Role of KYC Onboarding Process in Banking

In financial institutes such as banks, customers must identify their identity. After completing the KYC onboarding process, clients can use bank services. KYC verification ensures security and enhances customer experience. Financial sectors must comply with different regulations to secure their system. The efficient and authentic KYC process assists banks in the verification of compliance with legislation. 

KYC is a straightforward process for banks to uncover the identity of customers. It protects banks from identity theft. Using forged documents for scams is most common in financial fraud. According to Federal Trade Commission reports (FTC), 2.4 million fraud cases were reported in 2022, and 1.1 million scams are about identity theft. Imposter scams are at the top of the list, following online shopping scams, investment scams, and lotteries. 

The first step of any imposter scam is to make a new account in the bank by using forged documents. The financial scams not only affect the bank’s profit but also damages its reputation, and in the worst situation, they have to face regulatory fines or can go to jail. The KYC onboarding process protects them from all these. 

What is KYC Onboarding Process?

In native words, KYC is a simple process to know your customer by checking documents and information. These documents must be government-issued papers such as driver’s licenses, passports, national IDs, etc. Banks contain personal data across the documents like date of birth, name, address, and phone number. Suppose the banks use the traditional KYC verification process. In that case, customers have to visit the office. And in digital KYC, they can submit all required data remotely. Knowing your customer regulations strengthen business security, so neglecting this process harms them. 

KYC onboarding helps businesses and banks to know their customer better. It prevents them from scams and makes it easy to follow KYC requirements. Banks rely on human resources to authenticate documents in the traditional KYC technique. That process is time-consuming because employees must check all documents individually. After physically interviewing consumers for face and voice recognition, they can identify the customers and ensure the provided document’s owner and the consumer are the same person. 

However digital KYC onboarding process completes all procedures quickly and safely. Using online methods for customer compliance verification will reduce the banks’ administration burden and save time. Digital KYC is a cost-friendly and error-free process for banks. Automating the operational process, including KYC compliance, will deliver banks genuine results. 

What is Digital KYC Onboarding Process? 

Digital KYC or e-KYC verification is an automated onboarding process that customers can complete anywhere and anytime. In digital KYC, banks can utilize proactive technologies to comply with know-your-customer regulations. Modernizing is essential for all banking sectors to think uniquely and out of the box. The aim is to lead the market. Banks always search for an authentic tool that efficiently assists their onboarding process. The electronic KYC onboarding process is an ideal tool for banks and other financial institutes to protect their reputation. 

Types of Digital KYC Verification 

Form KYC Verification 

In this online KYC onboarding process, the company shares a form with customers, and they must fill out all initials and submit that to a representative. It is designed so the consumer can fill up the form online and submit it with the help of an online platform or website. The online form is a source for banks to collect personal information about the customer in a secure and confidential way. 

The structure of the KYC verification form depends on the company’s requirements and policies. However, given below are common elements included in all industries.  

Personal Information

This section collects the basic information about the customer, such as name, address, date of birth, nationality, marital status, etc., according to the state and company policies. 

Identification Documents 

This process allows customers to submit their identity documents remotely by scanning copies and uploading pictures from their phones. Clients can share all different government-issued documents. Companies can customize this process according to their requirements. Specific documents also reduce the time and are also straightforward for customers. 

Additional Information

Companies can add attributes for more information to verify identity. These fields collect extra information based on company regulations. Additional information can be employment, insurance, or financial information. 

Video KYC 

Online video-based KYC verification is the most legislated and authentic way to conduct the KYC onboarding process. This is the proper video call interaction with the customer and bank agent, where the officer verifies the customer’s face and documents. For the video KYC onboarding process, a customer must first register on the platform, and after submitting documents, they can schedule a verification call. Banks can verify face and voice recognition easily through video calls. The agent guides consumers step by step in the video call KYC which enhances the customer verification experience. 

The Outcome of the KYC Onboarding Process 

The KYC verification is essential for the banks to comply with requirements. Digital KYC verification simplifies gathering information and enables customers to cover all requirements remotely. The KYC verification is proving to be cutting-edge in the onboarding process. It protects them from financial fraud and improves their reputation. 

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