eKYC: Streamline Your Know Your Customer Processes

As the presence of online transactions continues to increase, the importance of a streamlined Know Your Customer (KYC) protocol is essential. eKYC or Electronic Know Your Customer is an advanced method for performing KYC that minimizes fraud and increases speed and conversion rates. Learn about eKYC and whether this digital identity verification method suits your organization. 

What is eKYC?

eKYC, sometimes referred to as online KYC, is an advanced form of the traditional KYC procedure often used to verify user identity during remote onboarding.  KYC, sometimes referred to as online KYC, is an advanced form of the traditional KYC procedure often used to verify user identity during remote onboarding. The KYC process is part of Anti-Money Laundering (AML) screenings to ensure that identity theft, money laundering, and fraudulent activity are not taking place. The Banking, Financial Service, and Insurance (BFSI) industry is one example of many that must comply with KYC regulations. eKYC simplifies identity verification and authentication through AI and biometric verification. This technology allows a user’s identity to be confirmed quickly while protecting Personal Identification Information (PII). 

eKYC is designed to:

• Increase customer conversion rates by reducing the friction associated with KYC & reducing approval time periods, providing a smoother customer experience and allowing the customer to access your product or service sooner
• Speed up the customer onboarding process to free up internal resources, allowing you to scale your business by onboarding more customers
• Comply with KYC & AML regulations
• Minimize fraud and its related costs

What is the Difference Between eKYC and Traditional KYC?

KYC incorporates a set of regulations that require organizations to conduct due diligence on their customers. The due diligence process requires organizations to verify their customer’s identities and confirm the risk of fraud and money laundering associated with them is low. This helps businesses only onboard legitimate customers, reducing fraud from malicious players. 

KYC is typically conducted via paper documentation, such as IDs, Social Security numbers, and passports, to confirm the customer’s identification. This is undertaken frequently during job onboarding, opening bank accounts, using cryptocurrency apps, etc. 

Financial and investment industries have extensive KYC compliance requirements, though KYC processes can be applied to every industry. eKYC is an evolving way of conducting KYC — with increased efficiency and accuracy. Streamlining KYC by digitizing the process helps reduce customer abandonment rates and satisfy the customer through a rapid, remote process.

Why is eKYC Important?

In a digital economy, anonymity is correlated to higher crime and fraud—eKYC limits these anonymous criminals’ freedom to manipulate eCommerce or other institutions. 

The need for eKYC includes:

• Credit card fraud
• Stolen ID cards
• Money laundering
• Terrorist financing

eKYC works against these potential hackers and identity thieves to meet compliance regulations, prevent fraud and support the onboarding process.

Customer Due Diligence and Enhanced Due Diligence

Customer Due Diligence (CDD) is the standard amount of KYC verification conducted on all customers. These factors help businesses determine their risk rating and if they should have access to the business as a customer – or employee.

If the customer is flagged as a potentially high risk, Enhanced Due Diligence is performed as a more rigorous alternative to CDD. This includes verification of the financial background of the customer and screening their purchases for unusual transactions that may signal evidence of fraud. 

eKYC offers a rigorous and fast alternative for verifying the authenticity of documents and can also use biometric authentication methods for ID verification. 

What is the eKYC process?

Implementing eKYC at your business can support faster ID verification while minimizing opportunities for financial fraud and identity theft. 

This process for ID verification is as follows:

1. The customer is guided through a set of prompts, starting with ID verification
2. The customer will provide the front and back of the ID virtually, using the camera on their mobile device
3. The system will determine if the ID is real and must pass a set of tests, including, but not limited to:
   • Tamper checks to verify whether the image captured is of an authentic document or a fraudulent document
   • Balanced lighting  and image sharpness to capture a clear image of the document’s front and back

• 2D barcode read
• Tamper checks to verify whether the image captured is of an authentic document or a fraudulent document
• Valid ID date
• Document expiration
• DMV verification

1. The user takes a live selfie (or other biometric verification) to be compared against the verified ID to confirm a match
2. Each results verification test is provided within the eKYC software dashboard
   • Identity verification can be confirmed automatically or manually

Additional eKYC Features

A robust identity platform will do much more than just ID verification. Incode Omni solutions are made to meet the diverse needs of businesses. With Incode, you can tailor your customer’s eKYC experience to comply with regulations specific to your industry or business.

• Capture: Capture features such as face capture enable users to quickly take high-quality selfies that are optimized for proper image verification. Other common capture features include ID capture for ensuring the ID is appropriately presented, fingerprint capture, credit card capture, and proof of address capture.
• Non-Repudiation: Minimize signature fraud by obtaining customer signatures securely through methods like verbal signature, checkbox signature, or digital signature. Additional non-repudiation features include video selfies and video conferencing with a support member. These features ensure that the applicant agrees to the provided set of terms.
• Risk Control: Determine the risk associated with the individual’s provided information, including their email, address, phone number, device, and more.  Risk is calculated based on the previous history associated with the provided information.
• Authentication: Complete authentication via biometrics with text or email verification. The user can confirm their identity through biometric methods like facial recognition, retina scan, or fingerprint. .Biometric authentication can also be used for app logins and verifying identity on high-risk transactions, such as ATM withdrawals. 
• Identity Database: Incode’s identity database provides a one-stop-shop for identifying blacklisted and verified identities. Continuous verification offers real-time alerts for suspicious activity from previously verified customers. . 

The Role of Biometrics in eKYC

Biometrics is a critical component of the eKYC process, and it offers a quick method for confirming a user’s identity that is difficult for fraudsters to reproduce inauthentically. The most popular biometric method for eKYC is facial recognition. 

Facial Recognition and ID Verification 

Facial recognition is frequently used due to the ease of implementation and the degree of accuracy. Each person has a unique face that can be used as a visual form of personal identity verification. 

Biometric facial recognition can be conducted swiftly using a mobile device’s camera. As most users are already using their phones to complete the eKYC process remotely, this method is easily accessible.

After taking a live selfie, biometric facial recognition technology maps the user’s face, identifying the distinguishing factors — such as distance between eyes or forehead to chin. This data is then stored as mathematical data and compared against existing data, like a photo ID. 

A facial match between the photo and stored data confirms your identity. This match is used for initial customer onboarding, but it can also verify identity within apps to eliminate the manual login process. 

The Future of eKYC

eKYC provides a secure alternative to cumbersome onboarding and verification processes. Its frictionless verification, authentication, and risk control features are superior methods of meeting even the strictest KYC and AML requirements. 

Financial institutions are often targets of money laundering and other fraudulent activity. Through comprehensive eKYC services, such as Incode Omni, banks and financial organizations can reduce fraud attempts by 99% while experiencing 40% higher conversion rates. 

While financial institutions clearly stand to benefit, eKYC supports every industry through increased security and decreased frustration involved in ID verification. 

Streamline Your Organization’s eKYC Process with Incode

Do you want higher conversion rates, greater fraud protection, and easy-to-use profile dashboards? With Incode Omni, you can streamline the KYC process and enhance satisfaction with onboarding for both your customers and employees. 

Without the power of AI and biometrics, identity verification can be fraudulently authenticated. Protect your company while taking advantage of emerging technology with Incode. Request a demo today to discover how Incode can help your business take control of KYC and AML processes.