Human evolution finally reached extensive digitization, and the world is highly dependent on a hybrid economy. From data sharing to intelligence cooperation, economies are operated under the shed of mutual interests and sharing. E-commerce, digital apps like online real estate deals, food delivery, and digital transactions are all following a “shared economy” trend. It was initiated by choice, but now it is unstoppable. Proof of identity documents is very useful against identity theft.
The rising ups and downs in the economic sphere are viewed through the lens of data safety today which is at high risk due to the increasing rate of fraud. Identity is the first attribute which is manipulated to execute criminal schemes. The identity document is evidence to detect and reject the forged identity-based documents provided for fraudulent activities in banks or other financial institutions. CNBC reports a 25.07% hike in digital frauds in the first quarter of 2021, and poor identity document authentication is the key factor behind these crimes.
Role of Shared Economy in the Digital World:
The economy is the name of profit and loss, demand and supply, etc. The sharing economy is the concept of reshaping the global economic system through web-based sharing and collaboration using the internet. The sale and purchase of products are carried out using social networks or digital apps. Digitization is still facing bumpy rides in the form of digital crimes over the internet. The global economic structure is working like a web where every node is connected and overlapped with the other one. Thus, the probability of data breaches and privacy infringement is higher than ever. Bloomberg records an almost 150% rise in digital financial frauds in 2021, and due to a lack of stringent steps, the gap continues to expand. Business and financial sectors are working on a peer-to-peer level for more growth and to meet mutual interests. The process continues to disrupt the social setup we are living in. From manual to online document attestation, the sharing economy poses challenges for the financial industry. The genuine proof of identity documents barricades fraudsters at the first step and further transparency in the process can eliminate the chances of financial theft.
Complications of Shared Economy & Way Forward:
Millions of people are expanding businesses using online platforms, including Upwork, Fiverr, Lyft, Airbnb etc. The digital financial model is undoubtedly a blessing, but it claims profound barriers. Financial institutions demand proof of identity documents with customers’ due diligence policies to avoid fraud across the board. Some of the challenges are briefly shared below.
Over-reliance on Manual Proof of Identity Documents:
It is not an easy task to shift from one to the other system completely. There are various companies still reliant on manual verification documents which imperil digital financing. Startups are realizing the demerits of receiving manual ID cards, address proof etc. It is not only hectic but also more error-prone. Hence, online proof of identity documents provides more data security and financial protection.
Enhanced Identity Theft:
The modern financial sector is more diligent in ensuring safety measures against fraudsters but the rapidly growing trend of shared economy is not immune to deterring the forging of documents of identity to an exceptional level. Criminals are still using the grey areas for financial crimes in the hybrid economic model. Online security and verification checks need to be increased above the demand for an email ID for registration. The telecommunication industry, digital private banking channels and other financial institutions are more prone to data leakage, phishing attempts and cybercrimes using fake proof of identity documents.
Spread of Disinformation:
The forged identity document is also utilized to spread rumours and fake information through fabricated text messages. In this era of disinformation, digital mediums with various loopholes allow ample opportunities for criminals. A shared economy exposes all the gaps which need to be addressed with the help of resilient proof of identity document methods.
Demerits come along with solutions to improve the situation. Forged identity is indeed a growing challenge but there is a number of ways to ensure proof of identity documents on every platform.
AI-Enabled Fraud Detection Mechanism:
Artificial Intelligence is fastly growing technique to catch identity flaws right on the spot. Criminals are more exposed to AI-enabled digital software where not only proof of identity documents is guaranteed but biometrics camouflage is also near to impossible.
Infomation Security & Data Protection:
Another way out provided by document verification is in the form of intelligent software-powered protocols to control data breaches and disinformation. Reuters updates about fines of up to 6% of the company’s global turnover for non-compliance against the spread of fake news. It is a very strong punishment for law-breakers. Similar procedures should be formulated to ensure KYC and AML compliance.
Final Thoughts:
It is irrefutable to say that the sharing economy is contributing a lot to the consumer market but it is not sufficient unless criminals are deterred through effective proof of identity documents compliance procedures. With the help of proper identity check methods, more accuracy can be attained. In this way, it is easy to keep the fraudsters at a bay. For enhanced due diligence, more security checks are required for both consumers and service providers. Shufti Pro is the best identity verification service provider for global financial stakeholders.
