Just like other finance domains, the space is also an ever dynamic one and is highly susceptible to changes. It is constantly evolving and as it does so, it presents both exciting opportunities and unique challenges for businesses.
In 2024, Electronic Identity Verification or EIDV has come up as a critical tool to help finance businesses focus on improving compliance and building trust with customers. These benefits are also being accessed by businesses who are learning to navigate a landscape and now focusing on stricter compliance regulations and user e-identity authentication.
What is EIDV?
Electronic Verification includes a range of different types of authentication processes. EIDV or Electronic ID Verification is just one of these. As listed in the eIDAS (electronic IDentification, Authentication and trust Services) regulation which is an EU law that covers regulations surrounding the digital authentication domain, EIDV allows for the verification of a user’s electronic presence (e-identity).
EIDV is based on a series of specific criteria. Since currency exchanges are a relatively newer form of business, for them, these criteria act as an essential framework.
High level of assurance (LOA)
EIDV demands meticulous care and attention in order to ensure the authenticity and validity of the user’s e-ID.
Transparency
Via the EIDV regulations, eIDAS gives us a clear list of services that businesses can make use of in order to carry out their authentication processes. These businesses are part of a centralized signing framework. This allows security stakeholders the power and ability to engage in dialogue about the best services, technologies, and tools.
Data protection
Platform is notorious for the anonymity that it offers to the stakeholders involved. When we add customer eID verification to the process, customers can get wary of their data being leaked. Thus, for EIDV, strict data protection is an essential criterion for the EIDV verification process. Handling of data must be secure, via encryption, and must comply with data privacy regulations. These include the GDPR (General Data Protection Regulation), and other personal data protection laws.
Interoperability
The EIDV solution must be able to network with other EU members’ electronic identification verification schemes. This can help to facilitate cross-border transactions thereby fuelling international business. It can also help to boost the use of decentralized financial models.
Electronic Identification Verification For Businesses – Why At All?
The anonymous and decentralized nature of business was what drew the public towards it. Including the EIDV process in the mix, brings in the risk of loss of anonymity and surveillance by external regulatory agencies. While this may seem bad for those who prefer anonymity just for the sake of it, it is essential to fight financial fraud among other crimes.
This, however, is not the only reason why EIDV is an essential process for currency business platforms. There are several factors that contribute to the growing importance of EIDV for businesses.
KYC (Know Your Customer) and AML (Anti-Money Laundering) compliance
Regulatory requirements that surround KYC and AML processes are tightening globally. EIDV provides us with a secure and standard way to verify user identities. This helps businesses comply with these regulations and mitigate the risk of financial crimes.
Combating fraud and money laundering
EIDV’s high level of assurance provides businesses with ways to identify and prevent fraudulent activities. Estimates show that over $14 billion worth of currency was stolen in just the year 2022, thereby, highlighting the need for robust verification measures.
Building trust and transparency
Implementation of EIDV demonstrates a commitment to user and national security and responsible business practices. A business that is in line with good values is more attractive to customers than most other factors. Thus, in a competitive environment, as is, this can help to build trust and transparency with customers. Since, is associated primarily with anonymity, this trust is good not just for individual businesses but also the industry as a whole.
EIDV for Businesses: Critical Things to Keep in Mind
While EIDV offers numerous benefits, it is essential for businesses to consider several key factors before they implement it to get the maximum benefit:
Compliance with specific regulations
Different businesses work in different regions and EIDV is not a universally accepted standard. While most places demand EIDV execution, regulations regarding e identity verification vary across jurisdictions. Businesses should carefully assess the specific regulations applicable to their operations.
Integration with existing systems
Implementing EIDV requires integrating with third-party providers or adapting to existing systems. Careful planning and consideration of your current software is essential.
User experience
The EIDV process must be user-friendly and efficient in order to avoid hindering customer engagement and comfort. Finding a balance between security and a smooth user experience is critical.
Conclusion
The online electronic verification is not just a technological cure for business problems; it is a significant shift towards a more secure and transparent future for the industry.
As this space continues to mature, we can expect EIDV to play an increasingly significant role. Advancements in blockchain-based identity solutions could further enhance the security and efficiency of EIDV processes. Additionally, with other technology, global dialogue and collaborative efforts around electronic ID verification can lead to wider adoption and acceptance.