ID Vulnerabilities Emphasise the Importance of Biometric Verification for Businesses

We are excited to release our H1 2023 State of KYC report, highlighting the importance of biometric identity verification in light of vulnerabilities around ID documents across Africa. This report is the product of an analysis of 75 million unique ID checks, and it reveals vital insights into the efficacy of biometric verification, the growing adoption of digital identity, and the impact of fraud rates in various industries.

ID-related fraud is a leading challenge for businesses across Africa’s emerging technology landscape. It is often a precursor to fraudulent activities that tarnish reputation and cause financial losses. In particular, national IDs were the most targeted by fraudsters due to their ubiquity and popularity in the countries evaluated within the report.

The most common tactic fraudsters used was using stolen or lost IDs for KYC during onboarding. Most of the ID-related fraud attempts we have caught so far in 2023 are either face mismatches, i.e., the user's face did not match the picture on the document (43%), or selfie spoofs, i.e., the user attempted to impersonate the ID owner using a photo (41%). 

The prevalence of these kinds of fraud reemphasises the importance of biometric verification for ID verification, which has proven to be a powerful tool that reduces users by up to 50%. Textual verification, which involves verifying the details on submitted ID documents, is typically insufficient to catch fraud using stolen or lost IDs. As such, businesses must pair it with other identity verification technology like biometric verification and liveliness checks for better ID fraud prevention.

Facial biometric verification technology, in particular, has proven to be effective in the fight against fraudulent users due to its accessibility and superior security. The popularity of selfie-styled pictures among smartphone users makes it a non-invasive and user-friendly verification method. Its superiority to other biometric verification methods like fingerprint and voice is well-documented.  

However, a leading positive from this latest report is the decline in the percentage of ID fraud attempts across the continent from 26% in FY 2022 to 23% in H1 2023, the first such decline in fraud rates since 2022, when the report commenced. This decline is a fallout of reduced startup investment on the continent, which has, in turn, led to lessened marketing spend from technology companies. However, while countries like South Africa and Ghana have seen marked reductions in fraud rates, Kenya and Nigeria recorded an upward trend.

The State of KYC H1 2023 report also touched on the decrease in downtimes of national ID databases from an average of 6% in FY 2022 to 3% in H1 2023. While the decline is a welcome improvement, and local ID databases remain the most reliable source for ID verification, downtimes still constitute a significant roadblock to real-time verification. Document Verification continues to be the preferred solution, as it ensures uptime during ID database downtimes and prevents user churn due to unpredictable KYC flows. In addition, Document Verification is an effective and reliable way to launch in multiple markets or handle users from different countries through a single integration.

Other insights mentioned in the report include:

• The increase in inclusive identity verification across multiple industries, 
• The continuing rise of digital identity across Africa, 
• The threat of generative AI to KYC, and
• Tips for KYC and customer data processing in various countries across the continent. 

Click here to download the full report from our website.