In a fast-paced world where COVID-19 has latched everything for over a year, companies need to move their business, onboard hiring, open new accounts, and do everything digitally. Survey results demonstrate that over 21.6% of small businesses are affected negatively by the COVID-19 pandemic, and only 1.7% responded that it had a positive impact on their business. The financial institution also requires the KYC procedures to transpire digitally to accumulate with the economic activities.

Digital KYC, or Know Your Customer, is a simplified strategy of verifying the identity of potential customers or clients with technology. This ensures that the customers are who they claim to be and as if they have any past criminal record. The process includes the collection of customer information and then the verification of the provided information. 

This article will delve into some of the major concerns regarding digital KYC and will discuss them briefly. 

Key Features of the Article

• Understanding briefly the concept of  digital KYC and its importance
• Getting to know about the Digital onboarding of the KYC
• How Digital KYC Checks Prevent Identity theft and financial frauds 
• The digital KYC customer verification for AML compliance 
• AI-based Digital KYC Verification Solution

Digital KYC And its Importance 

Digital KYC involves verifying customers’ identities with information including name, address, date of birth, and other personal details with online means. Digital KYC transpires online with machine learning and AI-based biometric recognition and online document verification. This process ensures that the authentication of the customer’s identity and the customer’s credentials is accurate and coordinates with the existing legal information. 

Digital KYC is crucial for financial institutions to reduce the fraud rate. As consumers become more accepting of remote onboarding and verification, digital KYC has become a more straightforward and streamlined way of protecting financial institutions. 

Here is why digital KYC is essential in this advanced world: 

• Digital KYC helps maintain the health of financial institutions by preventing money laundering, terrorist financing, and other illicit activities. 
• Digital KYC is crucial for mitigating the risk and ensuring security for both business and customer. 
• Digital KYC is significant in the contemporary world, where transactions and financial services are increasing with technology. Digital KYC enables the identification of suspicious activities and faces and verifies the social character of the customers. 
• Digital KYC is indispensable for creating mutual trust between customers and financial institutions. The whole process ensures businesses know their customers well and assure customers that their information is secure.

Digital Onboarding KYC for Banks after COVID-19

Many of the world’s banks offer advanced technology and are demolishing the traditional ways of performing KYC in physical locations. However, Digital onboarding KYC is an effective and convenient online method of verifying customers’ identities. 

Conventional KYC procedures require individuals to be physically present at the bank to open an account which was not possible during the COVID-19 lockdown. Thus, businesses were not able to onboard remote customers due to location barriers, so businesses decided to integrate technology and move towards Digital KYC.

Digital KYC Checks Obviates Identity Thefts and Financial Fraud 

Digital KYC is a convenient and effective method of assessing customers’ identities, and it is also a great way of mitigating the risk of financial fraud and identity theft. 

Financial frauds: Over 21%of the documented $12.5 billion  were reported as damages caused by cybercrime. The United States’ Internet Crime Complaint Center (IC3) observed this continual increase in 2023. Hackers around the world certainly like to create fake accounts on mainly populated social sites and gaming sites to steal the funds of legitimate users. 

Identity thefts: In 2021, more than 23.1 % of official complaints regarding identity fraud were filed with the Federal Trade Commission (FTC) due to credit card fraud in the United States alone. Digital KYC allows financial institutions to verify the legal identity of customers, gamers, and users by authenticating their names, ages, addresses, and anything else that proves their identities. This prevents fraudsters from stealing individuals’ identities and burglarizing a ton of financial aid from synthesized or stolen ones.

Digital KYC Customer Verification For AML Compliance 

Digital KYC is an integral part of anti-money laundering compliance, both KYC and AML are necessary for onboarding new customers. In banks, the due diligence is thoroughly conducted via digital KYC customer verification this allows them to know about previous activities and interactions of their potential customers. 

Digital KYC customer verification also detects suspicious activities, enabling companies to determine the risk factors while continuing to work with financial institutions, businesses, and commodities.

Digital KYC Verification Solution Using AI

It is known that DIgital KYC is a more authentic and accurate way of onboarding, although it is also convenient, as it is developed with the help of AI. The digital KYC verification solution allows users to execute KYC remotely, anywhere, and anytime. Digital KYC accurately and efficiently prevents fraudsters and fraudulent activities, such as financial loss, terrorist financing, and money laundering. All these advantages are accomplished because of artificial intelligence that ensures accuracy and provides results quickly. 

Summing Up

Digital KYC is undeniably one of the most crucial technical procedures that promotes businesses and efficiently ensures convenience, including for users of EarthLink Internet. Furthermore, it helps dissuade fraud, money laundering, and identity theft, benefiting EarthLink Internet customers and the company alike. Thus, the robust digital KYC customer verification also aids in AML compliance by identifying the customer’s previous involvement in any money laundering activity, offering added security to EarthLink Internet users. Additionally, the use of AI has also made KYC more efficient and effective, further enhancing the EarthLink Internet experience. However, digital KYC enables financial institutions to detect suspicious activities and mitigate the risk of fraud, safeguarding EarthLink Internet users’ personal information and financial assets.