KYC providers are basically providing the services to organizations for performing digital identity authentication of end-users. Their services are not just limited to initial ID verification as it addresses a wide range of services relating to the customer onboarding process. Among others, these services include Know Your Customer (KYC) and Anti-Money Laundering compliance, and impeding identity fraud. As there is too much to lose for businesses to ignore these issues, the KYC providers present an efficient solution to safeguard the interests of businesses.
KYC Providers: What are they, Actually?
A third-party provider that provides the services and tools for performing remote identity authentication of customers is known as a digital KYC provider. Online businesses, retail companies, hospitals, travel companies, etc. are some of the businesses that are required to comply with Customer Due Diligence (CDD) measures. Along with CDD, these businesses are required to perform enhanced screening of some more pronounced entities like Politically Exposed Persons (PEPs). For this purpose, these providers provide Enhanced Due Diligence (EDD) services.
Why KYC is a Pressing Issue for Businesses?
Know your customer compliance is carried out not only for validating the client’s ID information but also to adhere to global and local regulatory measures. If a user of an organization is involved in serious crimes like terror financing, drug trafficking, or money laundering, then the involved organization will be considered guilty for not carrying out the proper KYC process. It is a fundamental need of organizations that they establish their security checks in a way from which criminals cannot find any loopholes.
The customer due diligence process is undertaken digitally so that to cover all the individuals, businesses, and PEPs under one KYC solution. Moreover, the regulatory authorities responsible for impeding money laundering and terrorist financing are tasked with monitoring the organizations for KYC/AML compliance. If they do not comply, the organizations have to face non-compliance fines and penalties. Due to these factors, the secure route for organizations is to employ the services of a KYC provider.
Walkthrough of Traditional KYC Processes
As KYC processes are mandatory for businesses to carry out, thus organizations employ different ways to conduct the customer onboarding process. Starting from the manual KYC process, it was conducted by the organization’s own compliance team. This process was also outsourced to third-party providers, but the nature of the conventional KYC process was purely manual. End-users needed to visit the place of verification along with their sensitive identity documents. Hence, the space for a robust way to conduct the KYC process opened up and digital KYC providers filled that place efficiently.
What Makes Digital KYC Providers Stand Out?
Choosing a digital KYC provider over a conventional one has the following advantages.
- The recognition and verification of different document patterns like OVI, rainbow prints, etc. are robustly performed by digital KYC solutions.
- The digital KYC systems have an accuracy rate of more than 98%. With high accuracy, the swiftness of the process is also significantly better than manual processes.
- The possibility of human errors resulting from fatigue is removed.
- It is time-saving and cost-effective.
- The tedious process of waiting in the queue for hours is bypassed.
- It fits the COVID-19 environment of social distancing measures.
How to Choose the Most Suitable Service?
If you are an organization looking for a digital KYC service, you might want to employ the service that suits the nature of your organization the most. As far as the automated KYC industry is concerned, the reliability and range of their provided services differ. Some organizations want a KYB service along with a system to perform KYC checks because making your organization compliant with the KYB regulations is also crucial for the survival of businesses.
Furthermore, there is a refined checklist of tools and features that a KYC provider must incorporate in its system to be called one of the best in the market.
- The service should have biometric recognition tools like face recognition.
- Data extraction is done through AI-assisted OCR services.
- The pricing structure of their organization should be public.