Document Verification: What it is and how it works

More and more companies are offering online products and services that require the exchange of highly confidential data. In addition to technical security, which is intended to ensure the confidentiality, integrity and availability of data, the exchange of document-based information is a particular challenge. This is because the exchange of documents often requires verification and plausibility checks. This is the only way companies can ensure that the information provided is genuine and not forged. In practice, this means that companies must use sophisticated document verification to prevent the misuse of products and services - and to increase customer satisfaction at the same time. 

We explain in an understandable way which types and use cases of document validation there are. And we show how companies can quickly and easily perform document verification online and which software they need for this.

document verification definition

Document Verification Definition

Document Verification is a process that companies and organizations use to verify the authenticity of a document. The document verification process can generally be divided into four steps:

We will show exactly what these individual steps look like later in the article. In practice, organizations use document verification primarily to check the authenticity of certificates, bank statements or ID cards, for example. These play a crucial role in legal transactions. 

Why organizations need Document Verification

Document validation brings these benefits to companies and organizations:

Fraud protection

Document validation helps to prevent fraud, i.e. fraud prevention, fraud detection or document fraud. It ensures that only genuine documents are accepted. This is particularly important for companies that work with confidential information. In addition, a document verification system is important for government institutions to prevent identity fraud.

Efficiency increase

If companies rely on automated document verification, they can save a lot of time. This is because they do not have to check every document manually. Instead, document verification software takes care of this. This makes document control more efficient and thus increases productivity. And: Document Verification Tools relieve employees in this way.

Improved user experience

When organizations use document verification software, they improve the user experience. Users only need to provide the relevant document. They don't have to go through the hassle of providing all the data separately. This increases customer satisfaction. 

Compliance

Companies and public institutions must meet certain compliance requirements. Document validation can help meet these requirements. It does this by ensuring that only genuine and valid documents are accepted. If required, companies can also issue a Document Verification Certificate.

Types of Document Verification

Basically, validation ensures that documents are genuine and valid. Exactly what purpose validation serves depends on the context of the application. The main types of verification are as follows:

ID card verification

A document verification system ensures that identity documents such as passports, ID cards and driver's licenses are genuine. As a rule, it checks the security features of the ID cards. These are, for example, security printing with multicolor line structures and the laser tilt image.

Birth certificate verification

A document validation checks the authenticity of birth certificates. For this purpose, the validator examines the signature of the issuer, among other things.

Address verification

Companies use a document verification test to check addresses for authenticity. This is particularly relevant for documents such as utility bills, rental agreements and bank statements. Organizations do this primarily for what is known as KYC document verification. KYC stands for "Know your cumstomer". KYC fulfills the compliance requirement that companies in the financial sector must know who their customers are. Only then are they allowed to conclude legal transactions with them. The main purpose of this is to combat money laundering (AML).

Certificate verification

Certificates prove that users meet certain requirements or qualifications. For example, document verification software checks the logo and stamp of the issuing organization.

document verification challenges

Document Verification Challenges

Verification is essential for organizations to use official documents in a legally compliant manner. The process of verification presents them with these challenges:

  • Integration of technologies: To be able to carry out document verification online efficiently, companies need suitable software. This must be compatible with their own systems and function smoothly.
  • High cost: Companies can choose between different document verification services. However, depending on the software or tool, high costs are incurred.
  • Different languages: Verifying documents in different languages can be a challenge. This is because many document verification systems only support languages other than German and English to a limited extent.
  • Human error:  Document verification software usually works without errors. Nevertheless, companies must always manually check documents once at the end. This serves the purpose of uncovering inconsistencies that a tool may have overlooked. However, employees can make mistakes in the process.

This is how a Document Verification Process works

The process of a document verification includes these four steps:

  1. Step 1: Prepare data acquisition

    As a first step, companies need to collect the data of the customers. To do this, they must request and gather all the documents that carry the information relevant to the purpose. A Document Verification Checklist of the most important information usually includes the name of the users, the date of birth, the address and the date of issue of the document.

  2. Step 2: Extract data

    In the next step, organizations extract the relevant data from the documents. They can do this efficiently with software that uses OCR (Optical Character Recognition), for example. OCR recognizes the text in a document and converts it into digital data.

  3. Step 3: Validate document

    In the third step, a document verification tool checks whether the document is genuine and valid. To do this, it examines various features such as stamps, watermarks, fonts and carrier materials. Software detects not only whether the document is genuine, but also whether it has been tampered with at any point.

  4. Step 4: Verify document manually

    In a final step, companies must have an employee manually check the document. This person checks the document for possible irregularities or anomalies that a document verification system may not have detected. This could be, for example, discrepancies in the data or doubts about the authenticity of the document. If necessary, a Document Verification Certificate can then be issued at the end.

document verification use cases

Use Cases of Document Validation

The following five use cases are particularly common:

Merchant verification

Companies can use document validation to verify the identity of merchants. In this way, they ensure that they actually exist and are conducting legitimate business.

Invoice processing

Companies can process invoices automatically.This is done by extracting the data from the invoices and matching it with the information in their system. In addition, by verifying invoices, they can ensure that they are only paying for legitimate business.

Compliance with legal requirements

A document verification test helps companies to meet legal requirements. This can be, for example, the obligation to know the identity of their customers. For this purpose, they can use a KYC Document Verification.

Fraud Detection

Document Verification Services help to detect fraud. To do this, they determine whether documents are forged or manipulated.

Account opening

Another classic use case of document verification is the verification of the identity of customers for an account opening. This can be, for example, the opening of a bank account or the onboarding for a customer account.

Document Verification: Practical examples from different industries

In practice, automated document validation is used in almost all industries where confidentiality and integrity of data play an important role. Common use cases from three different industries are these:

finance

Credit institutions use automated verification of documents primarily for credit applications. Software checks, for example, the plausibility of the content of data in salary statements.

Insurance industry

Insurance companies use document validation in claims management. In this process, AI software compares, for example, the damage and the amount of damage with the insured perils and the corresponding documents. For example, the software checks whether the bicycle or car that suffered damage actually corresponds to the insured bicycle or car. In the case of the car, a OCR technology then checks the vehicle registration. With the bike it is the invoice and the information it contains, such as the frame number.

Logistics and industry

In logistics and industry, companies use automated document validation for recourse. This can be, for example, when proof of delivery is required and relevant documents must be found quickly in the archive.

The future of Document Verification

Companies can now choose from a wide range of services, systems and tools for document verification. Because:

The document validation market is currently growing at an annual rate of 14.4 percent.

With AI software that learns from humans, they can automate document review - and approach it efficiently. Take a look at our Human-in-the-loop (HITL) article an. With Konfuzio organizations can check any type of document quickly and easily. The software automatically identifies relevant data, records and analyzes it, and stores it in a database in an organized manner. In this way, companies can also efficiently and reliably verify the authenticity of documents such as certificates, credentials and IDs.

FAQ

What is Document Verification?

Document verification is a process that checks the authenticity of documents. These can be, for example, documents such as ID cards, passports, driver's licenses, birth certificates, testimonials, and employment contracts.

How does a Document Verification Process work?

An automated document verification process starts with the collection of relevant documents. Then, software extracts all relevant data from the documents. It verifies the authenticity of the document. Finally, an employee manually checks whether the tool has overlooked any anomalies.

What are examples of document verification?

One example of document verification is the checking of ID cards when opening a bank account. Another use case is the verification of job references or checking the authenticity of certificates when hiring new employees.

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