How Mobile Driver’s Licenses Can Transform Identity Verification in Financial Services
Digital banking has never moved faster. For platforms powering fintechs, neobanks, and embedded financial services, onboarding new customers quickly and securely is essential, not only for user experience but also for compliance.
That’s where KYC, or Know Your Customer, comes in—the set of identity verification steps financial institutions are legally required to perform before offering services like bank accounts, credit, or investment tools. It's a critical part of protecting against fraud or money laundering.
However, while some digital services have advanced rapidly, the identity verification tools that power KYC have lagged behind. Most platforms still rely on artificial intelligence to analyze images of physical documents, a patchwork process that creates friction for users and uncertainty for compliance teams. As fraud tactics become more sophisticated, these systems are showing their limits.
It’s time to modernize how identity is verified online, and that starts with mobile driver’s licenses (mDLs), a secure and verifiable form of digital identity issued by state governments.
The Bottleneck in Digital Onboarding
If your current onboarding flow involves photo uploads and long processing times, you’re likely to see drop-off and risk.
Even the best AI-powered verification tools struggle with edge cases, false rejections, and new forms of fraud. Meanwhile, generative AI is making it easier than ever to spoof IDs and deepfake “live” videos that pass existing checks.
The impact is real: one study found over half of users abandon onboarding when it becomes too slow or confusing. For digital platforms competing for users, these delays can directly impact revenue and retention.
mDLs: Trust That’s Built In
Mobile driver’s licenses are verifiable digital credentials issued by state governments and stored on a user’s smartphone. Unlike photos of paper IDs, they’re cryptographically signed, instantly verifiable, and privacy-preserving. This allows relying parties such as banks, fintechs, and marketplaces to instantly confirm authenticity without storing or interpreting sensitive user data.
For digital platforms, this means:
- Instant verification: no photos or manual review needed
- Reduced fraud: credentials are cryptographically bound to specific devices
- Streamlined UX: users can verify in seconds without leaving your flow
- Privacy-first: only necessary data (ex. age, name) is shared
- Compliance-ready: aligns with evolving KYC/AML requirements
With more than 5.6 million Americans now holding mDLs and TSA actively accepting them at airports, real-world adoption is accelerating. States across the U.S. are continuing to expand issuance, creating a growing population of users with ready-to-use digital IDs.
A Strategic Shift
Platforms that embed verifiable digital credentials into their onboarding flows unlock many benefits, like fewer drop-offs, lower fraud risk, and stronger audit trails. They also gain operational efficiency, reducing the need for manual reviews and exception handling.
And this is just the beginning. As mDLs and other verifiable digital credentials become more widely adopted by governments, retailers, and beyond, those who invest early in integration will be positioned to lead in trust, speed, and compliance.
Learn More
SpruceID provides the secure infrastructure needed to issue and verify verifiable digital credentials, such as mobile driver’s licenses, helping organizations streamline identity workflows and reduce onboarding risk. If you're exploring ways to modernize identity verification, we’d love to partner with you.
About SpruceID: SpruceID is building a future where users control their identity and data across all digital interactions.