Digital technology increases financial fraud in banks. Online KYC verification can protect the integrity of the bank’s financial ecosystem with AI and machine learning technology.
Frauds affect all businesses online and offline. Onboarding unknown customers leads to financial loss and creates compliance problems with regulations, damaging the system’s reputation. Financial institutes such as banks are always the prime victim of scammers. One fraud in the banking system can break the public’s confidence in the brand.
Complying with Know-your-customer KYC regulations is ideal for verifying the customer’s identity. Online KYC verification makes this challenging task easy for banks and other businesses. Companies can onboard customers quickly through online KYC. In banking and financial institutes, detecting fraud is not only essential for safeguarding the system, but also for compliance with regulations. Following rules helps businesses to protect themselves from financial fines.
Why is KYC Verification an Essential Component of Banking?
KYC verification is carried out by several industries to detect customers’ risk to the company’s security. In the banking system, it is compulsory to identify onboarding customers to prevent money laundering and terrorism financing. It reveals the background transaction history of the consumers and provides information that is needed for banks to determine risk assessments.
Fraud detection is not easy for banks, and manual customer verification can be time-consuming, leading the company towards financial loss. Traditional KYC banking relies on human resources which are prone to human errors. Implementing AI framework in the KYC process and powering it up by updating machine learning according to specific needs enhances identity verification. It eliminates unnecessary time in authenticating the unessential information and reaps the accurate results.
Identity theft is a vital concern for banks, and after Covid-19, the number of scammers’ has skyrocketed. It has proliferated so much that the KYC services provider is expected to reach $28 billion by 2029. This is all because the FTC reported 5.7 million total fraud reports and 1.4 million of which were identity theft cases. Identity thefts are dramatically increasing in 2023, which increases the significant need for online KYC verification.
Benefits of Online KYC Verification in Banks
Imposters and scammers have access to advance technology which makes it easier to counterfeit documents. Accepting forgery documents can cause financial loss and lead to unlawful activities. 86% of consumers become victims of identity theft, credit card fraud, and data breaches. These frauds destroy banks’ reputations and demand enhanced due diligence (EDD) in banking. Digital identity verification makes it easy for banks and other regulatory companies to simplify and secure the KYC process. Given below are the benefits of the online KYC verification process:
Streamline the Process
The digital KYC verification process makes the procedure smooth by leveraging the technology. In traditional identity verification, the customer must visit the office to submit documents and undergo manual checks for validation. However, online KYC verification improves the process by remotely submitting verification documents. Submission of papers is now very convenient as customers only have to register on the online KYC platforms and upload scanned documents.
Allowing customers to submit documents and personal information has streamlined the process. It reduces the time of gathering all the information and eliminates the customer’s physical visit to the office. The customer can scan and simply capture the image of the document and upload that on the KYC services platform.
KYC is essential for banks to protect them from fraud, these frauds can cause financial loss and fines. Deepfake also increases the risk of fraud in the banking system. Scammers can make fake videos or pictures using advanced technology. In the digital village verifying counterfeit papers is impossible without using online KYC verification software.
The KYC verification automates the process and helps banks to reap accurate results. It uses AI and machine learning technology for meticulously KYC. Artificial intelligence assists companies in detecting the visible security features of documents and identifying whether the customer is involved in any suspicious activities.
Automation of the KYC process complies with AML, CTF, and other regulations and controls the risk of customer onboarding. Compliance with all obligations reduces the chance of financial fines. Instead of relying on human resources for verification, when banks use AI technology, it supports the latest regulations. So the banks always stay updated with the latest regulations. Regulatory systems constantly upgrade the rules, and complying with these laws makes online KYC verification essential for banks.
Banks can also customize the KYC process to check the customer information comply with their criteria and policies. Online KYC verification also enables real-time monitoring, so banks can supervise ongoing activities after onboarding customers. This allows the banks to review the activities and report suspicious activities.
Bottom Line of Online KYC Verification
The growth of fraud in the banking sector demands meticulously KYC verification. The inadequate KYC process assists scammers in disguising their activities. Banks can enhance their security through online KYC verification, including customer satisfaction and seamless compliance.