Almost everyone remembers the good old-fashioned way of going to the post office with your ID card in hand. Whether it’s applying for a securities account, a loan or opening a bank account, identification procedures have their use case in almost every sector as part of customer onboarding. And this trend doesn’t show any signs of slowing down.
Nevertheless, fewer and fewer consumers are going to the post office. In Germany, the Anti-Money Laundering Act (GwG), among other things, lays down consistent rules for the financial world. However, the identification procedures of the various providers differ considerably in some cases. Join us on a journey from the classic POSTIDENT to the innovative Bank Ident, discover the pros and cons, and find the identification procedure that suits you and your customers best.
POSTIDENT: The Time-Consuming Classic Approach
THE classic of AMLA-compliant customer verification in Germany. But how does it work? As the customer, you enter into a contractual relationship with Deutsche Post AG and receive a customer number for billing purposes. At a Deutsche Post AG branch, your new customer presents their ID card or passport. POSTIDENT is available at most post offices and everything is done manually: the employee scans the ID document using software from Bundesdruckerei, compares and completes the recorded data, and prints it out on a POSTIDENT sheet.
The captured data and ID scan are stored on a Deutsche Post server, which you can then access. The software checks the ID for authenticity, but can only process machine-readable ID documents that meet certain minimum standards. The customer and employee confirm the information at the end by signing, dating and date stamping. The sheet and other documents are then sent to you.
The Advantages of POSTIDENT
It’s field-tested and most consumers are familiar with the process. Available at almost all post offices.
The Disadvantages of POSTIDENT
Cumbersome online and offline process with a lot of manual steps, resulting in many sources of error and a laborious, inconvenient process. Manual steps always entail high costs and offer virtually no scalability possibilities in case of larger numbers of identifications, which continue to increase due to more people using online services. The market and its respective requirements for identification processes has evolved more quickly and to a greater extent than previous identification infrastructure.
VideoIdent: The Classic Digital Approach
The digital successor to on-site personal identification is familiar to most consumers: customers identify themselves via facial recognition and their ID card in a video call with a physical agent. After sending the contract documents electronically, customers initiate a video call to the Ident solution provider, who carries out the identification, e.g. on behalf of the bank.
To identify themselves, they hold the front and back of their ID card in front of the camera on their smartphone, tablet or computer. For the ID to be verified, it must be titled and moved so that all security features can be checked. Photos are also taken and the ID number is recorded. To complete the identity check, the applicant is sent a TAN by email or SMS, which is entered in a form provided for this purpose. This completes the authentication process.
The Advantages of VideoIdent
Can be performed from anywhere on any device and has become an established digital alternative to in-person identification, especially since the onset of the pandemic.
The Disadvantages of VideoIdent
It comes with the potential security risks of a video-only process. Requires additional staff, training and space, which doesn’t make VideoIdent cheaper or more scalable than POSTIDENT, despite being a digital alternative. VideoIdent isn’t available 24/7/365 and will entail language barriers unless customers speak German. It’s only somewhat user-friendly due to the potentially awkward situation of being on video. Long waiting times of 20 minutes to an hour are not uncommon.
eID: The EU-Wide Alternative
The new ID card offers the same proof of identity online that the ID card offers offline. The electronic proof of identity works via a data chip. Customers must download an app or identify themselves at citizen terminals with their ID card in order to use the eID function.
If you want to offer your customers the option of authentication via this electronic ID card, you as a service provider must first apply for an electronic authorisation certificate from a central federal office. This certificate defines the data fields that you as a service provider are allowed to extract. The certificate is transferred to the customer’s electronic ID card and checked internally in the ID card. If the ID card is confirmed as authentic, the customer still has to release and transmit the data you’ve requested using their personal PIN.
The Advantages of eID
Secure, permanently compliant with the law, and more cost-effective than POSTIDENT or VideoIdent. Complies with all regulatory requirements, including the stringent requirements of the German Federal Office for Information Security (BSI).
The Disadvantages of eID
Dependent on many factors and items: a new ID card, the ID card app and a PIN. Since it’s currently offered almost exclusively by public authorities, there are hardly any use cases for customers and, accordingly, there’s very low acceptance.
Bank Ident: Legally Compliant and User-Friendly
Could there be an identification solution that meets all regulatory requirements, is extremely cost-efficient and convenient, and works around the clock without making customers go to a branch or use video and call centers? The account-based Bank Ident provides the answer to this complex question.
For identification via Bank Ident, customers take a photo of themselves and their ID, log into their online banking and confirm a simple reference transfer by means of a TAN. This way, customers identify themselves without media disruptions and in compliance with AMLA and data protection requirements.
The Advantages of Bank Ident
You benefit from AMLA-compliant, fast and extremely secure customer identification without any manual steps via an interface to the customer’s bank account. By bidding farewell to physical agents, Bank Ident is not only digital; it’s also automated and thus more scalable and cost-effective than any other process. The motto is: 24/7/365 – all around the world.
Based on a further development of common Ident procedures, AI-based verification mechanisms and innovative technology, you ensure customer convenience, data sovereignty and data security. As part of Bank Ident, there’s secure verification of who the account holder is and which IBAN is in use. When in doubt, you should identify stolen identities in real time. If required, account-based identification procedures can be extended to include a qualified electronic signature, e.g. for legally compliant, digital contract signing.
The Disadvantages of Bank Ident
The process impresses with speed, convenience and simple, logical processes. The reference transfer with login to the account poses a potential challenge for customers who don’t have an online banking account. Nevertheless, providers should take their first step towards offering their customers an identification process that meets their expectations and digital lifestyle.
Bank Ident Plus: Identification with Added Value
What makes Bank Ident the next step in the evolution? Well, it offers a great deal of added value with just one simple login. When a customer logs in, you not only verify their identity; you can also confirm creditworthiness, source of funds and their portfolio of contracts. This provides a complete customer profile to facilitate the most exhaustive onboarding possible.
The reference transfer can also function to provide an initial top-up for a customer account, e.g. in gaming, digital goods or a trading platform. Thanks to Open Banking, a multitude of KYC steps that used to be carried out one after the other can now be completed in one go – making it faster, more cost-efficient and in compliance with regulatory requirements.
You can also perform a real-time creditworthiness check during identification within a loan application process. With this integration, you save bank customers an additional process step and optimise your KYC process with daily updated transaction data. This makes the process even leaner and enables the loan decision to be automated to the greatest possible extent thanks to a reliable database.