Video KYC Onboarding: Fintechs meeting KYC compliance with video identifications

  • Richard Marley
  • February 24, 2020
  • 6 minutes read
  • 2366

The Financial industry is introducing a digital revolution globally. The term Fintech corresponds to ‘financial technology’ that promotes digital payment systems, asset management, fundraising, personal and business loans, money transfers, and investments. Just the way physical banks and financial institutions work, Fintech operates with customers digitally. The globally digitized world demands everything online. Therefore digital banking in the form of the Fintechs is prevailing rapidly so is the demand for digital/remote identification. 

Digital identity verification is incorporated by the Fintech industry in which they perform ID documents and biometric verification of online identity to comply with KYC and AML regimes. Determining the loopholes in previous methods, video identification of KYC is performed online that employs strong algorithms to verify an individual remotely against a video. Video KYC deters the risk of fraud by ensuring that a real person is showing up a document in the camera.

Video KYC is a convenient and quick process in which a KYC expert onboard the customer and conducts identity verification. It is a secure method that helps Fintech businesses in attaining a clean customer base. Moreover, KYC/AML compliance becomes easy when it comes to verifying the customers in a digital world. 

In the video KYC process, live KYC is performed and the end-user is guided in real-time to show the identity document to the camera for documents verification. Also, a few questions are asked from the end-user just like in-person KYC screening. 

Real interaction with Customers:

In video KYC a real interaction is done with the online customers to identify and verify them. The user is asked to show the identity documents as well as answer a few questions. During the conversation, customer behavior will be noted by the KYC expert. The liveness detection is also done during all this process that is done by both KYC experts as well as facial recognition technology. 

Cooperative audit:

The accounts that are opened after the video KYC become operational after a cooperative audit. The banks would need to perform an audit with respect to system security and KYC application as recorded in the form of video. The information is then verified and an account is created. A cooperative audit helps allow only trusted customers to become part of the financial system. Otherwise, if any fraudulent element is found, the application is rejected.

Video KYC Secures Digital Payments and Crypto Industry

Digital thieves are innovative. They hold fake identities and use them to conduct malevolent activities online. By using stolen real identities and their information, the customers try to fool the online identification process. Video KYC acts as a defense line that protects the system from participation of bad actors. The digital currency services providers and similar institutions such as crypto businesses are required to verify customers before onboarding them. With video KYC, financial sectors and ICO providers can perform a thorough KYC process online

The crypto businesses require transparency in their systems as per regulatory objections. The solution is identity verification of customers digitally that can better be met by exercising video identification of customers in which the liveness detection of the customer is performed along with document verification. Therefore, the risk of financial crimes such as money laundering and terrorist financing can be mitigated through on the spot video KYC.

How Video KYC works?

The video KYC process undergoes the following steps: 

  1. Your customer will be required to fill in the registration form that is present on your website.
  2. After registration, the KYC expert connects with your customers for live identity verification. 
  3. The customer will be guided for the process of identification through a video. The liveness detection will be done to ensure the physical presence of a customer at the time of verification.
  4. KYC experts will take consent from the customers to collect data for identification purposes. The process will proceed if a customer agrees to the consent. 
  5. Your customer will be asked to show the ID document that could be an ID card, passport or a driving license. 
  6. KYC expert will ask your customer to show both the front and backside of the document, tilt it in front of the camera to see the holograms in the document to verify its authenticity.
  7. KYC experts are trained that not only identify the spoofing elements in the document but also analyze the customer’s body language and behavior.
  8. To eliminate the chances of human error, video KYC employs facial recognition technology that ensures the physical presence of customers through liveness detection checks. 
  9. Once the face and document are verified, the video identification process is done and results will be sent to the back-office.

How video KYC benefits Fintech businesses?

For Fintech businesses, regulatory compliance can be ensured by keeping a balance between digital security and customer experience. The following are some benefits of video KYC for Fintech businesses:

Saves time and money:

Video identification is quick as well as a cost-effective solution that Fintech businesses can use to perform digital identity verification of their customers. 

Improves Digital Security:

Video KYC deters the risks of fraud and bad actors that use fake identity credentials and documents to ensure entry in the digital financial system. The video identification checks the human body language and verifies the information in real-time to prevent digital scams. 

Complying with KYC requirements:

With video identification, Fintech businesses can meet the requirements of regulatory bodies to prevent financial crimes. 

How video KYC benefits digital customers?

The following are some benefits that video KYC provides online customers:

Faster identity verification:

Digital identification through video replaces the physical visits of the customer to banks for KYC verification. Hence the identity verification is faster and smoother for customers to perform. 

Improved customer experience:

The customer can verify its identity by showing up identity documents to the camera and answering a few questions asked by the KYC expert. After collecting the user-provided information, it will be verified. 

The Fintech businesses are getting digitized with splendid digital services for their customers. The need for online identity verification lies in these businesses that can be well met by integrating the system with an identity verification method such as video-KYC. In this method, the customer will be connected to a KYC expert who will ask the customer to verify its identity by providing a government-issued ID card as proof of identity. Moreover, KYC experts ask some questions to which the customer needs to answer and during the process analysis of the customer’s body language is also done to prevent the risk of fraud.