Signicat digs into identity fraud risks in remote onboarding, account recovery

Businesses are claiming success in battling identity fraud at a solid rate despite a spike in attempts, but Signicat’s latest report, published in collaboration with CCGroup and Red Goat Cyber Security suggests their understanding of the situation is holding them back.

Fraud attempts are up 88 percent over the last four years, while identity fraud attempts specifically have risen nearly 70 percent. The culprits are the growth of AI, but also the rising sophistication of scammers who are defrauding at scale.

In the report, titled The Battle in the Dark, Signicat argues that companies are not entirely aware of how large the issue is: Almost three-quarters of businesses say they are successfully fighting identity fraud and its consequences. But the numbers tell a different story.

On average, businesses spend 22 percent of their annual revenue on either covering damages of identity fraud or attempts to prevent it, says the research. One in five transactions and customer onboarding attempts are fraudulent. Attackers primarily target customers, followed by weaknesses in technology systems.

“When businesses push back, it doesn’t deter the more agile fraudsters, who simply change tactics,” the research notes. “There are multiple vulnerable points throughout the customer journey that need protection – with the transaction stage being the most exposed, accounting for 40 percent of identity fraud attempts.”

One of the ways to increase identity security and cut fraud is employing NFC after user onboarding, for account recovery processes, Signicat explained in a recent webinar.

NFC-based identity verification for account recovery

Efficient account recovery not only saves costs but also increases security, says Signicat, while efficiency can be achieved by integrating identity verification with Near-Field Communication (NFC) chips. The Norwegian identity verification firm has been providing the technology to BankID, an identification service developed by Swedish banks, which has become one of the most widely adopted digital ID schemes in the world.

BankID has been introducing NFC-based identity verification since 2024 and has so far recorded 680,000 app activations and 400,000 password resets using the technology, according to Ove Morten Stalheim, product manager at Stø, owned by BankID BankAxept AS.

Stø is in charge of integrating technology into the BankID ecosystem. According to its data, around half of total activations and 60 percent of all password resets in Bank ID were done through NFC chips in September. And the numbers are growing.

“NFC-based identity verification, we believe, is increasingly accepted as a gold standard for remote identity document verification,” says Maarten Wegdam, co-founder of Inverid, a part of Signicat.

ReadID, the NFC technology used by Signicat, collects data from chips embedded in passports, ID cards and residence permits, obtaining information about the owner and a high-resolution facial image which can be used for verification. Once the data is submitted to BankID through the app, the customer takes a selfie image and biometric matching is performed by BankID’s partner iProov.

The biggest benefit of using NFC chips is that they are cryptographically signed and cannot be deepfaked. It also avoids mistakes that can happen during OCR (Optical Character Recognition) reading of documents. It also has a higher customer conversion rate, up to 96 percent, notes Wegdam.

Stø believes that NFC-based identity verification will keep growing, especially in countries such as Norway, where all identity documents are equipped with chips. The Norwegian trust framework also allows the use of passports and national ID cards for completing administration through Bank ID, Stalheim adds.

“There are no longer valid identity cards or passports that don’t contain a chip. So for us, the choice is using NFC to prevent fraud,” he says.

Article Topics

digital identity  |  document verification  |  identity verification  |  Inverid  |  NFC  |  onboarding  |  selfie biometrics  |  Signicat