Smile ID, a KYC and identity startup in Africa, has released its H1 2023 State of KYC report detailing digital verification and fraud trends across the continent.
Digging Deeper
According to the report, it was found that biometric verification reduces fraudulent users by 50%.
In 2023 so far, 43% of ID frauds caught were face mismatches indicating that stolen or lost IDs were used, while 41% were selfie spoofs.
The report also states that local ID databases remain the most robust source of truth for KYC, but frequent downtime (on average 3%) remains an obstacle.
Lastly, the report highlights growing gender inclusion on the continent with the percentage of female ID verification checks carried rising from 10% to 35% between H1 2021 and H1 2023.
Why This Matters
Nearly 500 million Africans still lacked legal identity documentation as of 2020, as per the World Bank’s ID4D Global Dataset, indicating a vast potential for identity verification solutions to bridge this gap.
The African Development Bank estimates that Africa’s digital economy could reach $180 billion by 2025, with secure digital identities being a cornerstone of such growth.
McKinsey also forecasted that digital identification could unlock a value equivalent to 3-13% of GDP in 2030 for African economies, particularly in the finance, agriculture, and healthcare sectors
The Bigger Picture
As more businesses across Africa adopt biometrics for identity verification and fraud prevention, more fraud is being caught, and more valid users who may have previously been rejected due to poor image quality are approved, helping improve onboarding conversion metrics and customer satisfaction.
One Last Point
In contrast, Africa’s cryptocurrency sector continues to grapple with high fraud rates, while the payments and remittances industries are witnessing a marked increase in fraud from last year.
A thorough analysis of fraud across various industries reveals that all sectors experience significant biometric fraud attempts that go unnoticed when using textual checks alone. In particular, the payments sector could greatly benefit from biometric solutions due to its reliance on high volumes of text-only validation, which involves non-biometric jobs where users only submit an ID number for verification against a database.
You can read Smile ID’s report here: H1 2023 State of KYC report
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