The banking sector has to maintain a balance between regulatory compliance and user-friendly business practices as technology advances. Besides this, the sector has to protect its customers from online fraud as recent studies. Digital banks are the greatest source of online fraud. It’s not only the traditional banking services that fell prey to digital scams. But other accounts that are linked to different services just like credit card accounts are also at a greater risk of being exploited by them.
Identity theft in the banking sector can be understood by witnessing a greater number of account takeovers. With the advent of digital banking services, the sector and its clients are facing a large number of identity theft and other online scams. No matter how advanced the verification solution is, the hackers still find a way to fulfill their nefarious means. Thus, only digital KYC solutions are a great choice that can protect the interests of banks and their customers spread across the globe.
What is KYC in Banking Sector?
Financial institutions including banks have already KYC solutions in place to verify the identity of a clients when they walk in and request the sector to open their account. A representative from the bank asks for all the necessary details of the client such as their personally identifiable information, occupation, source of income, etc. It also asks the user to provide evidence of the given details in the form of a government-issued identity card and other documents. If the same process has to be carried out by the digital banks. It becomes really challenging as the user is not there in person and the documents they provide can be forged. Hence, digital KYC solutions are required to verify the individual in real-time.
An advanced KYC solution is generally offered by third-party service providers. It is based on artificial intelligence to scan the documents and carry out the verification procedure. Digital KYC solutions can validate the individual and have the capability to detect the documents that are altered or forged. So, such a solution would be a great bet for the banking sector to keep fraudsters at bay.
How Do Digital KYC Solutions Work in Banks?
Digital KYC services use the internet, a smartphone, or a webcam to validate an individual. Let’s look at an example of opening a bank account online. As the user has fillers in all the details and provided all the required documents for evidence. The system jumps in and asks the user to face the webcam. The client is required to do so because the system has to check things like masks, excessive makeup, etc. In some circumstances the user doesn’t have a webcam, then they are asked to use their smartphone to complete the authentication procedure. Then the individual is asked to present their ID which is checked for any signs of forgery or tampering by conducting a hologram test.
All the provided details are crossmatched with the ones present on the documents. Meanwhile, the system runs a background test to ensure whether customers appear on the global watchlists related to terrorism funding and money laundering. If the customer is proven to be legitimate the system allows them to proceed. Otherwise denied to access the services and company’s resources.
Many service providers are offering KYC solutions. But the banking sector should rely on those solutions that are advanced and meet the company’s requirements. The technology being used in identity verification, document verification, and other KYC bank services plays a vital role while choosing a preferred solution provider. An ideal KYC solution is not only the one that offers omnichannel support. It should also be a flawless solution that can validate every incoming client quickly and with greater accuracy.
The AI-powered KYC verification process is not only hassle-free. But it also detects any kind of fraud whether it is identity theft or an account takeover within no time. The best KYC solution provider validates the identity of the incoming user through face recognition, address verification, ID authentication, handwritten note verification, and two-factor authentication. Moreover, it checks the client against various global watchlists issued by the local and global regulatory authorities. So, what are waiting for? Deploy digital KYC solutions and protect the baking sector from any kind of suspicious and fraudulent conduct.