Bank Verification

There isn’t a one-size-fits-all solution for bank verification. 

However, some popular methods include:

• Asking the customer to verify their account via their bank login information. 
• Using multifactor authentication to verify the customer’s identity.
• Asking the client to upload a document, such as bank statements, to prove their account ownership.
• Sending small monetary transfers to the customer’s account and asking them to verify the exact deposit amounts.

Automated Bank Account Validation (ABAV) is the process of verifying the bank account owner by comparing their account and routing numbers to a database to confirm legitimacy. Often, clients manually enter their bank account details, and a third party checks this data against a reputable database. BSB payments or offline payments, such as orders done through the phone, often use ABAV.

Banks and other financial institutions are required by law to verify their users’ identities. This involves conducting stricter checks during the account opening process and verifying that their information is genuine while ensuring that after the onboarding, they won’t be tangled in any suspicious activity that would pose risks to the business relationship. 

Bank verification is part of the Know Your Customer (KYC) verification and Anti-Money Laundering (AML) framework, which both require companies to verify customer identities and bank account details before starting a business relationship and maintain transaction records to report suspicious activity.

E-commerce platforms use bank verification to onboard accounts or facilitate one-time payments. Similarly, online marketplaces use this process to authenticate users and quickly link their bank account information to their profiles. Bank verification is also a popular security measure among investment platforms and other personal finance applications. 

Yes, since almost every business has money flowing, checking that the company isn’t linked to any illegal parties or activity like money laundering is vital both in terms of compliance and reputation. Businesses benefit from verifying bank account data by ensuring that all of the transactions are authorized and that their customers provide accurate banking information. 

iDenfy’s bank verification service integrates seamlessly with open banking, streamlining customer onboarding — a crucial step in the identity verification process. 

There are several functionalities, such as:

• Automated collection of key account holder information from the bank account (including full name, bank details, and IBAN).
• The ability to cross-match bank account owner ID information with other reputable databases.
• An option to add other fraud prevention measures, such as Customer Risk Assessment, to automatically calculate the customer’s risk profile by assessing each transaction.