Customer, client, and business identity verification is a standard process of risk management before doing business with any second party. Thanks to the digitization of personal and business identity, most of the steps of KYC validation are available online.
Legal requirements like complying with the anti-money laundering (AML) law, corporate risk management policies, etc., enforce the use of Know Your Customer (KYC) in financial institutes. A few years back, financial institutions would recruit third parties to do background checks for KYC.
But this is no longer in trend. Businesses now use advanced online tools, platforms, and apps for most of the steps of KYC. It enables swift customer onboarding. Find below some tools and apps that are popular for identity verification and KYC.
Online Customer Onboarding Bottlenecks
Verifying the customer’s identity online is the biggest challenge for the financial industry. Identity theft, impersonation, and spoofing are highly possible online. Banks and investment firms need to avoid such frauds but still sign up customers online.
Self-Service Onboarding Issues
Online customer onboarding requires much input from the customer. Hence, a sizeable percentage of clients drop out of the verification process due to technical complications.
User Interface Challenges
Thoughtful and effortless UI design is still a challenge for many financial institutions. While these businesses excel in multiplying money, they lack technological vision.
Non-Availability of Infrastructure
Except for the tier 1 cities, the internet is still a challenge for many rural and semi-urban locations. Online KYC and identity verification require fast internet for video, audio, and document sharing. Also, access to computers, smartphones, tablets, etc., is a bottleneck.
Verifying Financial Documents
Less digitization of financial document retrieval and authentication is still a challenge. It is not possible to verify all the documents online for every customer. Some clients may need in-person verifications.
Customer Support Cost
Businesses may need to hire additional frontline support staff for customers with their online onboarding.
What Makes Identity Verification and Online KYC Difficult?
Just like online onboarding, online KYC is also challenging. Businesses frequently face the following issues:
- Frequent connectivity errors when the customer is submitting various details using a web app or mobile app. This forces users to start over and they lose interest easily.
- IT technology infrastructure like app integrations, APIs, government databases, etc., may not sync from time to time.
- Detection of fraudulent activities becomes challenging when banks and finance institutes try to verify everything online.
- KYC process could get stuck due to third-party issues and resolving these cases can be a hectic task for businesses.
- It is easy to defraud third-party identity verification agencies that operate in the field.
- The customer needs to possess intermediate-level computer literacy to complete all the KYC steps themselves.
- Finally, online KYC is a costly process.
Now you know the bottlenecks that your business might face with online onboarding, identity confirmation, and KYC. However, you can overcome these challenges by using any of the following online tools:
Do you want to be in control of the whole customer verification process of your company? Validation is the identification verification app that lets you do that and more. It not only assists you in new customer verification but also mitigates risks by properly managing the compliances regarding KYC.
The best thing about this platform is you get everything under a single umbrella. Also, you can start using it straight away without any wait time and technical integration. Validation is a PCI Certified KYC Solution that helps you with fraud prevention, secure file collection, and identity proofing.
It has an intuitive and quick review process, along with low friction KYC submissions, for easy user onboarding. This platform also makes sure that you communicate with the genuine owner of an account.
Moreover, it allows you to stay ahead of the chargeback so you can protect your chargeback ratio and validate the person who made the transaction.
Veriff is an AI-powered identity verification solution that organizations can use to build trust through simplified identity validation.
With its help, you can convert people into valuable customers in a flash while being KYC-compliant at the same time. This application also ensures transparency in digital transactions and thus provides safety to the clients and the business.
Veriff boasts of cutting-edge technology, and a team of experts that assure your digital space is only accessible to trustworthy people. The top services offered by this application are:
- Identity verification solution
- ID verification software
- Proof of address
- AML screen
- Biometric authentication
- Assisted image capture
This platform is so simple to use that users must go through fewer steps to complete verification on their first attempt. Developers can integrate it with their apps using API or deploy it with mobile and web SDKs. It covers more than ten thousand government-issued IDs for your convenience, and the number is growing.
Jumio is a next-generation KYX platform that takes online trust to the next level. It offers a complete solution for customer verification that you can perform online. Companies get the right blend of controls and assurances from this application necessary for keeping financial crimes and identity fraud away.
It automates the process for fast and accurate identity verification so more customers can onboard in a short period. You can know your customers from all over the world, thanks to its support for 5,000 ID types across 200 countries and territories.
Furthermore, Jumio uses the biometric approach for customer authentication, which exceeds the current industry standards. It utilizes millions of domain-specific data points for a smarter and faster online identity experience.
The user-friendly identity verification of this app reduces abandonment rates and puts a stop to fraudsters at the very beginning. Also, it identifies and reports suspicious activity using its AI-powered screening, monitoring, and management.
Companies looking for an application that will empower an inclusive and secure relationship with their customers should go for Onfido. It derives its power from Artificial Intelligence to offer you a complete identity confirmation solution.
With the help of this platform, you can quickly onboard new customers, reduce customer acquisition costs, detect financial frauds, and fulfill various global compliance requirements such as KYC and AML. It automates the online user onboarding process and prevents fraud without compromising customer growth.
This end-to-end identity verification platform comes with a Verification Suite containing a comprehensive global verification service library. Apart from all these, developers can integrate the whole platform with a single Onfido API or check out the developer documentation for quick reference.
It uses passive anti-fraud signals for fraud detection without introducing friction. This platform’s flexible orchestration studio includes document and biometric verification, reliable data sources, and fraud detection signals into a manageable workflow.
Whether it is about knowing your students, traders, customers, drivers, freelancers, or instructors, Persona is here to help you. It lets you create the ideal identity verification experience that you can customize per your requirement.
This single platform is sufficient to create all the building blocks, including user flow creation and decision automation, with complete control. Use it for any of the following industries:
With Persona, you get thousands of passive fraud signals and data sources that help you underwrite risky individuals while performing KYC/AML.
iDenfy is an all-in-one platform where you can perform identity verification, compliance, and fraud prevention. Businesses can use it for identity validation while complying with crucial regulations and directives for KYC and AML requirements.
This application uses an AI-powered biometric recognition service for customer ID verification. Since their human team reviews the process, you can be assured of quality identity verification. In addition, it prevents fraudulent accounts and reduces customer onboarding costs.
Using ID.me, companies can get comprehensive and readily deployable ID verification solutions. It also allows you to choose the plan suitable for your business and risk tolerance.
This application securely verifies identity in minutes with remote physical ID verification, mobile network data, fraud detection, and compliance checks. Moreover, ID.me lets you perform virtual in-person proofing through video conference sessions.
Blockpass stands out from the other entries on our list as it is the pioneer in Blockchain identity verification. It allows companies to fulfill on-chain compliance checks without needing to keep data. This privacy-focused application offers turn-key solutions and supports API or blockchain result delivery.
DeFi and Crypto organizations willing to mitigate AML risk on the Blockchain should opt for this solution as it provides an on-chain user verification of users but does not store the customer data. Hence, customers can be assured that there will be no misuse of their personal information.
Lightico is a robust application for instant KYC and seamless ID verification worldwide. Now, keep the fraudsters out of your system quickly, without causing any inconvenience to your valuable customers. It offers complete security to your process minus compromising on customer experience.
With this app, you can increase the verification time up to 80%. As Lightico can perform tasks like eSign, ID verification, and supporting document addition, your business will become more efficient as your agents can focus on more pressing tasks.
Online ID Verification Process
Virtual KYC and personal identity authentication involve much-advanced software, hardware, and cryptographic processes. Here is a general idea about the process:
- The financial institution develops a web or mobile app that can capture videos, images, documents, fingerprints, audio clips, touch screen drawings, etc.
- Now, the company would link its app with many document server APIs to authenticate the customer’s driver’s licenses, photo IDs, passports, birth certificates, voter registration cards, green cards, SSNs, credit scores, etc.
- Sometimes, security experts and facial recognition software are at the back end to validate customers.
- When all the above are set, customers just log in to a web or mobile app and upload data like face image, video, driver’s license, signature, etc., and the tool automatically validates the input.
- The essential process is performing API calls to authenticate client documents from the respective issuing authority’s website.
The Components of Online KYC
Online KYC consists of two major components. These are the workflow of KYC and ID verification content.
Identity Verification Content
- Govt. or other competent authority-issued ID
- Client’s facial recognition data
- Video of client’s face, documents, vicinity, premise, etc.
- Birth certificate for age-critical services
- Digital and physical signatures
- Customer Identification Program or CIP workflow that verifies customer-submitted data with respective databases.
- Customer Due Diligence or CDD measures financial risks associated with the customer by analyzing financial transactions and credit reports.
- Constant monitoring of the customer account to update risk factors by capturing the digital footprint of financial transactions.
How Do Online KYC Apps Help Businesses?
Prevent Identity Fraud
KYC and identity verification are a must for financial businesses. Otherwise, institutions can take on heavy losses. Virtual KYC apps offer advanced KYC processes that help businesses authenticate and validate their clients.
Prevent Age Fraud
Age is crucial in sectors like insurance, investment, pension, social services, etc. Online KYC apps can effortlessly verify customer age groups, so your business does not need to deal with fraud.
Save Time and Money
You save money and time by subscribing to online identity verification and KYC tools.
Focus on the Core Business
When you have free time from unnecessary tasks, you can concentrate more on business marketing, sales, growing revenue, etc.
Integrate all Business Apps
Reuse customer data in CRMs, forms, websites, apps, etc., and avoid manual data entry.
Customer Satisfaction and Convenience
Your clients can complete all the formalities from the comfort of their homes.
A complete KYC is mandatory before businesses can lend, borrow, or deposit money. KYC and identity verification are equally important for the institution and its clients. However, it should not keep your bank or financial company from growing. Choose any of the above tools to process KYC and automate the whole customer onboarding process.
You may also be interested in app chat solutions to offer guided assistance to your new customers when they complete identity confirmation or KYC online.