Managing a global business with people belonging to different countries have its challenges. Financial businesses use different marketing tools to attract new clients and increase their business. Financial institutions around the globe use different KYC solutions before onboarding any new client. The process by which the client’s identity and credentials are confirmed is known as digital Know Your Customer (KYC).
Due to the increase in the number of financial frauds, money laundering, and identity fraud, banks and fintech have started using AI for client identification. The digital KYC solutions provide an accurate result as it swiftly identifies customers. This system also helps businesses to increase their valid customer pool.
What is KYC in Banking?
KYC banking is a standard technique used by banks around the globe to analyze and authenticate a client’s identity. This system helps the banks in confirming that a customer is who they say they are. The clients provide their credentials that establish their identity and authenticate their address. After the identity is established the customer becomes eligible to use KYC banking. ID card verification, facial verification, biometric verification, and other document verification are all part of the KYC process that banks use.
KYC/AML compliance is also used to stop money laundering and financial scams. Billions of dollars are saved every year because banks and financial institutions use this security service.
How KYC in Banking is Performed?
For the initial KYC verification of banks, a couple of necessary identity documents are required. These documents should have all the information required for different stages of ID verification. The documents include a national ID card, driving license, passport, and utility bills as proof of residence. These documents are required and important to maintain compliance with KYC/AML protocols and standards.
If the client is a business firm, the KYC banking process requires additional information such as the firm’s official registration number, a valid trade license, bank statement, general expenses ledgers, annual reports, and relevant documents, in addition to the above-mentioned records.
Different Steps of KYC in Banks:
Document Verification:
The customer begins digital KYC banking by uploading the documents with the help of his mobile phone’s camera. The OCR (Optical Character Recognition) technology analyses the files that are uploaded and confirms details and information by comparing it to data provided by the customer. The customer also uploads an image with the papers for processing. The final results are generated in real-time which results in a smooth client onboarding experience.
Address Verification:
Address verification is performed by banks using digital KYC solutions to ensure that customer is not in a banned market zone. The service is also useful in client onboarding. Through this process, a bank confirms if a person is not from an area that is under the watch of FATF.
Age Verification:
The service of verification of age in digital KYC systems is very beneficial for banks. The verification technique is nearly identical to ID document verification. The client gives the same type of certificates, and the OCR technology collects the information for authentication in the same manner. In addition, the client is required to provide a selfie for face confirmation to guarantee that the individual is who they claim to be and not underage.
Biometric Authentication:
In the second last step of KYC, digital KYC systems do biometric verification, in which the client uploads a photo after checking the ID certificates, and the system analyses the face for spoofing or cleverly crafted fake pictures. The KYC method can identify natural shift patterns of a face because of Optical Flow Analysis technology incorporated into them. This makes the digital KYC systems extremely capable of catching such frauds.
Video Authentication:
A verification agent of the bank authenticates the client in a video interview call during Video KYC. The same technologies that are used in biometric screening are utilized in digital KYC solutions. The agent asks a series of questions, and the AI-powered system certifies the client’s identity.
Importance of OCR engine in KYC Verification Process:
Whether it is document verification, age, or address verification, the OCR technology is used to extract data from screened certificates and reorganize it appropriately. This technique speeds up data validation and authentication in digital KYC systems.
Conclusion:
Digital KYC in banking is perfect for client onboarding and transaction monitoring. This makes it easier for banks to verify onboard clients. KYC banking takes every precaution to save banks from any sort of scam. The AI-powered KYC banking services provide quick and accurate results that help in the smooth onboarding of clients.