Know your customer (KYC) process is essential to ensure financial transactions are as secure and clean as possible. KYC compliance is the first step in the customer onboarding process. Therefore, KYC aims to cut transactional corruption and money laundering right at the source. However, such a process can be cumbersome and resource-consuming since it requires utmost compliance with global KYC verification standards. Dealing with such tasks manually becomes impossible, even during online KYC.
With the rising number of cyber threats and identity fraud, it becomes necessary to implement stringent eKYC onboarding. Compliance with online KYC requirements can curb these issues while simplifying the customer experience. This blog discusses the role artificial intelligence plays in revolutionizing online KYC.
Enhanced Due Diligence
Customer due diligence (CDD) is the first defense against potential criminal activities and actors. However, the rising demand for better security and privacy demands a more severe set of rules for customer onboarding. Therefore, EDD (Enhanced Due Diligence) is necessary. EDD ensures the customer has no ties or business relationships with any blacklisted or unlawful entities. For this purpose, the organization has to track each customer transaction, categorize it by risk, monitor associations, and prepare deep investigative strategies. Over time, it can cost organizations a lot to continue this online KYC process. Under such circumstances, they must harness the power of AI to automate repetitive tasks, such as ongoing monitoring.
Customer Risk Profiling
Simultaneously, continuous transaction monitoring is a must-follow, know-your-customer rule. It falls under the process of regular customer risk profiling. The customer automatically moves to a higher-risk category whenever a potentially fraudulent transaction is detected. These real-time monitoring tasks can put an excessive burden on the institutions. Moreover, it becomes even more taxing when the institutions have to assess the data relationships in different departments. On the other hand, AI can securely access all databases and automatically perform risk assessments, simplifying this crucial part of online KYC checks.
Intelligent Document Processing using ICR
Digital transformation provides new opportunities for customer-centric businesses. However, it also brings in a multitude of challenges. For instance, customer onboarding is not just about meeting the customers’ requirements; it should provide personal advice to the customer. However, online KYC solutions are impaired by slow document processing and long waiting times. The whole prospect of going digital is quicker customer service. On the other hand, AI can facilitate both the customer and the business by utilizing the power of OCR and ICR to handle this process. The customer only needs to add photos or scans of their documents. The system will then check for security features automatically to ensure the authenticity of papers. The AI can also quickly match the documents against trusted databases to ensure better security.
Biometric Verification Services
Although document processing is important, online KYC cannot be complete without biometric verification. This step is added to ensure that the provided documents are in the original owner’s possession. Biometric verifications sometimes include fingerprint, face, and even eye authentications. In addition to slowing down the system, manual biometric verification can introduce many errors. However, AI utilizes deep learning to match physical landmarks. Therefore increasing the overall efficiency and accuracy of online KYC onboarding.
Compliance with Regulations
Customer onboarding is only the first step toward compliance with KYC and AML policies. The remainder of the work goes into real-time monitoring of the transactions and their associations. As discussed, it can be a nightmare for any organization if manual labor is employed for such tasks. It can take days just to get clarification from foreign institutions, not to mention the error-prone nature of human intervention. The only viable option is to implement AI in digital KYC.
Conclusion
By implementing AI in online KYC, companies worldwide can improve the customer onboarding process and stay compliant with the regulations. The AI guarantees better performance, faster verifications, fewer errors, and an overall smooth process. Therefore, the result is improved customer satisfaction and reduced costs for the organization.
