Due to increasing institutional interest in digital transformation, the world is drifting towards online platforms. However, this has created more opportunities for criminals to exploit the information available online. The financial services industry is one particular industry that has become a target of fraud such as identity theft. To make the situation better, advanced technologies are being utilized. As financial institutions deal with customers online in today’s era, the need for identity verification online has been recognized.
Identity verification is the process of authenticating an individual’s identity to ensure that the person is actually who they claim to be. Typically, an identity verification document is required from customers, which acts as their valid proof of identity. In today’s modern world, the process has been further streamlined with the introduction of the video-based “Know Your Customer” process.
In this article, you will be finding out more about how identity verification is performed by financial institutions through Video-based KYC.
Difference between Traditional KYC and Video KYC
The Bank Secrecy Act, introduced in 1970 in the U.S., is the legislation that mandated financial institutions to perform verification of identity by collecting the customer’s Personally Verifiable Information (PII). Under this law, the collected information has to be efficiently utilized to eliminate the occurrence of financial crimes, such as account takeovers, identity thefts, or any other kind of corporate scam.
This is known as the “Know Your Customer” process. In video-based KYC, the goal is the same however, it involves a live video call which is used for the purpose of online verification and collection of customer data. The process adds an extra layer of security, which is necessary for institutions that have a monetary nature. Let’s take a look at how video-based KYC is typically performed in a bank.
Video KYC – How it Works
Verification of identity through video KYC is performed through the following steps:
- The customer visits a bank’s website and fills out a registration form
- The customer is then contacted by a KYC expert that performs live identity verification through a video once the consent is given
- During the video call, the customer is asked to display their ID document from both sides to collect necessary information through an automated process and to detect fake or forged documents
- KYC experts are also trained to detect fraudulent acts as spoof attacks. To avoid human error, video-based KYC employs facial recognition biometrics that is used for verifying the identity of the customer
- Once “liveness detection” has been completed and the documents have been verified, the results are displayed on the screen and updated in the bank’s back-office within seconds
The Significance of Video KYC
Video-based KYC is a cost-effective, convenient, and advanced identity verification solution that has enhanced customer onboarding for numerous business sectors. The strength of video KYC lies in its ability to eliminate the manual process of verification by providing a better alternative in the form of remote identity verification. Given today’s COVID-19 ridden era, remote businesses have to be secured to keep away cybercriminals and identity thieves.