Criminals are adopting complex techniques to achieve their malicious purposes in today’s technological age. Established criminal groups have made it a regular practice to utilize information acquired by banks, insurance companies, fintech, credit unions, or brokerage firms to acquire free services, file bogus insurance claims, or commit other forms of fraud. Financial institutions, on the other hand, have kicked up their game by developing automated solutions to help them battle such fraud. An online KYC verification is a great bet in this regard.
KYC goes beyond just validating the individual’s identity. It also compromises analyzing customer risk profiles, establishing a painless onboarding process, doing continuous monitoring, maintaining the client data, reporting to the regulatory bodies, etc.
What is KYC Authentication?
KYC stands for “Know Your Customer,” and it refers to the procedures that organizations must follow in order to determine and verify their customers’ true identities.
Businesses, no matter what sector they’re in, use KYC verification solutions. Corporations can use these methods to guarantee that their present and potential consumers, vendors, and sellers are AML (Anti-Money Laundering) compliant or just not imposters posing as someone else.
Clients are increasingly being asked to give details that may be required for identity verification by financial organizations such as banks, export creditors, insurance companies, and so on. The financial company was the very first to be subjected to KYC and AML rules. Non-financial businesses, such as online gaming platforms, e-commerce enterprises, virtual asset suppliers, casinos retail, and so on, are now required to comply with global regulations.
What is e-KYC?
Financial organizations can use online Know Your Customer (KYC) processes. Virtual business operations are becoming increasingly popular and necessary in the COVID-19 period. To bridge that gap, e-KYC processes are introduced that are much more advanced and better than compared to conventional KYC authentication procedures.
The following are the steps that take place in the electronic KYC verification:
1. Collection Of Information
At this stage of the know your customer verification process, the customer’s Personally Identifiable Information (PII) is collected online. And during the account creation step, the client is needed to provide their personal details such as their complete name, address, date of birth, and so on.
2. Upload an Evidence
Following the collection of PII, the consumer is required to provide proof of identification to serve as evidence. A government-issued ID card, driver’s license, passport, utility bill, bank statement, rent agreement, and other documents are all acceptable.
3. Verification of Information
Several checks are carried out when the customer has submitted details and uploaded an ID document. This included checking the document’s type, structure, and style as well as looking for crumpled edges and identifying fraudulent, altered, or falsified documents.
One of the biggest advantages of e electronic KYC verification is that data from ID documents are automatically extracted using optical character recognition software, which speeds up the complete KYC verification process.
Let’s look at some of the other advantages of using online KYC verification processes.
Benefits of e-KYC
Avoiding Heavy Fines
Data breaches, credit card fraud, and identity theft are all common occurrences that might raise questions about firm online security. If declared guilty of participating in or failing to comply with know your customer processes, the entity could face a slew of lawsuits from victims of fraud and data breaches.
1. Protection of Reputation
Cyber risks are a concern to digital e-commerce companies and online banking services. In a highly competitive environment, a firm’s weak cybersecurity measures might lead to a negative reputation. Data security is improved with the use of KYC online verification processes without sacrificing client experiences.
2. Reducing Opportunities of Cybercrime
Customers requesting fake refunds are a common issue encountered by online businesses. Sometimes, fraudulent transactions may be undetected, putting the firm’s finance department at risk. By remotely authenticating clients, identity proofing systems that are utilized in digital know your customer protocols, reduce the risk of fraud. Financial crimes like fake chargebacks can be decreased in this way, resulting in higher overall earnings.
3. Final Thoughts
As the technology is progressing, fraudsters are also revising their methodologies to dodge the verification solutions and fulfill their malicious intents. Companies are struggling to provide greater security while not compromising the user experience. This is where KYC solutions came as a hope. Knowing who the customer actually helps the firms prevent fraudulent activities. Moreover, deploying KYC services makes the firms adhere to KYC compliance, preventing them from heavy fines and building their reliability in the competitive world market.