Convenience and security are of paramount importance today. This is true for businesses and customers alike. However, today, these two can be tricky to maintain, especially with traditional KYC.
Digital KYC or Know Your Customer is a game-changer that revolutionizes the traditional, paper-based onboarding process all while upholding the crucial security measures that today’s era demands. It lets businesses make themselves and their customers feel secure easily.
Understanding Digital KYC – The Hows and Whys!
Digital KYC refers to the use of digital technology to process KYC execution. It leverages technology to verify consumer identities electronically. Digital KYC involves the collection and validation of customer information by means of secure online channels such as specific software for OCR, facial recognition, etc.
Digital KYC checks utilize a combination of many such technologies. These include,
KYC and Document verification
Document verification refers to the authentication of documents after editing and reading document contents. Document verification for digital KYC involves uploading scans or images of government-issued IDs for authenticity checks. Besides IDs, other documents, such as utility bills, employment certificates, etc. may also be used.
Biometric authentication
By employing fingerprint or facial recognition technology for biometric recognition, we can get real-time identity confirmation. These systems are in active and common use today thanks to their integration into mobile phone unlocking systems. However, biometric authentication is not just facial recognition but also involves iris scans, retina scanning, voice recognition, etc.
Data verification
By cross-referencing customer information with external trusted databases, digital KYC services can improve the efficiency of their processes. For example, you can check all data online about a given person by feeding in their social security number or face scan to check customer details with trusted databases to confirm accuracy.
Benefits of digital KYC customer verification
While KYC might seem unimportant or redundant, it is an essential approach/tool and digital KYC only adds to the usefulness of it. Digital KYC comes with a lot of benefits. For example,
Frictionless onboarding
Digital KYC customer verification allows for easy and seamless onboarding. Customers can very easily complete all verification processes remotely. It allows for great flexibility in time and work location, while simultaneously reducing waiting time and paperwork hassles.
Enhanced security
With digital KYC, security is a major benefit. Online, information is processed by software completely with data encryption, which promises great security. Furthermore, data can also be stored securely greatly reducing the likelihood of data leaks or breaches as well as hacking.
Advanced verification methods greatly minimize the risk of fraud and ID theft. This allows for the protection of businesses and customers.
Cost efficiency
With manual or traditional digital KYC, we used to have an extensive amount of paperwork to deal with. It also required expenses on employee hiring as well as other miscellaneous expenses such as stationery. On the other hand, digital KYC customer verification processes everything in a paperless fashion while requiring at max, only a few people working.
With digital KYC, everything can be handled from a single computer and customers also do not need to engage in hassle to benefit from services or products. Furthermore, the automation of KYC manual processes saves businesses time and resources which leads to cost reductions.
Global reach
One of the biggest benefits of digital KYC customer solutions is that individuals from all over the globe can easily access services. For example in the year 2022, the Chinese retail platform Alibaba had over 305 million active users on it. Digital KYC allows people from any country to verify themselves and their identities and legitimacy from any part of the world. In cases such as that of Alibaba or other retail/shopping platforms, this becomes of even more importance. This is so because the sellers as well as the platforms themselves have to go through extensive shipping processes. By using digital KYC to verify users we can ensure that there are next to none returned orders, shopping fraud cases, or other such issues.
Furthermore, businesses can onboard customers from anywhere in the world and expand their market reach.
Digital KYC Checks – A Deeper Dive
While digital KYC comes with several benefits, the true essence only comes from reaching down and getting specific. Digital KYC checks can be tailored to certain specific industry profiles, procedures, and regulations. Common checks for the digital KYC include:
Identity verification
First and foremost, as a standard for all KFC processes, irrespective of industry or any other factor, we confirm the identity of our customers. This includes confirming customers’ names, dates of birth, addresses, and other similar information.
PEP (Politically Exposed Person), watch lists, and sanctions checks
Screening for politically exposed persons against government watchlists or other databases such as police lists is becoming increasingly important. This allows us to not only stay in compliance with the regulations but also to prevent financial crime in the most active passive way.
Digital KYC document checks
Digital KYC document checks are a step above the basic KYC identification. Document checks refer to the verification of other different kinds of documents such as utility bills, lease agreements, etc. These are essential for verifying addresses, employment histories, and educational backgrounds among other things.
Biometric checks
As previously mentioned, biometric checks are increasingly becoming part of security systems in almost all industries. These primarily include facial recognition which matches live facial features or fingerprints against stored data.
Conclusion
Just as traditional KYC had been in use consistently, digital KYC is also here to stay. While it may keep evolving continuously due to the dynamic nature of technology, it will stay. Digital KYC is essentially a transformative shift in customer onboarding.
By embracing its convenience, security, and accessibility, businesses today can unlock a new world of opportunities. With this, we can expect frictionless, secure, and inclusive financial systems for all.