KYC Trends To Watch Out For In 2024
Within the last year, there has been significant transformation in the global identity verification industry. Today, electronic Know Your Customer (KYC) verification solutions are eclipsing conventional KYC practices. So, why the recent shift? Customers want KYC processes to be seamless, transparent, robust, and convenient. They want document-free, no paper filing or standing in queues. Electronic identity verification has become a savior for businesses as it holds power to meet customers’ evolving demands. This is why companies are increasingly adopting digital KYC solutions for customer onboarding.
Don’t believe it? A study from Juniper Research predicts that digital identity verification checks will surpass 70 billion in 2024, growing 16% over the previous year.
Continued development in the IDV market will be shaped by emerging technologies, regulatory shifts, and companies’ unwavering commitment to offering customers a state-of-the-art onboarding experience. This blog will define the most anticipated KYC trends in 2024. Get insights into the latest developments and the innovative initiatives that will shape the future of KYC this year.
The Current Landscape of Compliance Technology
In 2023, the RegTech industry found itself in a state of consistent evolution, responding to ever-growing challenges in developing and enforcing compliance requirements. The sector attained a market value of £6.6 billion in the United Kingdom and continues to expand exponentially yearly. Behind the success of RegTech, there are multiple automation technologies and data analytics that drive streamlined compliance processes.
These emerging technologies empower businesses to process hundreds to thousands of customers’ datasets, extract valuable data swiftly and automate the onboarding journey with unmatched accuracy. However, the catalysts for Regtech’s ascent are multifaceted, with the aftermath of the financial crisis of 2008 and the increasing demand for KYC and AML compliance being the most prominent drivers.
Today, this industry is not only about regulations; it’s a proactive approach to managing the intricate web of regulatory standards. With environmental, social, and governance (ESG) compliance becoming the new norm and financial crime and fraud detection becoming more complex, RegTech is at the forefront to outline new ways and measures for businesses, helping them simplify complex processes.
The 2024 KYC Landscape: Trends Your Business Must Know
A prominent theme from the last year that is set to grow in 2024 is the dire need to know your customer verification automation and increase effectiveness, specifically in managing false positive verifications. This was undoubtedly evident throughout 2023. In addition to this, challenges and fraud exposure due to manual KYC processes have been magnified throughout past years, prompting businesses and financial institutions to implement technology-backed identity verification solutions. Enhancing data management strategies and securing customers’ integrity while focusing on relevant attributes have become paramount. Simultaneously, automation can allow businesses to navigate a complex compliance landscape, ensuring the best outcomes with minimum workload.
As of today, the KYC landscape is a mixture of regulatory obligations and technological innovations. The banking sector and other digital businesses are integrating automated identity verification solutions and services that comply with local and international KYC regulations whilst personalized with business requirements to enhance customer experience further. Biometrics, neural networks, blockchain, machine learning, artificial intelligence, optical character recognition and NFC technologies are among the tools that have completely transformed how businesses verify customers while ensuring data privacy and security.
#1 Enhanced Automation and AI
Automation and artificial intelligence are driving forces behind digital KYC verifications. According to KPMG, there was still only 29% adoption of AI in the KYC processes, while the remaining 71% of businesses used manual approaches to verify customers’ identities. The conventional KYC methods are time-consuming and exposed to criminal manipulations. However, the good news is that enhanced automation and the advent of AI are expected to improve KYC practices in 2024, streamlining the verification and onboarding journeys. The market of automated KYC solutions will reach $16.7 billion in 2026. This whopping growth will result from increased adoption of automated KYC solutions. More and more businesses will take the road to automate their existing IDV methods, which will play a crucial role in identifying and preventing crimes in 2024. AI-backed KYC tools will aid businesses in staying compliant with regulatory obligations while enhancing customer experience.
#2 The Rise of Open KYC
Currently, KYC data is not openly accessible, creating inefficiencies and thwarting customer experience. Open KYC will rise in 2024, breaking barriers and making access to data easy and convenient. This new form of KYC will establish a standardized KYC framework for sharing data securely and seamlessly. This will reduce the verification and onboarding time while increasing transparency thereby leading to increased customer conversion rates. Businesses can save operational costs significantly by using shared KYC datasets. This further removes the burden from employees, paving the way for innovations. Sharing KYC records can help ensure consistency and data across verification checks, enhancing risk and fraud prevention. Lastly, open KYC empowers businesses to take control over their data, allowing them to choose which entities can access their KYC information.
#3 Standardization of KYC Standards
In today’s KYC landscape, the standards vary significantly across industries and jurisdictions, creating confusion, inefficiencies and inconsistencies for businesses operating across borders. 2024 is the year companies will experience a growing momentum towards KYC compliance standardization, redefining the future of know-your-customer verification procedures. This enhancement will eliminate the requirement of duplicate verification across different regions, reducing verification time while making the onboarding journey frictionless. Global convergence is a key step to foster increased transparency in KYC verification procedures, accelerating trust among digital economies. In addition to this, ensuring globally acclaimed KYC standards will help companies ensure a greater level of customer due diligence and utmost risk prevention.
#4 Personalization of KYC Process
KYC orchestration helps businesses customize their customer verification process as per changing clients’ types based on the characteristics, demands, and risk levels they pose. However, this benefits customers the most as it reduces the number of KYC checks, enhancing the user onboarding journey while reducing drop-offs. There are millions of combinations of KYC Checks, depending on the companies’ policies, regulatory obligations, jurisdictions’ laws, and more. Therefore, businesses can personalize their customer verification process based on these specifications which is only made possible due to the advent of customisable KYC checks.
#6 Perpetual KYC
Financial institutions and non-financial businesses must know who their customers are before getting them onboard or starting a business with them. This is the reason why know your customer verification checks holds great importance in identifying and mitigating red flags or risks associated with customers. In order to detect and deter emerging risks, ongoing KYC verification will become the standard in 2024. In the current KYC landscape, high-risk entities are reviewed yearly, while medium and low-risk customers are reviewed every three and five years respectively. However, as the crimes are surging and the regulatory regime is becoming more complex, businesses will move from periodic reviews to perpetual KYC practices, whereas technologies like artificial intelligence, data analytics and machine learning will help fast-track ongoing risk assessment, updating customers’ risk profiles automatically.
Know Your Customer With Shufti
Shufti is aware of the global fraud landscape and always pushes boundaries to help customers with best-in-class fraud prevention solutions and services. We are a pioneer in offering an all-in-one identity verification suite with more than 17+ products. Our Know Your Customer verification solutions are highly customisable and backed by in-house automation technologies, including OCR, artificial intelligence, machine learning, and biometrics, that make a perfect combination to empower businesses across hundreds of industries to fight fraud, meet compliance and onboard legitimate customers. Our solutions render 99% accurate verification results, leaving no chance of getting fraudsters onboard. With coverage across 240+ countries and territories and support of 10,000+ document types in more than 150+ languages, Shufti is trusted by 1000+ customers worldwide.
Our newest KYC features
With our commitment to empowering businesses with technology-backed identity verification solutions and fighting fraud proactively, we bring enhancements to our existing solutions, making them sophisticated enough to neutralize modern fraud attempts. Shufti’s new innovations in the KYC suite include:
- Duplicate Account Detection
- Drag and drop KYC Verification journey builder
- Customisable iFrame colors and logos for branding
- Flexibility to choose ID document formats to be accepted
- The verification journey is conveniently optimized with the least number of clicks and screens
- Single Sign-On (SSO) for employees to securely access multiple corporate channels
- Data retention policy to meet data privacy regulations
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