Better KYC starts with electronic identity checks

Electronic identity checks verify an individual's identity, address, or tax status by matching them in online sources to establish a digital paper trail. And it leads to better KYC processes for compliance teams and new customers.

Posted by: 
Alexis Fox-Mills
  |  
Dec 9, 2020

December 9, 2020

When a potential customer hits your website, completes their application and hits submit – whoop whoop, that’s a win! The next stage is to process their application to get them converted as soon as you can to make sure they don’t change their mind and head elsewhere to another shinier bank or card provider.

But, obviously, we don’t want to get too giddy about approving the applications that are pouring in because Know Your Customer (KYC) compliance checks need to be done and they need to be thorough. This compliance process starts with the essentials of verifying someone is who they say they are, and that means identity checks.

Ditch manual effort in KYC

The KYC process – even online – should never be any longer than absolutely necessary. If it is too long, there go your customers again, heading off to the competition.

There's good evidence that people frequently drop out of applications for financial products, in fact even just getting them over the hurdle of completing your application form can be a challenge.

In this article, Sales Cycle states that around 75% of applications for financial products are abandoned.

“One issue [is] the lack of an online-only option. People clearly want to complete applications online, saving themselves the hassle of making appointments and visiting bank branches.”

A big KYC challenge for banks and financial institutions historically has been that identity checks and any review of ID documentation was manual. Potential customers submitted their passport, drivers licence etc., and a compliance officer would validate them before approving or rejecting the application.

So, banks got digital.

The move towards digital ID checks, and complete digital onboarding, brought a number of efficiencies -

1)     Customers no longer needed to submit physical documents – making life easier for them

2)     Compliance officers could save time using automation to complete key checks

3)     Data providers could be brought in to verify credentials online

The initial moves towards digital transformation of KYC took regulated firms so far, but it still had its limitations.

Step-change in KYC efficiency

When managing multiple data providers, compliance officers still have multiple touchpoints before they can approve an application. They might make a call for name and date of birth check, and log that; then another call to verify an address or country of residence, and log that; then another call for tax status, and log that. All this data and the results might be going in a spreadsheet, prone to error and data security risks, before deciding whether to approve the application.

Again, this makes the process longer than it needs to be and means customers are at risk of dropping off.

The step-change in efficiency comes when compliance teams start to access and control the KYC process in a single platform, with all the elements integrated in one place. This brings together compliance processes, case management, customer communication and the different data providers necessary for eKYC.

eKYC in one place

An automated workflow of eKYC checks with different data providers means compliance teams can use straight through processing (STP) to deal with the vast majority of applications. But, if a check fails, the compliance officer can use their time to manually review the case as an exception, rather than needing to review each and every individual that comes their way. Compliance teams use valuable time and expertise wisely, while reducing risk and creating better experiences for customers.

Verification of an individual’s identity through eKYC that’s orchestrated in one platform means you can operate more efficient, accurate and robust checks on the information provided in an application. It’s the first step to a truly swift and seamless eKYC process that works for you and your customers alike.

Electronic ID checks can be used to –

•                Capture documentation, such as a passport or driving licence

•                Instantly validate the expiry date and other personal information on documents

•                Verify the person making the application is the person in the documents provided using facial recognition

•                Trigger enhanced fraud checks on personally identifiable information (PII)

Completing ID verification online, with a single provider, ensures a better experience for those legions of brilliant customers trying to get your products, while ditching the manual effort involved in either checking physical documents or managing multiple data providers.

Get in touch

PassFort is a single, online platform to manage KYC compliance, prevent financial crime and onboard customers smoothly. It's used by governance, risk, and compliance professionals worldwide.

With PassFort, it's easy to improve STP and then handle exceptions or manual work so applications can be approved or rejected quickly and easily.

If you are working on digital transformation of your KYC processes to drive efficiency and better customer experiences, we would love to hear from you. Please get in touch anytime!

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