IDV vendor that cuts corners on data security is a recipe for disaster. According to IBM’s Cost of a Data Breach Report 2023, the average data breach now costs $4.45 million, but that’s just the beginning. Non-compliance with regulations like GDPR can result in fines of up to 4% of your global annual turnover.
The long-term damage to your brand can be even more severe. After a data breach, 65% of consumers lose trust in the affected organization. This translates to customer exodus, plummeting market value, and a tarnished reputation that can take years to rebuild—if recovery is possible at all.
To mitigate these risks, companies need to select IDV vendors with robust security measures. This includes end-to-end encryption, regular security audits, and compliance with regulations like GDPR, CPRA, and BIPA.
Be sure to ask you provider the following questions:
- What measures do you take to ensure data privacy and security?
- What certifications has your solution achieved in data privacy and security?
- Is your solution in compliance with all regulations in the areas where my business operates?
- How will you ensure that your solution remains compliant in the future?
The financial stakes are immense
Choosing the right IDV vendor isn’t just about improving efficiency; it’s potentially about protecting your company from financial ruin. The risks of making the wrong choice are simply too great to ignore.
IDVerse has developed solutions with each of these critical factors in mind. Our proprietary technology adapts in real-time to emerging threats, our AI-driven automation eliminates costly manual reviews, and our ironclad security measures safeguard your data and reputation.
Remember: The true cost of an IDV solution goes far beyond the initial price tag. Your choice today will determine whether your business thrives or becomes another cautionary tale in an era of growing digital fraud.
About the post:
Images and videos are generative AI-created. Prompt: An armored Brinks truck driving from right to left down a city street, back doors wide open, dollar bills flying out in a cloud behind it, oblivious smiling driver visible through the window, dynamic action shot, cinematic lighting, highly detailed, realistic style. Tools: Midjourney, Luma.
About the author:
Shane Oren is the CRO for IDVerse. He has over 12 years experience in sales for a range of businesses, from startups to large enterprises, where he has achieved record-breaking results. In his current role, Shane leads the North American office and manages revenue across the market, overseeing sales and customer support teams.