Banks validating customers
Because online identity verification is very fallable, it’s important to put some thought into your institution’s manual review process.To see what Ally Bank did wrong, read this article.As well as the banks themselves, there are a number of third party companies in the US that provide check verification services.Check verification services have been most common in the United States, in Europe a cheque guarantee system operated for a number of years that could be used by merchants until the usage of cheques declined to the point where it was no longer necessary.This second step performs the same function as a debit card pin or a credit card signature, making sure that an identity thief with a stolen wallet can’t open accounts and apply for loans willy-nilly.Out-of-wallet questions in account opening and lending are similar to the security questions we select when we enroll in online banking or other sensitive online services, but whereas those questions and answers are chosen by the customer when he or she first enrolls, deposit and loan applications need to present out-of-wallet questions without prior knowledge of the applicant.
Step 2: Verify that applicants are who they say they are with knowledge-based authentication questions, better known as out-of-wallet questions.
Sometimes questions are just too difficult; you may simply not remember the name of that minor street located a few miles away from an address you lived at 20 years ago.
We estimate that between 5-15% of applicants who are who they say they are fail out-of-wallet questions on our system.
A check verification service provides businesses or individuals with either the ability to check the validity of the actual check or draft being presented, or the ability to verify the history of the account holder, or both.
There are a number of different methods that can be used to provide the service, these include checking different databases with negative or account history, checking that routing and account numbers are valid using algorithms, or contacting the bank that issued the check to get confirmation about the account status.