Companies are shifting towards online mode; the digital system is replacing manual processes. Businesses can facilitate their daily tasks and make them more convenient by installing digital KYC. This solution is used to better understand the client’s identity, trust, and financial record. If a company knows its customers, it can mitigate the chances of fraud, cyber crimes, and money laundering. The online shift has attracted the attention of scammers, as it was easy for them to scam digitally. In 2022, 15% of individuals claimed they were scammed by clicking an email link, and 12% were deceived by SMS. This increasing number of scams has raised the importance of KYC so that companies can better gain knowledge about their clients.
What is Digital KYC?
Online verification is done to check the client’s authenticity; The system matches the unique biometric features against the template saved in the database. The customers’ documents, such as identity cards, residential addresses, utility bills, and bank statements, are verified. When businesses have complete information about their clients, the chance of getting scammed gets reduced. These verifications have reduced the number of bank branches, as the clients do not have to visit the financial institution; they can deposit their money online. Customer onboarding can be done online as they do not have to carry their documents to the office; they register through digital KYC onboarding. This system is very secure, as artificial intelligence and machine learning are involved; elimination manual requirements.
Components of KYC
Organizations perform the KYC Process in three steps:
- Customer Identification Programme (CIP)
- Client Due Diligence (CDD)
- Ongoing Monitoring
Benefits of Digital KYC Solutions
The following are the benefits of the digital KYC process:
Conventional ways of verifying clients were time-consuming, as the client had to visit the branch, along with the documents, and wait in the long queue. The operator collects the data, gathers it, and then analyzes it. The whole task sometimes even takes more than a week. In contrast, the digital system is very swift, as the entire process is carried out in seconds.
Improved Client Experience
This solution has remarkable benefits not only for companies, but even clients get its benefits. First, they do not have to follow the official protocols and 9 to 5 timings for their authentication. The entire process can be done from the comfort of their home. Other than this, their documents are also verified digitally; they just have to upload scanned copies of the legal papers,.
Digital KYC is customizable, as it adapts to all the changes in no time; if the company’s size increases, the solution immediately molds it according to the innovation. Traditionally, it would be difficult for the operator to record the whole data and then manage it.
Online verification is very secure, as the whole information of the client is stored in the database of the company. There are no chances of data exposure, as the algorithms of digital KYC are robust, and it is almost impossible for hackers to decode it. Accustomed ways were prone to disclosure as the internal members of the company could even disclose the credentials to the hacker for the sake of money.
Compliance with AML (Anti Money Laundering)
It could be demanding for the organization to comply with the changing rules and regulations of the AML. These guidelines are mandatory for the company’s survival, as they aid them in mitigating the changes of fraudulent activities. Businesses that have installed these solutions properly can safeguard themselves from robust penalties. For those who do not follow them, their brand image is also affected by it, as clients do not prefer such companies that are prone to cyber crimes.
Companies can enhance their revenue by investing in digital online KYC, as the noteworthy rise in the companies’ income is observed because their activities are simplified through it. Customer retention rate is increased; satisfied clients also recommend the company to others.
Digital KYC has shown wonders for companies and clients; the burden of the staff is reduced through it. Digital KYC is an online process in which businesses perform customer verification; from client onboarding to monitoring, everything is carried out online. Brand image is improved for the companies implementing it properly because it promises a smooth client experience and facilitates them in all possible ways. The solutions are a one-time investment for the company, and their benefits are unremarkable for every industry. The gain through financing is promising, as its results improve daily.