Many industries leverage AI-powered smart biometrics solutions to counteract security threats and meet updated know-your-customer (KYC) standards during client onboarding. Advanced biometric authentication provides an additional layer of fraud prevention by digitizing the processes for e-KYC.
Digital onboarding based on e-KYC is the most reliable, secure, and faster way of authenticating identities, which is also resistant to counterfeiting and spoofing. A recent World Bank report cites that moving to e-KYC reduces the average cost of customer verification from $23 to $0.50, and it takes no time compared to five to seven days when done manually.
Besides its cost-effectiveness, digital KYC solutions are vital in today’s digital era, where industries are scaling up their online capabilities, including financial services, education, entertainment, restaurants, and healthcare. Let’s understand the e-KYC process for digital customer onboarding and how biometric authentication can transform the overall experience.
Understanding e-KYC Process for Digital Onboarding
The e-KYC process is the first step in the digital customer onboarding and identity lifecycle, and it consists of three main components:
Document Verification or ID Capture
Document verification requires secure and accurate data capture from a government-issued trusted document. Businesses can use AI-powered OCR (Optical Character Recognition) technology to auto-capture the data seamlessly. This e-KYC component automatically identifies the type of document, edition, issuing country, and extracts all required fields. It also extracts the portrait image and converts it into a proprietary biometric template for biometric authentication.
Biometric Authentication
Customers must prove their authenticity by being physically present to complete the digital onboarding process. There are three ways digital KYC solutions can accomplish this process through biometric authentication:
- Fingerprint recognition: It requires a fingerprint sensor designed to pick up on fingerprint patterns and link them to an individual.
- Iris Recognition: Iris scanners identify unique patterns in an individual’s iris to verify identity.
- Facial recognition: It uses a 2D or 3D depth camera to identify facial vectors and matches them to individuals.
However, only select expensive cameras are designed to perform iris scan that is fast and highly accurate. Dirt, oil, and other hygiene concerns may compromise the efficacy and integrity of fingerprint sensors. Facial recognition can be considered a superior biometric method because it is affordable, fast, flexible, and accurate. Multi-factor authentication based on facial recognition requires the user to take a selfie which then compares to the cross-verified and genuine image extracted from the document. Besides, this biometric method enables active and passive liveness detection technology based on deep neural networks to detect and prevent digital and remote ID verification frauds.
Risk Management and ID Affirmation
The identity affirmation process uses layers of intelligence like device intelligence, behavioral biometrics, and trust consortium, depending on the risk appetite. These techniques analyze the user and environment activities to build a dynamic profile for each event that can be fed to a risk engine to validate customers’ identities and interactions. Financial institutions can implement Anti-money Laundering and Countering the Financing of Terrorism regulations to the ID affirmation process to mitigate the risk of identity theft during and after the digital onboarding process.
Why Should You Switch to Digital Onboarding Powered by Biometrics Solution?
Customer Convenience
Digital onboarding allows customers to enroll in new services without having to leave the comfort of their homes to get their KYC information authenticated. As the e-KYC process is entirely digitized and automated, it appeals to those who want their authentication done remotely. Customers can choose any mobile device to complete their e-KYC process, which only requires filling out a form and a few clicks.
Reduced Turnaround Time
Governments and central banks encourage using AI-powered facial matching software for V-CIP (Video-Customer Identification Process). The automated digital KYC solution allchows more data to be captured quickly from minimal input. Such a frictionless e-KYC process reduces the turnaround time for customer onboarding, which is hugely beneficial for businesses with large customer bases.
Improved Compliance and Security
One of the essential benefits of the e-KYC process is enhanced compliance and security during customer onboarding. The digital identity verification mechanisms comply with stringent and evolving regulations such as the 6th AML directive and Payment Services Directive. Cloud solutions also provide access to risk management services vital in the onboarding process to reduce application fraud.
Incredible Cost Savings
The biometrics solution-based, digitized onboarding process significantly reduces the cost of paper documents, printing, and other expenses associated with traditional onboarding. Officials or customers are no longer required to travel to various locations to perform in-person verification of KYC documents. Smart biometrics expedites the e-KYC process and eliminates the need for a special KYC analyst, freeing up resources for more critical business activities.
Increased Customer Acquisition
Organizations can reach a broader customer base through digital onboarding, including those who may have yet to enroll in their services using traditional onboarding. The convenient and smooth process attracts people from the young generation. The seamless customer experience also increases customer satisfaction and loyalty, retaining more customers.
Room for Innovation
The entirely digitized nature of the e-KYC process leaves much room for innovation and improvement using some emerging technology to strengthen its integrity. Machine learning can be used on V-CIP for lower false positives, saving the time spent screening for false positives. Businesses can also implement liveness detection technology to detect and prevent increasing presentation attacks.
Supports Digital Workplace
The manual onboarding process can be clumsy and time-consuming. Gathering identity information and cross-verification can be laborious for businesses and customers alike. The advanced identity verification process allows organizations from various sectors to digitally accept ID documents and KYC information. Whether it is customer onboarding, bank account opening, SIM card registration, driver registration, or e-VISA issuance, e-KYC declines the need for paperwork and physical presence.
Growth of Formal Economy
Adopting e-KYC will mark growth in the number of users in the formal economy. The digital identity lifecycle can be used to provide formal and government services to more people, especially those from rural settings. The innovations in the e-KYC process support vernacular languages and text-to-speech mechanisms to encourage people from underbanked regions to subscribe to safe microfinance services.
Modernize Customer Onboarding with Smart Biometric-based e-KYC
Electronic KYC powered by innovative biometric solutions can empower organizations to secure their assets and information more effectively. It is also more compliant than manual customer identity verification and genuine user confirmation during the entire customer lifecycle. Fingerprint authentication, AI-powered facial recognition algorithm, document verification, and passive liveness detection can contribute significantly to automating, optimizing, and customizing the e-KYC process to minimize the risk of identity fraud. With many other benefits, such as convenience, speed, and increased customer acquisition, it is only wise to integrate advanced biometric authentication into an e-KYC process for digital onboarding purposes.
Our Smart Biometrics solution helps enterprises, governments, and API partners verify users in real-time using robust features, including customizable workflows, API-based framework, data accuracy, and document management.
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