Video Identification — One Stop Solution for Financial Businesses to Fulfil their KYC Needs

In the past few years, financial institutions have witnessed a remarkable and thorough adaptation to digitisation. Not just the financial industry, we live in an era where every possible industry is impacted by the advancements in technology.

The pandemic, on the other hand, is fuelling the digital presence of service providers around the globe. Likewise, the banking industry has also started to realise the massive potential digitisation holds and therefore, gradually transitioning towards digital banking, making digital customer onboarding quite popular.

This has further prompted a need for remote video identification solutions in order to make life easier for not only the banks but for their customers too. Beyond a shadow of a doubt, financial institutions are prone to crimes such as frauds, money laundering, terrorist financing, corruption, and/or tax evasion. Addressing these issues was the reason why KYC or Know your Customer processes were set in motion by regulatory authorities.

Seemingly an upgraded version of traditional KYC — Video KYC solution has also jumped the bandwagon.

Understanding ‘Know your Customer’ or KYC

KYC or know your customer is an integral part of businesses. It is the process of verifying the identity of the customers before onboarding them. Every industry, especially financial institutions including banks are now legally obligated to verify their customers through the KYC process before letting them in their system.

Performing KYC ensures that the customers are who they claim to be, and not an imposter. KYC is a major step towards preventing identity theft and other illegal activities. The comprehensive KYC process includes:

• ID card verification
• Face verification
• Document verification
• Proof of address (POA)
• Biometric verification
• AML screening

Challenges of traditional KYC solutions

Manual and outdated KYC procedures come with a lot of challenges that may be inconvenient for businesses that are looking to speed up their processes for quick customer onboarding:

• Manual processes are inefficient, in terms of effectiveness
• Incurs higher costs as more and more customers are onboarded, the labor involved in manual KYC grows too
• Processing documents manually takes time, which is quite daunting
• More susceptible to errors, which can have drastic consequences such as data breaches etc.
• Includes manual compliance costs
• Makes verification across different locations difficult
• The unavailability of customers for offline verification can lead to delays
• Involves too much paperwork

Video KYC — A ‘remote’ way of verifying customers

The Reserve Bank of India amended the Know Your Customer (KYC) policies and introduced the video-based KYC option to onboard customers, in January 2020. Video KYC is an upgraded form of simple KYC. Unlike KYC, video KYC is an AI-based online remote identification process that verifies the digital identity of customers through a live video call in which the customer is advised to show an ID document in front of the camera.

It is a quick process that reduces online fraud. It uses the modern technology of facial recognition through liveness detection to ensure the credibility of a potential customer in question without needing to be physically present. Only KYC experts selected by the regulated authorities can perform video KYC for remote customer on-boarding.

Financial institutions must comply with Video KYC and AML regulations to limit online frauds in order to avoid reputational damages and heavy fines by regulatory authorities. Additionally, HSBC and Standard Chartered banks were charged with $1.9 billion and $1.1 billion in penalties respectively because of KYC failure and violations in AML sanctions.

The rising need for video verification among financial institutions

Since the world is increasingly becoming more connected than ever before, over 90% of people believe that digital banking will change the landscape of corporate banking.

As COVID-19 pandemic has forced people to stay indoors, 60% of people say that they will keep using online services even after the lockdown is lifted because it is more convenient. Similarly, traditional identification processes are more of a hassle for banks too, the reason why VideoID is a decent option.

It not only wipes out any vulnerabilities in the manual identification process but also avoids loopholes that could otherwise result in unintended consequences such as identity fraud. Video KYC is liable to meet AML compliance which is significant for building trust among customers. Overall, VideoID can enhance customer experiences through smoother and faster onboarding.

To open a bank account, or to avail financial services, customers are required to go through heavy verification processes by visiting the facility itself. But Video KYC being a major innovation is aimed at facilitating the remote onboarding of customers.

Video KYC solution targeted industries

Financial institutions were the initial ones who endorsed the applications of Video-based KYC. It is a positive sign that can lead to more developments in the entire financial landscape.

• Banking institutions
• Loan companies
• Investment companies
• Insurance firms
• Virtual/ remote companies

Since innovation varies from industry to industry, so every industry is in an ongoing search for innovative solutions to meet customer needs and to fit in this changing digital ecosystem. Video verification systems are evolving and it will not be long since every single industry on the face of this earth incorporates it with their already existing systems.

Some pros of using video-based KYC

Cost-effective: Companies lose billions each year due to data breaches and identity frauds. Video KYC ensures that only legitimate people pass through, thus saving companies millions of dollars.

Fraud prevention: Facial recognition through liveness detection ensures the physical presence of the end-user thus keeps frauds and fraudulent people from entering the system.

Improved customer experience: Talking about financial institutions, according to a research in the UK, 34% of people said they had abandoned an onboarding process because it was too time-consuming. The Video KYC verification process is automated and AI-based which reduces lengthy verification time.

Secure: Video KYC uses superior technologies of AI, ML, and facial recognition which makes the entire process reliable and secure.

Accessible remotely: Since video KYC is paperless. It allows for remote verification, does not require a KYC representative to visit the customer’s address for identification.

How does a good video KYC solution look like?

There are a number of solutions available in the market that are committed to upgrading manual verification processes. But what makes a comprehensive video KYC solution? Let’s find out:

• Fully compliant with ongoing KYC and AML regulations
• Offers outstanding face match online score
• OCR (Optical character recognition) to analyse the authenticity of information on ID documents
• AI and ML to detect spoof attacks, deep fakes, synthetic identities, pre-recorded videos, and still photographs
• Facial recognition through liveness detection to ensure the physical remote presence of individuals
• Offers customisable features based on your industry
• Multilingual platform with a seamless user interface that reduces customer drop-offs by 70%
• Experienced KYC experts for the global identification
• Quick turnaround time, as it only takes a few minutes to complete the verification
• Hassle-free integration with digital platforms
• Globally accessible and cost-effective

What makes Shufti Pro the right video KYC solution for you?

Shufti Pro is a trusted leader among identity verification solution providers in the market. Along with liveness detection and digital document verification, Shufti Pro ensures seamless and risk-free customer onboarding. Furthermore, Shufti Pro offers three different video KYC models to choose from:

• Identification through regional KYC experts
• Identification through your own KYC experts
• Identification through automated AI-based instructions

Shufti Pro offers a global solution that verifies 3000 document types, in more than 230 countries around the world from over 1000 + sanction lists and 3000 + databases to meet AML compliance within 30–60 seconds which makes Shufti Pro fully capable and a reliable system.

Visit Shufti Pro to know more.