It’s no wonder financial institutions (FIs) are losing millions annually to fraud and money laundering. Despite ongoing amendments to anti-money laundering policies, the industry still faces challenges due to delays in implementing those changes. While scammers
devise new methods to exploit the system, banks maintain a slower pace toward digitization. In 2022, the Federal Trade Commission reported a loss of $8.8 billion to fraudulent activities – an increase of 30% from 2020. The key question now is whether the banking
industry can learn the lessons from the pandemic and implement ways to mitigate such risks in the future.
When it comes to rethinking how technology can transform the banking industry,
e-KYC verification emerges as a promising solution. Leveraging the power of advanced identity verification solutions, financial institutions can convert the crisis into an opportunity to provide a better customer experience.
Embrace Digital-First Approach
Digital banking is the cornerstone of the finance industry, providing convenience and instant access to services. As banks continue investing in developing digital products, thought leaders in the industry must embrace an overall digital-first approach.
However, a digital infrastructure cannot stand alone by revamping products. Instead, the digital embrace should redefine all sectors, especially security. Besides digital card issuance and banking experience, the approach should also encompass digital Know
Your Customer verification (eKYC). Stating broadly, it is a paperless verification process that utilizes AI and cutting-edge machine learning to replace manual verification. Evidently, e-KYC reduces the friction in operations, increases security, and improves
the customer experience.
As banks continue to innovate and improve across all fronts, it becomes increasingly difficult to differentiate between the services. In such circumstances, it all comes down to the customer experience. Studies suggest that 76% of customers who experience
a smooth onboarding process are likelier to continue using the service or product. Given such a spike in customer retention, businesses should stop relying on manual processes. Not only are they time-consuming and resource-intensive, but they also cannot keep
up with demand surges. Whereas, automated eKYC solutions offer unparalleled reliability and scalability to capitalize on the increased demand. Customers can set up their account and get it operational from the comfort of their homes – no queues equal satisfied
Improve Data Accuracy and Consistency
eKYC offers several benefits that contribute to enhanced data quality. Here's how it improves data accuracy and consistency in banks:
Automated Data Capture: These solutions utilize optical character recognition (OCR) and machine learning algorithms to automatically extract customer data from identity documents such as passports or driver's licenses. This eliminates manual data entry errors
and enhances the accuracy of captured data.
Real-time Validation: eKYC systems validate the authenticity of identity documents in real-time by cross-referencing them against trusted data sources and reference databases. This verification process helps identify forged or tampered documents, reducing
the risk of fraudulent activities and maintaining data integrity.
Integration with Existing Systems: Seamless integration with banks' existing systems and workflows enables a streamlined and standardized approach to data verification and management. This integration ensures accurate customer data is available across various
banking processes, minimizing errors and discrepancies. For instance, integration with a transaction monitoring system allows the bank to use the data efficiently to identify underlying patterns.
Mitigate Money Laundering and Fraud
Fraud and identity theft start at the onboarding process, so it should not be surprising that the eKYC process is effective at fraud prevention. It enables banks to conduct thorough customer due diligence, including identity verification, background checks,
and risk assessments. This helps identify high-risk individuals or entities associated with money laundering or fraudulent behavior, allowing banks to apply enhanced scrutiny and monitoring measures. Similarly, eKYC systems screen individuals against global
watchlists and sanction lists to identify matches or suspicious activities. Banks can promptly flag and investigate customers who appear on these lists. This prevents illicit funds from entering the financial system and ensures regulatory compliance.
Transform Customer Experience
Identity verification using eKYC has a transformative impact on the customer experience in banks. By digitizing the identity verification process, eKYC offers several benefits that enhance customer convenience, speed, and overall satisfaction. Once customers
are onboarded, it allows for seamless and secure transactions. Customers can authenticate their identities digitally, whether through biometrics, one-time passcodes, or other secure methods. This eliminates the need for hectic manual processes and provides
a smooth customer experience. Moreover, by leveraging customer data obtained through eKYC, banks can offer personalized services tailored to individual preferences and needs. This enables banks to provide customized product recommendations, targeted offers,
and personalized support, enhancing the overall customer experience and fostering stronger relationships.
Overall, eKYC transforms the customer experience in banks by simplifying onboarding, expediting
KYC verification processes, enabling frictionless transactions, enhancing security and trust, facilitating personalized services, and ensuring regulatory compliance. By embracing advanced technology, banks can provide a seamless, customer-centric experience
that meets evolving expectations.