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African demand for digital ID infrastructure growing, as is fraud: Smile Identity report

28% of all KYC checks handled by Smile Identity attempted fraud in 2022
African demand for digital ID infrastructure growing, as is fraud: Smile Identity report

Digital ID verification company Smile Identity has highlighted increasing interest among African countries in developing critical digital identity infrastructure.

This trend, the firm’s new report notes, is underscored by the sustained investment focus on digital technologies despite a generally difficult economic experience for the continent in 2022.

Titled ‘2022 end-of-year report: State of KYC in Africa,’ the 40-page document which analyzes data from 50 million KYC checks carried out since 2019 by Smile Identity, also details the important role of biometric onboarding processes for businesses especially at a time when financial fraud rates on the continent are escalating.

Although these fraud rates stabilized in the second half of 2022, the phenomenon reached an all-time high of 28 percent of all KYC checks including an element of attempted fraud for the year overall, with face mismatches and use of stolen IDs identified as being among the leading forms of ID fraud.

This report, like the previous one, finds that biometric KYC checks are more efficient and effective in detecting ID fraud, noting that an average 50 percent of fraud incidents go unnoticed with textual KYC alone.

Biometrics, combined with ID verification, according to Smile, are the best baseline for combating ID fraud, citing the example that crypto platforms which use its ID verification technology for KYC have 46 percent less fraud than other industries.

“Local ID databases remain the most robust source of truth for KYC, but frequent downtime remains a major obstacle. Document verification is a reliable backup to maintain service and expand to multiple international markets,” Smile says.

According to the findings, the digital identity drive in Africa is also well on course and the company believes the trend is part of what will unlock Africa’s economic potential and create more opportunities for growth and prosperity.

“Ninety-four million Nigerians have already registered biometrics as part of the NIN (National Identification Number), leading the way in digital ID adoption in Africa,” states the report, which adds that other African countries such as Uganda and Kenya are in the midst of implementing similar digital ID programs.

Issues such as the enforcement of data privacy and protection measures with case studies on Ghana, Nigeria, Kenya, South Africa, and Uganda, as well as fraud trends, types of fraud attacks and how such frauds can be prevented are explained in the report.

“At Smile Identity, our mission is to make it safe and easy for anyone to prove their identity online. To achieve this, we are building infrastructure to onboard and secure Digital Africa,” says Mark Straub, CEO of Smile Identity while commenting on the report.

“Our products help pave honest paths for success, and we are proud to have played a role in helping businesses across the continent achieve their goals in 2022.”

In August last year, Smile published its maiden report on the state of KYC in Africa in which it emphasized the importance of biometrics technology for customer onboarding.

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