Since the world is swiftly shifting toward digital applications, automated financial operations add value and convenience to the digital verification system. Additionally, customers also demand immediate and smooth access to every service and product. That’s where e-KYC comes in, automating KYC procedures to improve the user experience by ensuring an efficient customer onboarding process.
What is e-KYC?
E-KYC or electronic Know Your Customer is an essential process for customer verification. It is used by authorized companies to conduct customer verification electronically by authenticating the user’s information. In other words, electronic Know Your Customer verification eliminates the need for checking physical documents.
An Overview of e-KYC
KYC verification helps businesses eliminate the risks of financial crimes and comply with international standards of financial security. The process establishes trust among clients and companies, reducing challenges like financial fraud and money laundering. The method of identity verification of new clients is implemented during the customer onboarding process, where background information of users is collected.
However, KYC solutions are not confined to customer onboarding processes rather it continues till the customer’s relationship with the specific business or financial organization. At present, the growth of businesses is increasing speedily due to advancements in digitalization. The banking sector and financial institutions are at the forefront of transitioning manual verification procedures into eKYC processes. To put it simply, e-KYC is an advanced and upgraded version of traditional Know Your Customer procedures. It’s a paperless digital verification process that allows businesses to carry out smooth customer onboarding without any physical presence of the customers.
Digital Identity Verification of Customers
Since the verification system in the banking and financial sector is evolving, online identity verification system has become the need of the hour. Customers prefer to provide information online instead of visiting the institution for identity verification processes. Therefore, digital identity verification helps businesses provide convenience during identity verification via online portals.
As per studies, covid 19 has played a vital role in faster digital transformation. Advanced algorithms and e-KYC procedures have helped businesses influence the financial industry to meet the competition swiftly. The e-KYC procedure, being a fully automated version of the Know Your Customer process, eliminates the need to fill out the forms manually.
How do e-KYC Solutions Improve the Identity Verification Process?
Customer satisfaction and convenience come first in any business or financial sector. And eKYC procedures allow enterprises to speed up customer onboarding procedures, providing smooth services and retaining clients’ trust. Moreover, efficient e-KYC solutions complete the hours-long manual procedures within minutes, giving ease to their customers. Additionally, smooth e-KYC procedures empower the financial sector to protect the sensitive information of its users and clients to prevent fraudulent activities.
According to a recent survey, around 89% of corporate clients have gone through unpleasant experiences with KYC verification online procedures. It is also mentioned in the reports that 13% of the potential customers decided to replace their banks and financial companies due to poor digital verification procedures. Financial companies and the banking sector can utilize eKYC processes to ensure smooth customer onboarding and increase the conversion rates of clients.
What are the Steps Involved in e-KYC Process?
E-KYC procedures not only surpass traditional customer verification procedures but also involve the verification of already onboarded customers. Being a one-stop solution to all the digital verification needs of customers, it covers all aspects, including client onboarding, due diligence procedures, and ongoing monitoring. Let’s have a look at the steps involved in e-KYC procedures implemented in the business and financial sectors:
- Verification of Documents
Document verification is the very first stage of the e-KYC procedure. It requires the gathering and verification of scanned copies of the customers’ identity documents via automated methods. User’s personal data is extracted from scanned identity documents with the help of OCR technology.
- Video KYC Verification
Video KYC is another verification procedure that enterprises and financial sectors implement to alternatively verify their users’ identity. In video KYC procedures, businesses compare the identity documents of their customers with their live videos.
- Ongoing Monitoring
E-KYC procedures while customer onboarding are not enough. Instead, continuous monitoring is mandatory to ensure the safety of business and client relationships. Therefore, financial institutions continue ongoing monitoring to keep a check on the transaction and business activities of their users to identify and report suspicious activities.
Electronic Know Your Customer (e-KYC) procedures help digitally verify customers and allow businesses to comply with KYC and AML standard regulations. In addition, they enable companies to prevent fraud cases that have been damaging the financial reputation of enterprises for decades. Hence, this advanced digital verification ensures smooth and secure customer onboarding and financial activities.