(Newswire.net — May 21, 2021) —
The financial sector is full of bad actors looking to get the best of lucrative opportunities. With the huge influx of users turning to the digital space, it has become even more significant for businesses to take precautionary measures to combat online fraud instances. The same technology that is used to develop security systems is used by fraudsters to reverse engineer the products and carry out sophisticated attacks against companies.
Banking firms face a large number of these cybercrime cases where they have to deal with bad actors daily. If not stopped, these potentially harmful fraudsters can hijack into the system, steal identity information of legitimate users, and use it to gain financial profit or indulge in other nefarious activities such as terrorist financing, tax evasion, cross-border trafficking of rugs, humans, and other precious items, etc.
That is why “Know Your Customer” (KYC) procedures are enforced by regulatory watchdogs to make the legal financial system a safer place for those looking to perform safe and secure business operations. Through state-of-the-art digital KYC, banks can offer fraud-free operations and convenient and streamlined onboarding to their customers.
KYC Banking – What Does it Mean?
Know Your Customer is the full form of the popular banking term, KYC, which means that each time a prospect wishes to associate ties with a certain business entity, the organizations have to take proper measures to determine if the potential customer is genuine or not and whether the identity proof they submitted is legitimate. This acts as a deterrent against financial crime and allows companies to deliver a purposeful experience to customers.
Banks can practice regulatory compliance by ensuring KYC authentication for every onboarding user. This allows them to avoid non-compliance penalties by financial watchdogs and also do a better risk assessment of customers based on background checks and ongoing monitoring.
KYC Compliance – What are the Potential Aspects?
Whether it is a bank, insurance firm, or any other Non-banking Financial Institute (NBFI) operating in the financial sector, an entity or organization needs to meet KYC compliance requirements set forth by regulatory bodies. KYC verification directly addresses the problem of criminals with false identities opening accounts with legitimate business entities.
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Better Brand Reputation
A business or organization that practices KYC in its daily customer onboarding operations is said to be compliant following state-of-the-art rules and regulations that govern the legal financial system. This ultimately adds to the company’s good reputation as a credible institute that respects obligations and keeps secure customer onboarding a priority.
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Safe and Secure Customer Journey
With KYC due diligence processes, there are better chances for enterprises to stop crime in the first place. This is because KYC is usually performed before the customer legally starts receiving the business’s services. No, since individuals with a shady identity are not verified at the initial stage of onboarding, it makes it possible to deter digital fraud, and other cybercrime like data breaches, identity theft, account takeovers, etc.
This allows companies to ensure that personally identifiable information of legitimate customers is kept safe and that they enjoy a purposeful and worthwhile experience.
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Addressing Financial Crime Concerns
The fact that KYC ensures safe and secure custom onboarding means that genuine users can open accounts and use the products and services of the business. This acts as a deterrent against financial crime such as money laundering and other heinous acts related to it. Initial Coin Offerings (ICOs) sold by cybercriminals can also be taken down if companies invest a good deal of resources and time in state-of-the-art KYC authentication mechanisms.
Digital KYC – The Reliable and Efficient Way of Verification
Traditional methods are growing old with each passing day since fraudsters are becoming more and more sophisticated in carrying out their criminal acts. This is a big challenge for only financial entities like banks, insurance firms, cryptocurrency exchanges, and other types of businesses that offer services or use products manufactured in the financial industry ecosystem.
Digital KYC verification is the new normal in customer onboarding methods that allow companies to make use of intelligent facial recognition systems and modern document verification checks that can verify the customer’s facial identity as well as information present on their original ID documents.
Benefits of Digital KYC
These automated digital KYC solutions come with many benefits, some of which are stated below:
(i) With digital KYC, businesses do not need to invest a lot of time and money in a manual verification team for auditing their potential customers
(ii) The new and improved methods of verification are not only secure but time and cost-effective a well that ultimately reduce the operational overhead
(iii) With modern KYC verification tools, and error-free verification of the customer’s identity information is possible removing the possibility of human errors that are much more frequent in manual verifications