Numerous businesses, financial institutions, casinos, airports, healthcare firms, social media platforms, and e-commerce stores require accurate identity verification for customer risk assessment and to meet regulatory compliance. However, meeting these regulations is not an easy task due to the lack of skilled labor, its impact on customer experience, and data privacy issues.
One suitable solution for overcoming such problems is to opt for robust digital document verification solutions that allow companies to not only verify the identity of their customer base but also enable them to meet regulatory compliance without compromising customer experience.
Let’s start by discussing the KYC (Know Your Customer) process and how it is enhanced through automated document verification.
Defining KYC
KYC, short for Know Your Customer, is the obligatory process of customer identity verification. This process is mandatory for financial institutions such as banks, insurance firms, brokerage companies, fintech, etc., and is completed during customer onboarding. The strength of the KYC procedure lies in its ability to accurately ascertain the legitimate identity of customers i-e the customers are actually who they claim to be.
In previous years, the United States, Middle East, Europe, and the Asia Pacific gathered monetary fines worth USD 26 billion due to non-compliance with global KYC and AML regulations. As companies aim to avoid accumulating such high amounts of fines, customers that decline to accept KYC requirements can be refused from availing services or from forming any kind of business relationship in the future with that company.
Within the KYC process, ID document verification is employed to verify the identity of customers with maximum accuracy.
Document Verification
The document verification process is typically implemented by organizations that require their customers to prove their identity through official ID documents prior to forming a business relationship. Each individual is asked to provide documents that enable firms to authenticate their identity and business or residential address.
Examples of valid ID documents include:
- A government-issued ID cards
- Passport
- Employer letter
- Updated drivers license
- A recent utility bill
- Bank statements
- Rent agreement
- Tax bill
Next, an AI-based digital document verification software requires customers to take or upload an image of themselves holding their ID documents in real-time. With the help of OCR technology, data from these documents is easily extracted and analyzed within seconds. Once the information submitted is verified, customers are granted permission to carry out activities such as open a new bank account, access an existing account, or make online transactions.
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Can Fake Documents Be Detected Through Document Verification?
The document verification process is crucial for weeding out any fake documents that customers may be attempting to provide, such as:
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Illegitimate Documents
This includes documents that may be missing essential elements such as rainbow prints, digitally printed photographs, or holograms.
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False Documents
After stealing someone else’s ID documents or credit/debit cards, fraudsters may try to gain access to their bank accounts. Such documents are denied access during the initial stage of identity verification.
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Modified documents
This refers to documents that may have been manipulated by criminals in an attempt to disguise themselves. Typically, it involves manipulated writing fonts, color schemes, or incorrect document format.
Benefits of Document Authentication Services
In today’s digital-first world, businesses require robust technologies to automate their business processes. Considering this, the most effective option for companies is to opt for AI-powered, fully automated identity verification service providers.
Conventional methods of identity verification have proven insufficient as they create friction for customers and slow down the entire process. Due to frustrated customers, companies faced the risk of high drop-off rates. On top of this, manual document authentication methods are more error-prone, leading to a higher possibility of financial crimes such as identity theft and account takeovers.
On the other hand, automated identity and document verification services allow businesses to validate their customers with greater security and accuracy. By streamlining the customer onboarding process, customers can be onboarded remotely which has become a necessity for financial institutions in the era of COVID-19.
Why Your Business Needs It
Online document verification is gaining ground in numerous industry sectors today due to the numerous benefits it offers for streamlining day-to-day business operations. To sum it up, companies that utilize such software can avail the following benefits:
- Reduced cost due to minimum manual labor
- Rapid customer verification to reduce drop-off rates
- Greater likelihood of optimizing customer conversion rate
- Prevention against frauds such as chargebacks, account takeovers, identity theft, and other fraudulent acts
- Higher employee productivity and convenience