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The banking industry is highly influenced by Know Your Customer (KYC) bank regulations. But whatever the sphere you operate in – customer intelligence is the cornerstone of the matter.
For corresponding Know Your Customer obligations, your business needs a solution for identity verification that is convenient to your customers and ensures protection for your business. What is KYC meaning? And how can you apply it for your benefit? These are the things on sale in the article.
KYC (Know Your Customer or sometimes Know Your Client) is a practice of identity verification of the clients in compliance with legal requirements and current regulations and laws. In addition, Know Your Customer coupled with Anti-Money Laundering (AML) is a powerful tool to detect fraud and fight against financial crimes.
Know Your Customer compliance procedures can be performed both offline (personally) or online (impersonally or remotely):
In recent years, companies, banks, and organizations are pursuing the goal of transformation and digitization of processes that seem challenging to automate and get remote, including KYC. A coronavirus pandemic outbreak accelerated the process greatly. However, specialized software has appeared to help to achieve this task. By using cutting-edge technologies such as artificial intelligence (AI) and machine learning (ML) Know Your Customer due diligence can and will be automated.
Automated KYC verification exploits advanced AI and ML technologies to ensure that your clients meet legislative and regulatory standards with no high dependency on internal resources.
The automated process consists of the following stages:
Although end-to-end KYC processing still requires human resources to make crucial, high-level decisions, a majority of the routine checks can be handed off to automation, and more specifically, Intelligent Process Automation (IPA).
Intelligent Process Automation is a set of technologies combining management, automation, and integration of digital processes. Some of the technologies that IPA consists of:
The technologies mentioned above are now used for workflows automation, data extraction from documents, and reduction time for screening, identification, and verification.
Due to the advanced Artificial Intelligence and Machine Learning technologies, processes of onboarding customers can be substantially improved and digitized. Know Your Customer software solutions make the process seamless and frictionless. Customers have no difficulties accessing the contracting of products and services remotely in a secure way in all industries, including banking.
The key benefits of Know Your Customer automation:
Only when KYC process becomes global, standardized, portable, user-owned, and supported by digital credentials, KYC will start getting less expensive and difficult to deal with. It will ease doing business because location, borders, distance, and time zones do not impact the whole process.
Alongside the Artificial Intelligence and Machine Learning used to know your customer automation, there is a tendency of KYC evolution towards electronic KYC (eKYC).
The term “eKYC” is used to describe the digital, electronic, and online conception of KYC processes. eKYC is a remote, paperless process. It minimizes costs, time and natural bureaucracy necessary in KYC processes even more than automation does.
Though for some, verification of customers is still mostly a paper-based check with Know Your Customer forms to fill. The ways eKYC can improve your customer verification process are evident. Literally.
Video KYC allows verifying clients’ identities via video calls. Customer identity can be approved either by ID demonstration or via facial biometrics programs combined with fingerprint analysis. The only thing a customer needs is a mobile phone with Internet access.
The process looks as follows:
Some companies and banks are interested in eKYC as a means of collecting customer data. While analyzing social networks and customer behavior there, valuable data is extracted. It is further used for credit scoring or potential client’s financial activities analysis.
The main benefits of eKYC are:
But fishing and identity or signature falsification are very common now. Special businesses dedicated to technical compliance solutions exist. They ensure you have completely secure eKYC processes with zero losses for these counterfeiting offenses and related crimes.
For highly regulated industries like banking, it can be extremely complex to onboard new clients. Fortunately, the implementation of digital solutions for automation of the process provides financial institutions with a myriad of advantages and benefits at a much lower cost than traditional approaches do.
The correct KYC automation implementation can:
For more details on the KYC solutions, get in touch with us.
Director of Business Development
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