Know Your Customer (KYC) is a process utilized by financial and business organizations to verify the identity of clients in order to combat the risk of illegal financial activities, for instance, corruption and money laundering. The goal of KYC, also known as client KYC verification, is to ensure that the institution is dealing with legitimate clients and to prevent illegal financial activities.
KYC verification mainly involves gathering customer information to verify their individual and financial profiles, including their names, date of birth, and other details, followed by supporting evidence.
Advantages of KYC Verification
With the rapid increase in online business transactions, Know Your Customer (KYC) is a vital aspect of accessing various services. Whether it’s a financial account or another business account at some digital marketplace, client KYC verification is an up-to-the-mark idea to prevent identity theft and make transactions legitimate.
Integration of KYC procedures in businesses helps prevent fraud. With tight KYC procedures, companies are now watchful regarding illegal activities.
KYC compliance helps to do a risk assessment since constant monitoring helps to identify any suspicious activity in accounts. So, this efficient client KYC verification system builds trust and improves the business and financial sector workflow.
Digital KYC Verification
The advancement in technology has significantly simplified human lives. However, some scammers never forget to take advantage of it. In order to fight and prevent illegal online financial and business activities, digital KYC verification plays a vital role. Digital KYC solutions assist the financial and corporate sectors in preventing fraudulent activities, making client KYC verification smoother.
To put it simply, digital KYC verification is an online way forward to identity verification. This KYC online verification system allows users and clients to share their live videos and photos, and official documents to prove their identity. The shared details are then verified, and further KYC procedures are performed online. This advanced digital verification process is also known as eKYC.
Why Digital KYC?
Digital KYC (Know Your Customer) is a cutting-edge approach that revolutionizes the process of client KYC verification. It allows financial institutions, i.e., banks, gaming, and gambling sectors, to confirm their user’s legal identity. The process ultimately helps in preventing identity theft by preventing hackers from stealing user IDs.
Hackers sometimes create fake accounts using stolen data. However, in client KYC verification, digital KYC systems such as face verification and other parameters prevent these fraudulent activities.
Types of Digital KYC Verification
Online KYC
In this type of KYC verification, customers fill out online KYC forms and submit them to their respective organizations. In addition, customers also have to add their signatures or e-signature to the document.
OTP-Based KYC
Another common type of client KYC verification is OTP-based KYC verification. Banks and other financial institutions opt for this verification system to create digital accounts while logging in or making online transactions and transfers. Before the creation of an account or conducting the transaction, this OTP (one-time password) is sent to the mobile number of that user.
Video-Based KYC
Video-based or photo-based KYC verification systems are currently widely known and are the most authenticated ones worldwide. In audio-visual interactions, systems capture live pictures during the session before opening the bank accounts.
KYC Verification Provider
To make the client KYC verification process easier, KYC verification providers offer technology-driven solutions to identify businesses and individuals. These providers use online automated solutions and software in order to verify the given information.
There are several KYC verification providers globally providing the most advanced and accurate services. Here’s a general overview of how this system works:
- Data Collection
In this step, the service provider collects user information through online forms or mobile apps.
- Verification of Documents
Using OCR (Optical Character Recognition) technology, document verification provided by users is verified through machine learning algorithms making client KYC verification smoother.
- Face Verification
With the help of face recognition algorithms, customers’ facial features are detected in live video interaction and compared with the pictures provided in order to verify the customer’s identity.
- Data Analysis
The client KYC verification providers also check and verify customers’ data against various databases. For instance, they analyze public records, credit bureaus, and sanction lists to check the clients’ and businesses’ previous financial records.
Final Thoughts
Client KYC verification is undoubtedly a crucial gateway to minimizing financial fraud. KYC procedures help businesses and financial institutions fight against illegal activities like money laundering and corruption, ensuring legitimate clients and a safer world. Incorporating digital KYC verification through advanced technologies such as face recognition and OCR can significantly augment the verification process and provide secure and hassle-free identity verification online. Therefore, KYC verification is important because it builds trust and makes things run smoother in the business and financial sectors.