Cybersecurity should be a vital part of any modern business, especially those that provide financial services.
Without a proper security system, your business’ and customers’ data may be vulnerable to the rising number of data breaches and other attacks perpetrated by cybercriminals. This leads not only to significant losses and potential regulatory sanctions but also to your clients losing trust in your organization.
On average, cybercriminals launch an attack every 39 seconds. It is always important to ensure that your organization constantly looks for new ways to tighten its security protocols. One of the most common ways is by adopting strong and reliable verification protocols such as Know Your Customer (KYC).
What is eKYC?
An electronic Know Your Customer/Client protocol refers to the verification process of a client’s identity through digital means. This involves having them undergo a series of identity checks to verify they are who they claim to be. Financial institutions also use it to help mitigate the risks of fraudulent activities such as money laundering.
Elements of eKYC
Using Know Your Customer solutions can be a reliable way of securing your networks and creating a better experience for your clients. Here are the elements involved in verifying a user’s identity and what you can expect from them.
1. Digital ID
Users can be verified through an authenticated and secure government-issued electronic identification (eID). Compared to a regular ID card, digital IDs are encrypted to protect personal information. This not only helps prevent criminals from easily stealing information but also grants users better access to e-services.
2. Video KYC
Video KYC requires clients to provide a video of themselves performing specific tasks. The representative will then match the user’s face with the photo on their ID documents. Some organizations may also conduct this via live video call to perform a liveness check.
3. Document verification
Capturing an image of a document can help your organization quickly determine if an ID document is real or fake. The system allows multiple documents to go through comprehensive algorithm-based checks for faster and more convenient verification processing.
Global eKYC Models
As virtual banking continues to gain popularity, consolidation is more likely to happen in the near future. Below are some of the most common eKYC models you may encounter.
1. Identity Authentication and Matching
Identity authentication focuses on verifying identities through given documents along with a liveness check. Special requirements are set to maintain a high-level authentication approach if a user cannot be physically present.
2. Video Verification
Using video verification is often seen as an alternative to traditional in-person onboarding, limiting a few variations of identity theft. Both your organization and its customers can also benefit from remote verification, giving users quicker access to services when needed.
3. Digital ID Schemes
Countries such as India use a national eID system to maintain a record of the identities of all registered citizens. Financial institutions can tap this and similar databases when checking a client’s identity.
4. Enhanced vs. Simplified Due Diligence
Compared to simplified due diligence, the enhanced version can better identify risks. This is typically established to better classify users under high-risk categories based on a KYC risk rating system.
Common eKYC Methods
Since the needs of a financial institution can vary from one organization to another, there are many ways to adopt eKYC processes. Below are some of the most commonly used methods today.
1. One-time password (OTP)
Whenever a customer attempts to log in, they will be sent an automatically generated code which they will need to access your network. This is sent to their registered phone or email address, where the validity may expire after a short time. However, while this is common practice, this is not recommended.
2. Facial recognition
Facial recognition is a type of biometric authentication that scans a user’s facial structure and matches it against a database. Along with other forms of biometrics, it can help accurately confirm an individual’s identity.
3. Fingerprint authentication
During a login attempt, a user must present their fingerprint to a machine that scans its unique patterns. The algorithm will cross-reference this scan to previously recorded samples to find a matching identity.
4. e-Signature
E-signatures can be a way of proving identity and intent to agree or go through with a specific service. This can be given in person and remotely.
5 Benefits of eKYC
Adopting eKYC protocols can be an efficient way to improve data security without overcomplicating the login process. Here are some of the advantages you can gain from it.
1. Instant verification
Adopting KYC processes grants you the advantage of having automated verification systems. This can help users gain a simpler and more convenient way to access your network and services without added security risks.
2. Verification is cost-effective
The process of verifying identity delivers high value compared to the costs, which makes the experience worth the minor expense to all users. This is applied to most steps that require access to accounts or when making transactions.
3. Tighter security
KYC can help identify and address vulnerabilities in your system that may be caused by human error. This helps keep your network secure and enhances your clients’ trust in your organization.
4. Zero physical documents
Having no physical documents can help mitigate the risks of theft and stolen identities. It can also make it harder for cybercriminals to use your information and access certain networks.
5. Market penetration and financial inclusivity
Market penetration allows your institution to take an existing product or service and draw in a bigger market share. This can help you gain a better edge against competitors while improving your growth through financial inclusion.
Setting a Priority on Cybersecurity
Financial institutions invest in different types of security protocols to help secure their network and data. These mitigate the risks of fraud, money laundering, and cyberattacks and provide clients with a seamless experience.
To learn more about how you can implement these types of protocols effectively, reach out to experts at Q5id today and learn about the best authentication solutions for your business.
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