Digital KYC – Definitive Solutions for Secure Customer Onboarding

by techwole
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Businesses are moving to a new age of modern technologies that are opening doors for tremendous growth. While regulatory bodies are strictly obliging companies to ensure Know Your Client (KYC) and Anti-Money Laundering (AML) compliance, digital IDV solutions are easing their burden by offering automated customer identification mechanisms. However, with all these technological advancements, fraud risks equally increase such as identity theft, data breaches, and cybersecurity threats. 

The global identity verification market is forecasted to grow at a CAGR of 12.62% by reaching $18.49 billion in 2027. Therefore, businesses are readily incorporating digital KYC solutions to stay ahead of fraudsters and ensure compliance. These services further aid in improving companies’ security controls. This article explains Digital KYC and its importance for businesses. 

An Overview of the Digital KYC Security Checks 

Know your client refers to the security checks that businesses place to identify users and counter identity fraud. KYC is a legal requirement put forth by global regulatory watchdogs to counter criminal threats. The process involves a variety of checks such as information verification, document authentication, cross-validation across databases, and real-time presence assurance. However, businesses manually handling these tasks are experiencing complexities in ensuring secure onboarding and non-compliance risks. 

Digital KYC solutions are businesses’ options to improve their operations and bring in advanced techniques for customer onboarding. Being an advanced conception of long-in-use client verification methods, online IDV services are enabling companies to steer clear of compliance more efficiently. Businesses are leaving papers and bureaucracy because they see digital KYC as the replacement for manual identification tactics. 

The digitalized alternative of KYC security checks is cost-effective as it uses Artificial Intelligence (AI) and Machine Learning (ML) algorithms to verify customers. This makes IDV solutions more reliable. Furthermore, digital KYC tools are not prone to human errors and provide instant results. Similarly, AI-powered IDV solutions enable businesses to retain a competitive edge and keep pace with technologically evolving markets. In return, companies can enhance customer experience, safeguard operations, and improve compliance mechanisms. 

Development of Conventional KYC to Electronic Customer Verification 

The original KYC process involves physical in-person customer verification where individuals carry piles of documents to offices. Later the compliance officers cross-match information within records. This process involves high chances of human errors, data discrepancies, and inaccurate results dispatching. Furhtmeroe, manual KYC takes up to weeks and uses a high value of resources. 

On the contrary, digital KYC is streamlining customer verification for businesses by providing accurate and faster authentication. Clients are demanding more convenience and prefer registration without having to leave their homes. In this case, AI-powered KYC security checks come in handy. 

Businesses can offer customers the opportunity to upload documents by using their cell phones or other devices. Later the Optical Character Recognition (OCR) tools extract information without discrepancies. Machine learning algorithms cheeks validity of both papers and details. Utlamtwly, the digital KYC systems display customer verification results without consuming days. Hence, businesses can integrate user-friendly onboarding mechanisms and ensure compliance as well as more growth.

Techniques Used by Digital Know Your Client (KYC) Services 

As mentioned earlier, digital KYC solutions come with various checks to verify customers accurately. With the help of ML and AI, businesses can stay put with evolving regulatory landscape and mitigate cybersecurity threats. In the second quarter of 2022, there were around 52 million data breaches. This increasing threat forces businesses to pace up their efforts against fraud risks.   

AI-powered IDV solutions offer a comprehensive know your customer checklist that involves video-based identification, liveness detection, facial recognition, consent verification, and document validation. Hence, clients can avail of a touchless onboarding experience and businesses can safeguard their operations from criminal risks. Further techniques used by digital KYC solutions involve:

Accurate Document Authentication 

One of the most reliable options provided by digital KYC services is accurate and error-free document authentication. Upon arrival, the system asks users to fill in their Personally Identifiable Information (PII) in an online form. 

In the next step, they are asked to upload supporting documents as evidence of their identity proof. The digital KYC system then extracts information using OCR that eliminates data discrepancy risks. ML-powered tools then validate documents by looking for tampering or forgery signs.

Biometric-Based Identity Verification 

KYC service providers offer advanced techniques such as biometrics to verify customers more accurately. While documents are prone to forgeries, fraudsters can not create fake biological and behavioral traits. Digital KYC systems use advanced AI-powered tools to analyze real-time videos of customers. They then map facial features and cross-match them with documents as well as global databases. 

AI-powered IDV tools predict the presence of customers by analyzing backgrounds, gestures, noises, and other surrounding objects. Hence, digital KYC systems offer touchless customer verification by asking for a real-time video or selfie.

Final Verdict 

Businesses are falling victim to criminal threats such as data breaches, identity fraud, financial crimes, and much more. In order to place necessary preventions, they need to integrate digital KYC solutions. They are the advanced forms of identity verification that rely on automated AI and ML technologies. Hence, businesses can improve the customer Enhanced Due Diligence (EDD) process while driving more convenience and security.

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