IDV: Countering the threat of fraud for neobanks

Pablo Nebreda

Pablo Nebreda

Neobanks, also known as digital banks, have revolutionized the way we manage our finances. These innovative financial institutions operate exclusively online, providing customers with convenient and user-friendly banking experiences. However, as neobanks gain popularity, they also become a target for fraudsters seeking to exploit vulnerabilities in digital onboarding processes.

The rising threat of fraud

Neobanks offer streamlined and frictionless onboarding experiences, allowing customers to open accounts remotely without the need for in-person verification. While this convenience is appealing to customers, it also presents an opportunity for fraudsters to manipulate the system.

Fraudsters continuously devise new techniques to bypass security measures and gain access to neobank platforms. They may use stolen identities, fake credentials, or sophisticated AI-powered bots to create fraudulent accounts. This not only poses a significant financial risk to neobanks but also tarnishes their reputation and erodes customer trust.

The importance of IDV

Identity verification (IDV) plays a crucial role in countering the threat of fraud for neobanks. By implementing robust IDV processes, neobanks can ensure that the individuals opening accounts are who they claim to be, mitigating the risk of fraudulent activity.

Traditional methods of verification, such as in-person visits to a physical branch or document submissions via mail, are not suitable for the digital onboarding processes of neobanks. Instead, neobanks need to leverage remote IDV solutions that can verify customer identities in a seamless and secure manner.

The benefits of remote IDV solutions

Remote IDV solutions enable neobanks to validate customer identities remotely using a combination of document verification, facial recognition, and biometric technologies. These solutions offer several benefits:

  • Enhanced security Remote IDV solutions utilize advanced technologies to detect fake documents and manipulated images, reducing the risk of identity fraud.
  • Improved user experience By eliminating the need for customers to visit a physical branch or submit physical documents, remote IDV solutions streamline the onboarding process, making it more convenient and user-friendly.
  • Compliance with regulatory requirements Neobanks are subject to strict anti-money laundering (AML) and know your customer (KYC) regulations. Remote IDV solutions help neobanks comply with these regulations by accurately verifying customer identities.
  • Scalability As neobanks experience rapid growth, remote IDV solutions can easily scale to accommodate increasing volumes of customer onboarding.

Choosing the right remote IDV solution

When selecting a remote IDV solution for neobanks, it’s essential to consider certain factors:

  1. Accuracy The solution should have high accuracy rates in verifying customer identities to minimize false positives or negatives.
  2. Speed and efficiency The solution should provide near-instant results, ensuring a smooth onboarding experience for customers.
  3. Compliance The solution should comply with relevant regulatory requirements, ensuring neobanks meet their legal obligations.
  4. Integration The solution should integrate seamlessly with neobank platforms and existing workflows, minimizing disruption during implementation.
  5. Cost-effectiveness While the cost is a consideration, it’s important to balance it with the overall value and benefits the solution provides.

The future of IDV for neobanks

As fraudsters continue to evolve their tactics, neobanks must stay ahead by adopting advanced IDV solutions that leverage artificial intelligence and machine learning. The future of IDV for neobanks lies in continuous monitoring and analysis of customer behavior patterns, enabling proactive detection and prevention of fraudulent activities.

Neobanks must also prioritize user education and awareness regarding cybersecurity and fraud prevention. By empowering customers with knowledge and equipping them with the necessary tools to protect their identities, neobanks can create a secure digital banking environment.


The threat of fraud for neobanks is real, but with the right IDV solutions in place, these innovative financial institutions can effectively counter it. Remote IDV solutions offer enhanced security, improved user experience, regulatory compliance, and scalability. By carefully selecting a reliable and robust IDV solution, neobanks can safeguard their operations, reputation, and, most importantly, customer trust.

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