What is Digital KYC?

In industries such as healthcare, telecom, banking and financial services, and eCommerce, customer identity verification is both crucial and a compliance requirement. However, the cost of compliance is prohibitive. A LexisNexis study of 5 major European markets pegged it at 83.5 billion USD annually. While it found that labour resources constitute an average of 74% of compliance spend (varying between countries), the largest portion of the compliance spend is reserved for KYC initiatives, which account for 40%.

Thanks to advances in technology, KYC can now be performed entirely digitally. Done right, both the organisation and its customers benefit from the resulting speed, accuracy, security, convenience, and cost-effectiveness of eKYC-enabled onboarding.

What are the obstacles faced while onboarding customers?

Customer onboarding process can be quite a hassle for users as well as banks, with lengthy application forms and overhead costs. Customers are faced with a myriad of applications and documents , and banks are required to process these forms for all the necessary details.

Banks are also struggling to find a way to collect all required details in a manner that is not burdensome for their customers. 

A frustrating onboarding experience often leads to customers abandoning the process of opening their account with a particular bank. Adoption of new technologies, on the other hand, might streamline the onboarding process, minimising customer frustration and preventing banks from lost revenue. 

What are the benefits of digitized KYC for the customer journey?

An effectively digitized KYC solution has numerous advantages that are beneficial for both parties involved in the customer onboarding process but is especially important for a great customer experience. 

Digital KYC enables instant and hassle-free onboarding for users, giving them the flexibility of taking their own time with the process. It saves the time and effort of carrying the various documents needed for manual identity verification, making the entire KYC process much faster.

AI-enabled Digitized KYC is powered by the most secure technology and ensures that your data is secure and protected from any kind of data breach.

These factors make Digitized KYC the preferred method for the customer onboarding process. 

What does digitized KYC look like?

The primary difference between manual and digital KYC is the fact that digital KYC is designed around the customer journey. All the steps from collecting the necessary KYC documents to providing the individuals’ KYC results are constructed with the customer journey in mind. This ensures proper KYC compliance throughout the customer lifecycle and guarantees all data is accurate, up-to-date, and relevant. A reduction in the time required and money spent on the KYC process is an added bonus. 

How is Digital KYC transforming the banking and finance sector?

Specifically in the banking and financial sector, CXOs and digital transformation experts have been challenged to deliver on customer experience (CX) for a while now, but the global pandemic has cemented the urgency. More customers than ever have shifted permanently to digital channels and mobile devices for their purchasing and payment needs. 

eKYC can address traditional challenges associated with customer onboarding, such as prospects abandoning the purchase due to tedious paperwork, banks getting defrauded due to ineffective manual verification, and the sheer cost and effort of completing due diligence promptly.

Digitising KYC can also address new-age challenges such as the need to provide a friction-free customer onboarding experience, serving consumer preferences for digital channels and devices, and data security.

However, just digitising the KYC process may not be enough. Studies have found that when various elements of the overall eKYC process such as KYC, AML, and fraud detection are conducted piecemeal, it can actually increase costs of manual and back-office interventions, despite digitisation. Working with a single end-to-end identity verification vendor can ensure the use of a single dataset, drive process streamlining and optimisation, and ensure a seamless CX. 

5 ways digitising KYC can accelerate customer onboarding and transform business outcomes

A seamless digital KYC process can accelerate customer onboarding at scale and deliver cost efficiencies without compromising safety and compliance. 

Future-focused banks, NBFCs, and insurance service providers realise that done right, digitising KYC can impact the customer acquisition experience and transform business outcomes.

Here are 5 proven outcomes of accelerating customer onboarding with a seamless eKYC process:

  1. Crash the sales cycle from weeks to minutes: Processing new applicants used to take weeks, if not months, and many surveys show that customers are simply not ready to wait out the entire process. Using advanced data science, AI and ML technology, digital KYC can accurately and quickly process and verify applications at scale. 

This not only minimises the time to activate accounts but also causes a drop in applicant rejections. Most importantly, it causes a huge drop in the number of customers abandoning the purchase process due to long waits or tedious paperwork.

  1. Enable outstanding customer experiences: eKYC offers customers unparalleled convenience on the channels and devices of their choice. It offers a friction-free onboarding experience with minimal human intervention.

By leveraging data science, financial institutions can activate insights based on accurate and updated customer data. These insights further drive customer retention and optimise customer lifetime value by upselling and cross-selling the right products at the right time.

  1. Mitigate process complexity: Manual KYC was a complex process for both the customer and service provider. By digitising onboarding with eKYC, financial institutions can streamline the onboarding process and drive operational efficiency. 

The automation also infuses transparency and trackability at each stage of the process for all stakeholders, including customers. Service providers benefit from massive cost reductions in the regulatory due diligence process without compromising security and data privacy regulations.

Customers too no longer need to compile paperwork or visit branch offices for verification. The system can verify and cross-reference digitally uploaded documents and images against government-authorised databases and complete the process without manual intervention.

  1. Ensure cyber security and data protection: The digital age brings new cyber-attack threats and data breaches for financial institutions. These attacks and breaches are not just getting more frequent, but also more expensive, not just in terms of the financial costs but also in terms of reputation and credibility. In addition, Forrester studies found that identity theft and account takeover had increased between 10% and 15% between 2019 and 2020 and will continue between 8% to 10%.

Non-compliance with privacy regulations while handling sensitive customer data can also cost millions in fines. By working with the right technology partner, financial institutions can ensure that the digitisation of KYC accelerates the onboarding process without compromising on cyber safety and data security.

  1. Minimise fraud:  Fraudulent documents and manual errors in verification used to cost banks and financial institutions millions of dollars in losses and liabilities. Digitising the onboarding process can take care of that by minimising human error and subjectivity. 

Automating the entire cross-checking and verification process also enables massive amounts of scale, enabling millions of customers to be onboarded each month. With technology such as AI and facial recognition, digitised KYC can ensure that the applicant data and face is checked against millions of existing customers. Bad actors and fraudsters are immediately recognised and flagged at the right juncture. 

Make the move to accelerate customer onboarding with digital or online KYC today

Digitising KYC for accelerated onboarding (onboarding meaning onboarding process) is the next step for business leaders obsessed with driving efficiencies and delivering breakthrough customer experiences. E-KYC can directly impact business and revenue goals while balancing 3 key business challenges—customer experience, data and cyber security, and cost-effective operational efficiency.

Independent studies on the total economic impact of identity verification solutions powered by AI and technologies such as facial biometrics have found a 261% ROI and a significant improvement on all major key parameters – over 26% in customer acquisition, 20% in fraud detected at the onboarding stage, and a lower dropoff during the onboarding stage.

As a future-focused CXO, your next step is to find the right technology partner to enable your strategic vision of instant and seamless customer onboarding. Ensure that your partner is able to deliver technology that offers accuracy, scale, speed and security while minimising process complexity and driving cost-effectiveness.

Fintech stacks such as HyperVerge enable banks, NBFCs, insurance and other financial service providers to leverage the power of cutting-edge AI, ML, and data science for end-to-end digital and video KYC, automated fraud checks, and error-free data verification. 

Perhaps equally important, they also bring the innovation capabilities you need to anticipate and solve real business challenges in a future defined by disruption.