Enhancing fraud prevention with eIDV: the challenge and power of data quality
Fraud is ever-present in the banking industry, driving the need for financial institutions to embrace robust fraud prevention measures.
Advanced electronic identity verification (eIDV) technologies are vital tools in combatting this escalating threat. Yet while many organizations have implemented eIDV solutions, they often overlook the critical role of data quality—specifically, the validation of address data in connecting verified information to a unique individual.
Address verification brings eIDV full circle in connecting identities with verified identity information. This capability transforms simple data authentication into a comprehensive fraud prevention tool, laying the groundwork for more comprehensive Know Your Customer (KYC) and Know Your Business (KYB) activities.
But why is data quality sometimes overlooked as part of eIDV? Address verification requires specific tools—many of which are simply not offered by eIDV providers. Address expertise is both necessary and available.
Today, a broad range of data quality tools can integrate seamlessly with eIDV solutions, allowing financial institutions to enhance their fraud prevention strategies without disrupting operations.
Address verification plays a key role in eIDV
Address verification is a fundamental eIDV process that goes beyond confirming whether data is correct. Instead, it ensures that the information provided—such as a name, phone number, or document—is associated with a specific address and individual. This level of precision optimizes compliance reporting for KYC and KYB initiatives by ensuring that all collected information is accurate, complete, and actionable.
In addition to streamlining KYC/KYB operations and compliance, the same precision empowers top-tier fraud prevention processes. For example, address-to-name connections support Synthetic Identity Fraud (SIF) processes that detect fabricated identities relying on mismatched data. Precise data also reduces friction during onboarding, fostering customer trust and satisfaction. These are obvious benefits, but they may also mask just how difficult it is to verify an address.
Optimized eIDV taps into data quality expertise
The parsing, standardization regiments, and matching algorithms necessary to do this are complex—especially on a global scale with over 200 different postal address formats used worldwide. Verification systems must be able to synthesize postal data from postal authorities representing 240+ countries. Results must pass strict testing criteria; for instance, USPS CASS Certification requires minimum accuracy of 98.5% for carrier routes, ZIP+4, Five-Digit ZIP, and LACSLink. For delivery point coding, minimum accuracy is 100%.
Now… can a person be matched to that address? If so, how? And is the match current or ten years old? It is difficult to match names and addresses effectively, considering diacritics, transliteration complexities, last name first or last, prefixes and suffixes, and more. Cultural differences alone create a slate of name standards that differ broadly. When paired with data quality tools, eIDV solutions solve the challenge by incorporating phone, email, and name verification.
Primary tools in a comprehensive eIDV solution
eIDV supported by data quality can build on address verification, integrating various additional technologies to provide a multi-layered approach to fraud prevention.
Geolocation tools, for example, verify that the applicant’s claimed location aligns with their actual physical location. Here, verified, standardized addresses are critical to the solution’s ability to convert an address to the ZIP Code, ZIP+4, or rooftop accuracy. Cross-referencing address data with geolocation services enables institutions to quickly identify discrepancies, enhancing both security and customer trust.
Document verification technology analyzes identity documents such as driver’s licenses or passports to confirm their authenticity. It also extracts address data for cross-referencing with address verification databases, adding another layer of validation.
Sanctions screening goes even deeper. Compliance with regulatory requirements involves screening applicant data against international sanctions lists. Address verification ensures that flagged individuals or businesses are accurately identified and blocked from financial systems.
Some eIDV providers do offer liveness checks and facial matching. Their goal is to confirm that the individual interacting with the system is a live person, not a fraudster using stolen credentials, or that the individual’s real-time selfie matches with the photo on a government-issued ID. The failure point is that they lack the ability to extract, verify, and pair meaningful address and name data to get more matches, processes critical for document verification and sanctions screening.
Elevating fraud prevention with data depth and accuracy
Fraudsters continue to adapt, making it essential for financial institutions to stay ahead with innovative solutions. In response, today’s modern eIDV tools go beyond confirming the accuracy of data; they validate that the data belongs to the person it claims to represent. When supported by advanced (and scalable) data quality measures, address verification ties all the pieces together. Matching names to verified addresses allows financial institutions to detect fabricated identities more effectively. This level of precision not only mitigates risk but also streamlines customer onboarding, reducing friction and building trust.
eIDV and data quality—together these capabilities dramatically increase the reliability of fraud prevention measures, simplify compliance, and optimize the customer experience.
About the author
As Melissa’s Chief Information Officer (CIO), Bud Walker shapes the company’s long-term strategic vision and global expansion, empowering companies worldwide to capitalize on the value and power of their customer data.
Connect with Bud on LinkedIn or bud.walker@melissa.com.
Sponsored by Melissa