With continuous innovation in FinTech, customer expectations of comprehensive digital experiences have prolonged to all corners of financial services. Financial regulators have enabled EKYC practices to facilitate financial institutions to perform EKYC online checks and process customer applications digitally over the past few years for replicating this transformation.
With the Covid-19 pandemic challenges, governments across the globe are comprehending the acceptance of EKYC in their administrative procedures. On a global level, many regulators have already delivered reviewed guidance on remote customer verification to assist financial institutions in ensuring business steadiness and easy customer onboarding during lockdowns.
This blog post will discover the diverse EKYC models worldwide and explore the differences countries have in their specific EKYC practices.
EKYC Meaning and Process
EKYC is the expression to define the digitalization conception of KYC processes. EKYC (Electronic Know Your Customer) is the paperless procedure that reduces the costs and conventional bureaucracy needed in KYC processes that precisely identify and verify a customer’s real identity.
Digital ID Schemes – Followed by India and Sweden
India and Sweden are working on a more fundamental approach to EKYC, which comprises the formation of a Digital ID framework. Such techniques place the accountability of gathering, dealing out, and securing citizen information onto the government, which financial institutions can further use to verify and identify a customer.
Such procedures are inclined to cyberattacks and are vulnerable to execution errors. However, a centralized EKYC portal can provide security and cost savings to financial institutions, which do not require the same procedure of crafting their EKYC systems. India’s Aadhaar EKYC solution is such a precise system and model innovator.
Many governments worldwide are planning or working on solutions to create an EKYC model similar to Aadhar. Sweden’s financial sector first adopted the digital ID scheme, which their government later accepted.
Video Verification – Followed by Germany
The German EKYC model was the foremost to replace individual in-person meetings with precise two-way video call verifications. It facilitates customer identification and validation through a live two-way video link with a compliance expert.
Even the Monetary Authority of Singapore recommended that live video conferencing be adopted instead of direct face-to-face interaction for identity validation.
Other prominent illustrations include the RBI (Reserve Bank of India), which in 2020 broadcasted it would enable video-based KYC as a choice to facilitate a customer’s individuality. In India, the finance industry requires video KYC to reduce the costs of physically connecting with customers in inaccessible locations.
Video verification has the benefit of averting some versions of identity frauds and is a better digital version of outdated face-to-face onboarding for both government and financial institutions.
Simplified vs. Enhanced Due Diligence: The UK & Bangladesh model
While most KYC models take a risk-based approach, the Financial Conduct Authority in the UK takes things to the next level.
In this specific Due Diligence model followed by the UK and then Bangladesh, the measures for validation are known as 2+2 as it needs financial institutions to compare 2 information points given by the customer to 2 information points from a reliable source. For instance, the individual’s name and birth date or name and address.
The Australian model
Australian citizens must verify their residential address or date of birth for KYC. The verification procedure can be leveraged by documentation, electronic information, or both. In the case of entities, the benchmark for business verification is to satisfy that the customer exists.
The validation requires:
- Full name of the company
- Australian company registration status
- Australian Company Number (ACN) or Australian Registered Body Number (ARBN)
Identity Authentication & Matching Model
Initial EKYC regulations were found somewhat imprecise. Instead of authorizing explicit techniques, technologies, or advanced procedures, they merely provided overall guidance and favored/discarded EKYC related procedures on an ad-hoc basis.
In 2019, the HKMA (Hong Kong Monetary Authority) released a rationalized circular on remote onboarding of distinct customers to counter these traditional approaches. The guidance does not offer a precise checklist of activities to track. However, it explains that technology acceptance for remote onboarding drives must comprise identity authentication and match, such as liveness recognition and facial acknowledgment.
Variations of this Hong Kong concept comprise Malaysia and the European Union direction. In the same year, BNM (Bank Negara Malaysia) introduced draft requirements for financial institutions executing EKYC and using biometric technology, liveness recognition, and fraud detection.
How HyperVerge Digital and Video KYC Works
The HyperVerge Video KYC solution relies on the RE’s domain as per precise regulation and supports all customer requirements. The company uses Artificial Intelligence (AI) engines to augment the EKYC process and make it highly scalable.
At HyperVerge, we offer Offline Aadhaar XML support for validation and verification, enabling compliance as a part of the defined workflow.
Customer location monitoring and timestamp functionality are rooted in the video KYC procedure. The software checks the location to be within India as per regulations. It also cross-checks the customer’s picture with PAN and verification of PAN details against the NSDL database.
Artificial Intelligence (AI) steered OCR reads and matches ID card information. It promptly facilitates liveness check and validation of customer documents in real-time without compromising legal assurance.
Lastly, an AI-based face match software compares and matches the customer picture with Aadhaar and PAN photograph maintaining higher accuracy levels, and this phase completes the video KYC process.
Moving Forward with EKYC Models
As more nations announce new guidelines for using technology to enable EKYC online, it is likely to expect a further association of innovative EKYC models and schemes worldwide. We even anticipate that the governments put even more effort into facilitating the acceptance of new and innovative EKYC portals.
The HyperVerge Fintech Platform entails Digital KYC+, Data Verification, Dedupe Fraud Check, and Contract Verification solutions. HyperVerge offers the fastest online identity verification, KYC/AML checks, and fraud prevention for all industries, enabling frictionless customer onboarding. We have processed 600+ million identity and fraud checks so far.
Furthermore, HyperVerge has enabled organizations to safely validate a large user base against fraudulent activities with swift onboarding. Video EKYC and accurate face recognition by HyperVerge is a practical approach in bringing different stakeholders and customers closer.
Would you like more insights about the HyperVerge Video KYC Product and how you can set it in your current workflow? If so, directly write to us at firstname.lastname@example.org. Else fill out our request form right here.