In recent years, many areas of digitization have developed rapidly. As more customer interactions and other online platforms evolve, banks and financial institutions are leading the way. The essence of difference between conventional KYC technique and the electronic KYC (eKYC) is the means and technique of collection and validation of data. eKYC verification employed uses digital technology to accelerate it as compared to traditional KYC that involves the physical verification in person and documents. Businesses have redesigned the way customer acquisition is performed after the start of the use of digital KYC verification. With the global eKYC market set to reach $2. Owing to the potential readership of 44 trillion by 2030 let’s look at the future of eKYC.
What is eKYC?
The old way of handling KYC, which required many manual steps and led to errors, is becoming obsolete. The landscape has changed since the introduction of eKYC verification which enables businesses to meet stringent regulations and at the same time serve customers quickly and efficiently. The digital transformation of identity verification is represented by the eKYC process. eKYC uses online methods and digital technologies to verify customer identity, unlike traditional methods that rely on physical presence or paper documents to extract data from documents This innovative system uses methods such as optical recognition (OCR), facial recognition, automated use checks against reputable databases, as a result, faster, more accurate, and easier to use.
eKYC Verification Process
Digital ID Verification:
A photocopy of any photo-bearing identification issued by a government or a local equivalent, such as a passport or a driver’s license, can be uploaded. In order to scan and verify the ID documents in a completely automated manner to extract information and to input it into the form of the documents, the processes involve OCR or optical character recognition.
Mobile NFC Scanning:
After OCR, the system further scans the document using NFC (Near Field Communication) technology. This includes verifying data from chips embedded in ID cards or passports. NFC technology provides a secure and fast identity verification process that verifies the authenticity of documents and prevents identity fraud.
Biometric Verification:
Digital KYC verification adds extra security with biometric technology. This can include a facial scan to match you with a photo ID, or a fingerprint scan to prove you have the document. These measures typically involve liveness detection to verify the presence of a person and prevent fraud using recorded images, videos, or even deepfakes.
Information Verification:
A reliable database will be compared to the data you provide. There is credibility, and absence of the loopholes through which fraud may be perpetuated as a consequence. As against the conventional paper based KYC process, eKYC verification is faster, simpler and safer. It also makes identity verification simpler.
The Benefits of eKYC.
Reliable Process
eKYC is secure as it meets or exceeds traditional manual KYC security. It meets all relevant standards including AMLD and eIDAS.
Improved Customer Experience
Financial institutions want customers to receive products and services as quickly as possible, and customers want a seamless, worry-free experience while focusing on security. A Thomas Reuters survey found that 89% of corporate customers had a negative experience with the end to end KYC process and 13% of them even switched banks. eKYC process improves the customer experience in real time.
Improved Conversion Rates
A fast and efficient eKYC process increases the customer conversion rate. It is a must for any financial institution.
Quick Process
The digital KYC is fast. Onboarding and verifying users using eKYC takes only a few minutes, rather than days or weeks manually.
Flexible Process
As regulations change and technology advances, the eKYC process and workflow can be easily adapted. Many eKYC platforms are modular and can easily integrate additional functionality.
Future Trends in eKYC
Biometrics and Multi-Factor Authentication
The future of eKYC sees advances in biometrics and multifactor authentication (MFA). AI-enabled fingerprint, iris, and voice recognition will bolster security and enable data sharing based on consensus.
Blockchain-Based Self-Sovereign Identity Models
The development of blockchain technology brings autonomous identity models. Users can check their credentials and identity files and securely share them with organizations as needed. It eliminates reliance on centralized storage, increasing privacy and control.
5G Networks and Real-Time Video KYC
With the rollout of 5G, a real-time video KYC experience driven by augmented reality and machine learning is on the horizon. Organizations can integrate biometric tracking and facial recognition to verify identity remotely through video communication. This not only improves security but also transforms the user experience.
Step Forward
On the face of it, eKYC has a lot of merits, however, it also has its demerits. The regulators, industries and consumers have gone on to foster concerns such as; algorithms, security threats and data protection. Meeting these obstacles is essential to long-term success as eKYC develops. The future of eKYC is filled with endless opportunities as technology continues to advance. Digital KYC and eKYC verification can be made more effective, secure, and accessible by innovations like AI, machine learning, and decentralized identity solutions. The eKYC process will be improved for everyone if these areas are improved.
