Table of Contents
The KYC (Know Your Customer) service is exercised in multiple industries to verify the identity of their customers and other business partners. It is made compulsory to prevent identity thefts and scams in various networks of finances, social interaction, and trading. The KYC check also helps in countering money laundering activities. Most people experience identity verification checks when opening a new bank account or joining an organization. The KYC verification process ensures the right person accesses the resources of the firms and does not utilize them for illicit purposes. It is also necessary to tackle the rising issue of identity theft among digital systems. For modern-day solutions, organizations take a digital KYC approach that enables the verification of the clients remotely.
How Does KYC Help In the Identification Of Customers?
The identity verification process comprises various verification evaluation methods such as document verification and face identification that ensure the credibility of the customer. The procedure is greatly improved as compared to the traditional approaches used in the past.
Identification Of Customers
Modern-day verification is performed using new technologies such as artificial intelligence and optical character recognition that not only improve the accuracy but also automate the process. The KYC identification evaluates the client via all the legal and associated information, this helps in reducing identity theft and fake customers.
Online Know Your Customer
Talking about the digital approach, the modern-day methods enhance each step as the computerized solutions minimize the chances of errors and attackers cannot bypass them easily. Digital techniques also provide a faster process of identification as compared to manual procedures.
Digital KYC Verification Process
The KYC verification process is initiated by most organizations at the time of customer onboarding. It starts with basic identity evaluation, for example filling out forms to provide personal data such as name, age, address, and other related information. After which the organization initiates the critical checks as per KYC compliance.
Document Evaluation Procedure
The document verification process is being carrying out for a long time. It still provides a great way to ensure customer data from their legal documentation. The process requires the customer’s government-issued licenses and paperwork, for example, identity cards, passports, etc. In the digital system, document verification is carried out remotely by uploading all the files onto the online portal in the form of digital copies. Just like the traditional way, the digital method also extracts the data of the person from their documents using OCR to ensure genuineness.Â
Biometric Recognition
The biometric verification technique is the core of the identity verification process as it uses the natural characteristics of the person to evaluate their identity. The biometric solution provides a secure method to distinguish between real and fake customers. It also enhances security by improving real-time authentication procedures. Most industries use the latest biometric recognition technologies such as facial identification which maps out human faces to process identities. It also provides a touchless solution that increases the accuracy of the systems. Other biometric methods include fingerprint scanning and Iris recognition as well.
Address Verification
The address is necessary as it ensures trust among different business entities. The KYC compliance also adds an address verification process to prevent business fraud and financial scams. The old method used different documents to confirm the address of the customer such as utility bills. The new geo-tracking solution has increased the accuracy of the address verification technique. Global Positioning System provides real-time tracking of the customer. It also uses the remote technique to extract the addresses of the client from their uploaded documents such as ID cards. The extracted location is then compared with the coordinates provided by the customer at the time of registration.
Consent Approval
Most people have to submit the agreement to the privacy policy and business guidelines. The manual way of consent agreements is exploited by the fraudsters and identification. To tackle the increasing issue of scams, modern systems have developed a new method. It is the method of consent verification that uses real-time video conferencing between the client and the firm. Identity verification With digital consent verification, the customer and organizational agent interact which restricts the involvement of any third-party entity.
The Bottom Line
Identity verification plays an important role in evaluating the customers. The social media platforms are even performing the KYC check to counter the issue of fake profiles. KYC compliance acts as the defense mechanism against multiple threats of identity theft, financial scams, and other illicit activities such as money laundering. The KYC verification process has greatly evolved with time as it incorporated new methods of identification such as biometric evaluations and geolocating addresses. The modern-day systems perform complete checks with the help of new technologies such as OCR that ensure accurate results. AI also helps in accurate biometric scanning of the customer by developing multiple patterns of identification.