HackMDVideo identification is the next big thing in KYC compliance
Regulatory authorities are always in a bid to eliminate crime at the regional and international levels. Financial and social crimes are increasing and one of the tried and tested methods to eliminate these crimes is through the implementation of KYC and AML screening laws.
Businesses, financial institutions, and non-financial institutions are liable for KYC and AML compliance. Although these regulations are more strict for financial institutions (banks, insurance companies, etc.) and the fintech industry. So these industries are opting for video identification method to kill two birds with one stone, it helps them fulfill regulatory obligations along with customer needs.
What is KYC compliance?
KYC laws are passed by international (FATF,etc.) and domestic authorities (FINMA, FINTRAC, etc.). Major features of all these KYC laws are identical. Below mentioned is the summary of KYC regulations implemented around the globe.
Develop a customer identification program Collect and verify the personal credentials of customers Store the information of customers through video verification.Perform enhanced due diligence on high-risk entities Develop and maintain a compliance department Keep an eye on customer activity and report any unusual transaction
So it becomes inevitable to take concrete steps to eliminate risks and to keep the criminals away from a business or financial institution. The best approach to prevent these risks proactively is to perform identity screening on the customers.
As customers are the primary source of all these risks, and the ultimate effect is on the business entity. Businesses and banks are liable for compliance and penalties in the event of fraud or crimes due to non-compliance.
Online identity verification solutions are used quite commonly but the increase in crime and technological advancements demands a more robust fraud prevention system. The solution for this increased demand is presented by the rapidly growing identity verification industry in the form of video KYC screening solutions.
Video identification is performed through a live video call, face verification, liveness detection, and document screening. All are performed in real-time while the customers are in a live video call with a KYC expert.
Benefits of Video identification
Video identification holds several benefits for businesses, especially financial and fintech industry, a few are listed below.
Regulatory compliance
Traditional financial institutions are required to engage with their customers on an in-person basis before onboarding them. Most of the regulations don’t allow the banks to onboard customers online. Although regulations become lenient in some cases and allow vidoe-based customer verification for remote customer onboarding.
It is considered a substitute for in-person verification. So the banks that wish to onboard remote customers must perform video-based KYC and AML Compliance copto fulfill regulatory obligations.
Fintech industry is also under the eagle’s eye as an increasing number of countries now require this industry to verify their customers just like traditional financial institutions.
Competitive edge
Performing video KYC on customers allows the banks to onboard remote customers, which turn to be their competitive edge over the fintech industry. It helps the banks to onboard millennials, who demand advanced financial services.
It will also help the fintech stakeholders to gain a competitive edge over their internal and external competitors. Regulatory compliance and customer security will help them stand out as a better choice for their customers.
Customer experience
Customer experience is an indispensable part of business operations. Giving better security to the customers definitely gives them a better experience, it’s tarnished with long manual verifications. So video KYC allows the banks and businesses to give a secure environment to customers but in a smart manner, where the customer can undergo mandatory screening process without visiting the bank.
Video KYC is performed in real-time and good service providers of video KYC products have designed remarkable UI and UX to give the best customer experience. So your customers will be happy to provide all the details without getting irritated.
Fraud prevention
Last but not the least, video KYC helps entities practice better fraud prevention without demotivating legitimate customers due to long verification processes. Video KYC performed with the help of Artificial Intelligence (AI) delivers highly efficient results in real-time and reduces false positives through identity document screening and biometric authentication.
These solutions can verify people from all over the world so businesses can onboard customers without the fear of fraud. Fake identities, account take over fraud, credit card fraud, money laundering, terrorist financing, etc. can be eliminated through video KYC.
To wrap up, video identification is the next big thing in KYC compliance, as it will enable traditional financial institutions to onboard remote customers. This new venture will change the way banks operate and will help the financial and fintech industry to retain unparalleled growth.
