By implementing KYC verification, organizations may reduce the risks of financial crime while still adhering to global norms. Reducing instances of fraud and money laundering also contributes to the development of trust between companies and their clients. The process of identity verification takes place when the business learns nothing about them beforehand. However, online KYC continues throughout the customer’s relationship with the business and does not end with onboarding.
Digitization has advanced quickly in recent years across a wide range of businesses. When it comes to moving operations online, banks and other financial institutions have taken the lead as the leading sector. Simply said, the eKYC solution is a more advanced version of traditional KYC verification that is more automated and digital. It is a fully digital, paperless system with the capacity to remotely verify consumers in a faster, more precise manner than KYC verification.
A Digital Method of Customer Identity Verification
An online method of identity verification is becoming more and more necessary as banking and other financial operations migrate to digital networks. Customers do not like being called to a bank branch just for the purpose of identity verification. Because they have the option to conduct transactions and other banking activities online. Institutions work to offer their consumers the convenience of confirming their identities through online portals in light of the updated customer demands.
Although widespread digitalization of financial services was thought to be difficult to achieve, financial institutions are now far ahead of their time because of technical breakthroughs in the field of artificial intelligence. However, that is only valid if they make use of the appropriate technological approaches to assess the risks related to their clients.
Speaking of widespread digitization, KYC service providers take the top spot on the scoreboard thanks to AI-based systems that have developed a reliable mechanism for running various algorithms and analyzing data at rates that are faster than humanly conceivable. These cutting-edge technologies enabled eKYC solutions to become an automated process.
Currently, there is no need to complete paper forms or meet with a verification agent because eKYC is a fully automated version of the KYC procedure. The system then conducts the KYC and AML screening procedure to perform a thorough background check on the clients. Nevertheless, without rules, none of these advancements or the widespread adoption of e-KYC techniques would have been conceivable. Financial regulators started to accept and promote the use of techniques like video KYC and biometric facial recognition to digitally verify customers’ identities as the pandemic’s cases of fraud and financial crime increased.
The Benefits of eKYC for Identity Verification
By speeding up the KYC procedure, eKYC onboarding greatly enhances it. What once took days or even weeks now takes only a few seconds. Second, e-KYC simplifies the customer’s verification process, greatly improving the customer experience. Financial organizations typically attempt to provide their consumers with goods and services through an easy, streamlined approach. They may offer their clients a safe platform that safeguards their private data while adhering to international laws like eIDAS and AMLD.
Step-by-Step Procedure for eKYC Solution
The eKYC procedure outperforms conventional use for both new and returning consumers. All client verification requirements, including onboarding, customer due diligence, continuous monitoring, and addressed by this single solution.
Verification of Documents
The first step of e-KYC document verification is to request and automatically check the scanned copies of customers’ identity documents. OCR technology is used to retrieve the customer’s personal information from scanned ID documents. By comparing the document templates with pre-defined, legitimate document types, AI-based verification is carried out.
In the eKYC procedure, a sort of verification technique called video is used to give clients another option for having their identities verified. In the video KYC process, an expert compares the customer’s live video with their ID documents to confirm the customer’s identity.
Risky in terms of fraud and financial crime isn’t just the onboarding phase. Existing consumers at financial institutions frequently prove to be dishonest. Financial institutions recommended to continuously monitor customer transactions, and alert the appropriate authorities to any unusual activity in order to prevent being duped by fraudsters. Checking for ongoing clients on PEP and worldwide sanctions lists is a step in the process.
Financial institutions have shown a greater need for Electronic Know Your Customer (e-KYC) verification solutions in order to establish themselves as market leaders. In addition to providing an easy-to-implement client onboarding verification procedure, digital identity verification also enables firms to adhere to onerous AML and KYC rules.
Additionally, it enables companies to get rid of decades-old fraud and con games. As a result, financial service providers may now create plans to fight fraudsters thanks to eKYC solutions. It shows the process of delivering financial inclusion as being special, and all pertinent data coordinated. Moreover, it offers online biometric and document verification to meet the demands of the digital world.