The latest Fintech trends echo changing consumer behaviors. Customers today have embraced digital technology in managing their money. As a result, financial institutions are increasingly channeling their investments to innovate Fintech solutions that offer customers control over their finances without running afoul of financial regulations.
While financial operations are being altered digitally, the risks of financial crime are undeniable. Thus, balancing Fintech innovations and risks can help the banking, financial services, and insurance (BFSI) industries discover a wealth of opportunities to create value.
A prime example of such disruption is, well, eKYC solutions.
What is eKYC?
The digital banking model is rapidly becoming mainstream. Under such circumstances, customer onboarding poses the opportunity for banks to offer the best customer experience and nurture long-lasting relationships with their customers.
A typical onboarding process requires banks and financial institutions to verify the prospective customer's identity against a database before accounts can be opened.
That’s where Know Your Customer (KYC) comes into the picture.
However, the traditional KYC process is time-consuming and requires customers’ physical presence at the bank branch, which means a longer wait time for onboarding. This can be a huge worry point for both banks and customers, especially after the pandemic, when most businesses are going digital.
Hence, eKYC solutions.
eKYC or electronic know your customer, is the mandatory process implemented by banks and other financial institutions to authenticate and establish the identity of customers.
In general, eKYC is the digitized and automated version of traditional KYC processes. It benefits from ground-breaking technologies such as Artificial Intelligence and Machine Learning to verify a customer’s identity electronically.
With innovative eKYC software solutions, the financial services industry can onboard new customers and better cater to the needs of the digital generation remotely in a much more secure manner.
What Happens to Fintech When KYC Becomes eKYC?
A recent GlobeNewswire report forecasts that the global eKYC market size is expected to grow at a compound annual growth rate of 22% and reach USD 1,015.36 million by 2026.
No wonder, for a highly regulated industry like Fintech, shifting to online identity verification is the bare minimum to pivot dynamic digital innovation trends.
The following factors sum up the major impact of eKYC solutions on the Fintech sector:
Faster Processing and Customer Onboarding
With eKYC, financial institutions can address the challenges associated with offline KYC processes.
Modern eKYC solutions for banks make the entire process automated and thus transfer customer data in real-time without manual intervention. This helps them accelerate verification and offers a friction-free onboarding experience.
The result?
Reduced applicant rejections, a shorter sales cycle (from weeks to minutes), and—most importantly—a sharp drop in the proportion of customers who back out of the purchase.
A Better Experience for Tech-Savvy Customers
More than ever, mobiles and laptops have become the digital equivalents of banking’s physical touchpoints. KYC is no exception.
Customers today expect that the KYC process should be in real-time with instant approval. Not to forget the need to have heightened data security.
eKYC creates a system that delivers a fully digital banking experience to digitally savvy users. Biometric verification, document uploading, secured interface, accurate processing, etc. provide customers with next-level flexibility and convenience without disrupting their busy schedules.
Secured Access to Reduce Data Leakage and Fraud
39% of financial industry executives Fintech’s network security is a key vertical that is highly vulnerable to cybercriminals. Unsurprisingly, it might appear that it’s a cakewalk to breach a system using a username and password.
Financial institutions empowered by eKYC technologies provide robust security against unauthorized individuals necessary to mitigate fraud and meet anti-money laundering regulations.
Advanced eKYC solutions utilize AI tools that verify the identity of the person requesting access through a webcam. Once the face of the user is scanned, the AI matches all the details on the displayed ID with the government-issued records. If it does not match, the user is not granted access.
Hence, fintech companies, with the help of such highly accurate eKYC software solutions, can reinforce access points, simplify account creation, and extend a seamless customer experience without compromising the customer's private information.
Enhanced Operational Effectiveness and Accuracy
Fintech companies can break off from the inertia of legacy systems that are run by intensive manual input. The eKYC process, led by AI technology such as facial recognition, removes the human error factor.
Strong digital authentication enables banks to allow lightning-fast validation of customer credentials with no room for operational mistakes.
Paper-Less Processing
eKYC solutions emerge as critical enablers for paperless customer onboarding. It helps financial institutions save costs on paperwork, reduce their carbon footprint, and preserve customer data more efficiently as compared to the traditional KYC process.
Moreover, implementing eKYC solutions for banks can well be their first big step towards creating a brand identity of an open-minded bank and securing a remarkable competitive advantage in the market.
eKYC Solutions with OCR for Document Digitization
One of the greatest benefits of eKYC software solutions is that customers can submit digital versions of identity proofs, such as ID cards, driver’s licenses, and passports. But the manual data extraction from these documents is time-consuming and sometimes inaccurate.
The AI-Optical Character Recognition (OCR) tools used in eKYC processes manifest this task with way more accuracy and agility.
eKYC Solutions with Computer Vision for Facial Recognition
The video-based KYC process is another trailblazer in the Fintech space. It plays a vital role in the precise recognition of facial features and juxtaposes them with the data records.
Its deep learning algorithms map facial features from images and videos in real-time, produce a unique face print for each individual applicant, and even detect fake images.
Is eKYC Safe to use?
Absolutely, since the customer data is shared via the UIDAI’s internal encrypted software, data privacy and security remain intact.
What are the Different Use Cases for eKYC?
The eKYC software solution is the answer to all the customer verification requirements of a Fintech company.
Here’s the list of key use cases for eKYC:
- Document verification
- Video KYC
- Due diligence
- Fraud detection
- Ongoing monitoring
How can we Help?
In the current times of digital disruption, the need to balance superior user experience and fraud risk mitigation might put Fintech companies in a tight spot. In such a situation, relying on the manual verification process is a “money on the table” deal.
Here at Panamax Inc., we help financial institutions establish themselves as industry leaders with the help of our cutting-edge eKYC software solutions. Its comprehensive features help you establish a robust digital identity verification process for customer onboarding, comply with stringent KYC and AML regulations, and keep financial fraud in check.
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