Artificial Intelligence Becoming Inevitable for the Financial Sector After Covid-19
When the global pandemic was at its peak, I wrote an article on the need for digital transformation for daily business operations, changing consumer behavior, and how banks can stay compliant with KYC/AML regulations amid the lockdown. While the severity of Covid-19 has reduced, it has left a deep-rooting impact on the world.
Covid-19 Leaving Enduring Impacts
The global outbreak not only changed our lifestyle and interactions but also how we see the world. Back in 2019, no one imagined that they would have to wear masks while walking down a street. Today, the world is experiencing this, in addition to accepting the emergence of vaccine proof for travel and practicing social distancing. Wearing a mask is becoming more of a habit rather than a restriction. Evidently, the world is adopting new ways to comply with the Covid-19 restrictions.
Businesses have altered their ways of communicating with customers, insisting on virtual meetings and video conferences. The best example is a bank’s account opening process since banks are now onboarding new customers without meeting them physically. The customer just has to sign up on the bank’s website, provide the required details and that’s it. Customers welcome this method as it saves their time, resources and provides much comfort, contrary to the traditional process.
But a bank cannot compromise security over this new ease. Undoubtedly, the conventional account opening method was burdensome and tedious. Pre-pandemic, banks used to verify a new customer by meeting them physically (sometimes more than once), would scrutinize their documents, and then proceed to open an account. However, this process is not efficient, either in time or in resources.
Given this, a major question arises: how can a bank securely verify customers without meeting them online?
Remote Working: The Need of Hour
Among all other aftershocks of Covid-19, the rise in identity theft is a major one. FTC found that in 2020 there had been a 100% increase in the cases of identity theft compared to the previous year. The ways of committing identity fraud have become more sophisticated today. Since there has been a rise in the use of digital platforms and online mediums, it has caused identity theft cases to surge substantially.
To assist businesses in tackling this threat, Shufti Pro is providing AI-powered solutions like online KYC, video KYC, automated data extraction through OCR, and ongoing AML screening.
- KYC — Online Customer Verification
KYC verification serves as a shield against financial crimes and frauds. It can be said that KYC is the digital version of human verification like mobile messaging is the digital version of hand-written letters. Here’s what happens: the customer uploads an image of their ID document and selfie, KYC solution analyses the given data through document verification and facial recognition technology. It delivers verification results in seconds, eliminating the need for any one-on-one meetings and customer-based efforts.
The artificial intelligence algorithms in KYC spot any fraudulent spoofing attempts. At times, fraudsters use tampered documents, deep fake videos, and photoshopped pictures to bypass security checks, However, this cannot be successful in the case of online KYC.
To give more convenience to the end-users while providing data security online, video-based KYC has entered the market. It is similar to traditional KYC, but with one more feature — the user does not have to upload documents, instead just have to show themselves through the camera. In simple terms, it is like a video interview where a KYC expert (from the solution provider or the business) verifies the ID and live presence, assisted by AI, for detecting deep fakes and spoof attacks. While comparing with online KYC, this method has more human interaction and has minimal customer drop-offs.
- Automated AML Screening
Money laundering is one of the major financial crimes that has caused troubles for financial institutions worldwide. By blending ill-gotten and legal funds into the system, money launderers hide the illegal source of their funds. To curb this mala fide practice, businesses are required to screen all their customers against global criminal watch-lists. Businesses can screen numerous customers at once using automated AML screening. This not only secures B2C relationships but also B2B by screening business entities against sanction lists.
The bottom line is, a financial institution can save up on time that was previously being spent on manual checking processes while also maintaining, all with the help of automated AML screening.
Technology — Making Things Easier
Financial institutions were in dire need of robust identity verification and AML solutions as the world were looking for vaccine verification procedures. Luckily, online KYC and AML saved the day by filling in all the market gaps.
The trend of usage of digital channels will keep growing even after the end of the Covid-19 crisis. Now or in the near future, when most of the population has been vaccinated, restrictions will be eased down. However, the risk of digital fraud will remain. To streamline and automate the vaccine verification process, AI-powered document verification processes must be effectively utilized.
AI — A Game-Changing Revolution
The main advantage of adopting AI-powered solutions is that they have a minimal rate of errors and high levels of efficiency. This means that the accuracy of KYC and AML procedures enhances business operations without compromising global regulatory obligations. Given the endless benefits, even household appliances like refrigerators, washing machines and microwaves are now AI-enabled while every smartphone uses AI algorithms. Evidently, the trend will continue to prevail in the upcoming years as well.
It is said that “AI is the Future” which is universally true, the integration of AI in digital solutions is unavoidable now. The financial sector not only safeguards itself through AI, but it also helps in better decision-making, as it examines customer behaviors.