Banks and financial institutions have been dealing with complicated, ever-changing compliance needs and regulatory requirements since the major crisis in 2008. The current digital landscape and developments in the fintech sector have forced businesses to consider new means and ways. KYC, also called Know your Customer, is the standard procedure that banks use to verify the details of a customer before getting them onboard. Traditionally, KYC was a standardized procedure, where customer would submit physical copies of relevant papers, for verification purposes. With digital KYC, banks can finally simplify the process.
Why is KYC important?
KYC is a must for banks, financial institutions and a lot of related services in the same sector. Businesses have no choice but to keep up with the AML and KYC regulations, because regulatory bodies have been fining banks and other institutions heavily in recent years. The idea is to get access to required information for anti-money laundering (AML) needs and prevent some of the frauds, scams and scandals that banks have faced in the last couple of decades.
Going digital with KYC
Digital KYC, as the name indicates, refers to the process of instant verification of customer’s identity. For the same, a digital KYC API is integrated into the platform and app of the concerned business, and the API uses the bank account of the customer as a source to verify details like name, address, and financial account. There are several tangible advantages of digital KYC, like –
- Reduced human errors
- Simplified onboarding experience
- Reduced paperwork
- Reduce risks with regards to mishandling and misuse of KYC information
- Better customer satisfaction.
Businesses must understand that KYC compliance needs are country specific, so it is absolutely necessary to keep a tab on the necessary aspects before opting or using a digital KYC API for verification. You also need to check if the concerned company is reliable and if they offer the same level of reliability for their API. It is also a good idea to review the process of integration and extent of support that the company offers. You may also want to check if their services and solutions are in sync with FINTRAC / AML regulations.
In conclusion, businesses can finally change the way they deal with customer onboarding. More than satisfaction of individual customers, it adds value to the brand and makes the KYC compliance process simpler and transparent process, with no additional concerns.