Plaid released a biometric Identity Verification (IDV) tool last week that will integrate into its account linking services in an effort to streamline customer onboarding.  

IDV handles authoritative data source, documentary and liveness verification, as well as more than 16,000 possible document types, according to the announcement. It also automates verification checks based off rules set by the customer.  

These rules extend beyond identity verification to draw from Plaid’s entire suite of data, Plaid’s Head of Identity Alain Meier explained to Bank Automation News. 

“A medium- to upper-risk determination during identity verification may not be enough to make a decision on a user, but combined with a medium-risk payment fraud determination can help resolve gray-area decisioning,” Meier said. 

IDV is powered by the fintech’s risk engine and analyzes email, phone, IP address and device ID to help prevent fraud, according to the announcement.  

“A fraudster can manipulate the name-matching differences between two disparate systems used for verifying account ownership and identity,” Meier told BAN. “Because we have visibility into both account owners and the provided name, we can help customers ensure there are no discrepancies.”  

Accelerating ID verification is key 

 Plaid’s IDV release comes just weeks after payments technology fintech Stripe announced it will develop APIs to link banks.  

 However, attempts within the industry to highlight competition among the two fintechs may be overblown, Kate Drew, director of research at CCG Catalyst Consulting Group, told BAN. 

“Stripe is focused on helping businesses accept payments while Plaid is focused on creating solutions for fintechs and financial institutions,” Drew said. “Those two things are very different, so I am not sure they will end up quite as head–to–head as one might think.” 

Meanwhile, Plaid’s move into identity verification, which is critical to the onboarding process for banks and fintechs, makes a whole lot of sense, Drew said. ”Customers today are used to friction-free, speedy experiences. The quicker and more easily you can onboard a user, the less likely to are to encounter high drop-off rates,” she noted.

 Plaid customers had to use six to 12 other vendors to handle all the aspects of identity verification before IDV was implemented, Meier explained.  

“That’s why we wanted to streamline this process for them and make this as seamless and easy as possible with one single onboarding experience,” he stated. 

There is essentially a competitive dynamic around onboarding today, which augurs well for Plaid’s new offering, Drew explained. “How fast can you do it without compromising security? How few clicks can you get to? How low can you get those drop-off rates?” she said. “Identity verification is a key part of this flow, and it’s one that can be very friction-filled, so solutions that can improve this part of the process are in high demand.”

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