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The financial industry around the globe needs robust due-diligence processes in place to assess companies or customers they are having onboard or concluding business with. This need gave birth to Enhanced KYC. Enhanced KYC or Know your customer transcends the problems that the manual KYC processes faced initially. It basically helps companies gather information in order to verify the identity of customers to ensure that they comply with AML regulations. Meaning the individuals and businesses are not involved in money laundering or any other financial crimes.
Therefore, KYC is increasingly becoming crucial for industries that involve online transactions. Since the innovations in technology are inevitable, this acceleration towards digitization has introduced video interview-based KYC. No matter how attractive the services are, they will not make much difference if the customer onboarding isn’t done right. Consequently, Video KYC provides easy and instant access to digital banking to customers while securing your business from online frauds, altogether.
What is Video KYC and how it’s done?
The merchant verifies the customers through live video interviews along with identity document verification and biometric authentication. AI-based solutions such as Facial recognition and liveness detection technology ensure the physical presence of the individual as well. It beats the tedious old processes of physically verifying documents, making the onboarding process more efficient and reducing expensive onboarding costs altogether. This proves beneficial not only for the financial institutions but customers too.
Now, let’s see how video-based KYC enhances customer experience in financial institutions:
Digital Onboarding experience in Banks
There is no company that doesn’t want to make the onboarding process of customers simpler and smoother. All the initial steps involved in how a user starts his journey as a customer is what best defines customer onboarding. It’s all about making their experience as frictionless as possible. Fail to do that, and customers will leave and may never come back. Today’s world is ridden with aggressive competition, almost every financial industry believes that minor customer interaction with their platforms matter. Some may leave an everlasting impression others just don’t cut it.
Even if your onboarding process is already very simple. But how are you to ensure the prevention of a blacklisted individual from entering your system? Let’s take the example of banks. Imagine your customer is going to withdraw some funds from his account and discovers that his money already dropped from $2,000 – $50. The customer is shaken to the core and doesn’t understand how the bank could let this happen. The bank management itself is very puzzled. Now, what actually happened? The customer’s identity was stolen and there was nothing even remotely suspicious about the initial transaction because all the information was correct and the (illegal) withdrawal was completed successfully. Now, this is where your onboarding process fails to prevent fraud and make you lose your customers.
Banks and other financial institutions, around the globe, are required to meet AML compliance to prevent money laundering and terrorism financing activities. Similarly, potential back customers must meet AML regulatory obligations if they want to open an account at a bank anywhere in the world. Verifying customer identity when onboarding new customers at financial institutions is never negotiable. Video KYC for FinTech offers one of the latest digital ID verification solutions that not only reduces inefficiencies but also increases accuracy, thus making the whole onboarding process fluent and compliant. For the most part, it is one of the lucrative strategies for financial institutions as it allows for error-free onboarding of customers, minimizes drop-offs, and prevents fraud.
Online Insurance customer Onboarding
Video KYC eliminates the hassle of going door to door to verify prospective insurance policyholders and on the other hand, customers can easily comply with the onboarding procedures to complete the policy purchase without having to get out of their homes. The Insurance Regulatory and Development Authority of India (IRDAI) has authorized insurance companies to sanction insurance policies on the basis of a video KYC. Many banks and insurance firms in India are embracing video-based KYC to validate and onboard customers for the sole reason of policy issuance.
The process of video KYC for insurance companies is the same, as it is for banks. Verification through Video KYC ensures that the person in question is alive, on the other hand, your customers won’t have to visit the insurance provider multiple times for lengthy document and biometric authentication processes.
Contactless Customer Onboarding
Video KYC could prove to be a great deal of help for businesses that are looking for a touchless and contactless customer onboarding process, and we are sure customers want the same in this time of pandemic and social distancing. Video KYC gives companies a chance to verify their customers remotely, anywhere anytime. To prove the wholeness of the system and AML compliance, many solutions in the market are relying on AI-based facial recognition technologies, and the process itself is conducted by KYC experts to ensure the integrity of the individuals. A process as easy as this can reduce verification time from a week to hardly a few minutes, which is downright advantageous to both companies and customers, all in all.
Providing Better Customer Experience
Understanding customer needs is significant no matter the industry. As more and more businesses are moving towards digitization, connecting with customers is primarily becoming more important. According to a study, 38% of customers consider user experience as one of the most important criteria when choosing an online banking platform. So video KYC makes it easier for the end-user as they’re assisted by a KYC expert through a one-on-one live video call. This not only builds trust but makes them view your business as reliable and secure and vice versa.
‘Low KYC costs’ and High Security
Surprisingly, Video KYC is cost saving. It is considered as a flexible option with no additional costs. Also, it brings down the overall customer onboarding costs by 90% that the KYC process otherwise consumes.
Along with this, Video KYC is efficient. Meaning, KYC experts can complete over a hundred KYCs in a day through Video KYC. Simple manual KYC procedures are tiresome, prone to error, and vulnerable to drop-offs whereas video KYC takes only a few minutes to complete. The process in itself is scalable, and not constrained by geographical access. Most importantly, it obstructs online frauds and errors.
Video KYC is the future – Key takeaways
Amid pandemic and social distancing, more and more customers are shifting towards online services which give companies the newest opportunities to grow and attract new customers. For banks, online account opening shot up to 15% when social distancing policies were implemented. Video KYC eliminates in-person interaction and many obstacles during the manual account opening process. In another study, 73% of people in the US are more likely to use digital banking for transactions, making online identity verification the only fool-proof system in onboarding legit customers. Furthermore;
– Video KYC is done remotely, reduces costs and drop-offs
– Prevents identity theft, online frauds, account takeovers, and spoofing attack
– Fast onboarding of customers through Artificial Intelligence (AI) and facial matching techniques
– Ensures AML (Anti-money laundering) compliance
– A more streamlined and automated KYC process
– Replaces the outdated manual authentication processes
– Extremely cost-effective and secure
