eKYC: The Solution to Remotely Verify Your Customers' Identity

Key takeaways:

eKYC (electronic Know Your Customer) is the digital identity verification process that allows companies to remotely and securely confirm that their customers are who they claim to be, complying with anti-money laundering (AML) and Know Your Customer (KYC) regulations more efficiently.

Implementing an eKYC solution brings numerous advantages to businesses, such as faster customer onboarding, increased regulatory compliance, reduced operational costs, improved user experience, and global scalability.

Sectors such as finance, telecommunications, online gaming, healthcare, and public administration are among those benefiting the most from adopting eKYC to optimize their identity verification processes and comply with regulations in an agile manner.

When choosing an eKYC solution, it is crucial to consider aspects such as technological capabilities, regulatory compliance, user experience, flexibility and scalability, and the provider's reputation, to ensure that it meets the specific needs of the business.

In the era of deepfakes and generative artificial intelligence, identity verification has become more important than ever. eKYC (electronic Know Your Customer) has become an indispensable tool for companies seeking to optimize their onboarding processes and regulatory compliance, now in this digital context. In fact, more than 70% of financial institutions already consider eKYC to be a priority in their strategy for the coming years. In this article, we will define the concept of eKYC in depth, analyze its competitive advantages over traditional KYC, and address key regulatory issues. If you want to discover how this technology can take your identity verification processes to the next level, keep reading.

What is eKYC (electronic Know Your Customer)?

eKYC (electronic Know Your Customer) is the digital identity verification process that allows companies to remotely and securely confirm that their customers are who they claim to be. Unlike traditional KYC processes, which usually require the physical presence of the customer and subsequent manual document processing, eKYC relies on technologies such as facial recognition, document validation, or biometric authentication to efficiently meet all regulatory requirements.

eKYC processes have become a fundamental tool for preventing fraud, money laundering, and terrorist financing. It allows companies to comply with KYC (Know Your Customer) and anti-money laundering (AML) regulations in an agile manner, reducing the time and costs associated with identity verification processes and onboarding new users.

These eKYC processes are also important from the users' perspective. In addition to helping companies comply with regulations, eKYC allows organizations to improve their qualitative metrics (such as user experience) and quantitative metrics (conversion rates). Moreover, automating these tasks that were previously mainly manual, frees up and optimizes resources so that compliance teams can focus on other activities that bring even more value to the company.

How does the eKYC process work?

The eKYC process is based on the combination of technologies to remotely and securely verify the identity of customers. A process that, as we have seen before, can be done digitally and fully automated.

Although each implementation may vary depending on the specific needs of each company, an eKYC process usually includes these key steps:

1. Customer enrollment: The user registers on a platform or application by providing some basic information about their digital identity.
2. Document verification: The customer captures an image of their identity document (ID card, passport, or driver's license). Advanced algorithms are used to check for inconsistencies to ensure the authenticity of the document and extract the information accurately.
3. Facial recognition: Using facial biometrics, passive liveness tests are performed to ensure that the person trying to verify themselves is truly a real person and not a deepfake or a pre-recorded image.
4. Identity verification: The information extracted from the document is compared with external databases, and the identity of the documentation is cross-checked with that of the facial recognition. This confirms that the data is valid and there are no signs of fraud.

Once these steps are completed, the eKYC system will make an automated decision about the correct verification (or not) of the users' identity. An incorrect photo of the documentation or a problem during biometric recognition may require additional action. The best part of this eKYC process is that it can be completed in just a few seconds, about 30 in the case of Didit, which is a considerable improvement over traditional manual processes.

From a regulatory perspective, eKYC is the first step in complying with Know Your Customer (KYC) and anti-money laundering (AML) regulations, independent but obviously intertwined issues.

Advantages of implementing an eKYC system in your business

Implementing an eKYC solution in your business can bring numerous advantages, both from an operational and user experience perspective, as we have seen throughout the article.

These are some of the most notable benefits:

1. Faster and more efficient customer onboarding. With eKYC, you can significantly reduce the time needed to onboard new customers. Thanks to this automated system, most bottlenecks are eliminated and onboarding is accelerated.
2. Increased regulatory compliance and risk reduction. eKYC helps you comply with anti-money laundering (AML) and Know Your Customer (KYC) regulations efficiently and consistently. Common human errors during manual processes are eliminated, and it is ensured that all customers must pass this identity verification process as part of regulatory compliance.
3. Reduced operational costs. Automating the identity verification process with eKYC can result in significant savings compared to traditional manual methods. In addition, automated processes avoid paperwork, ensure regulatory compliance, and avoid potential fines.

GBTC Finance, one of our partners, talks about a 90% reduction in operational costs thanks to our free and unlimited identity verification solution. Read their story here.

1. Better UX during onboarding. Related to the first point, eKYC allows you to verify your customers quickly, easily, and from any location and device. This can help reduce drop-off and improve conversion and retention rates.
2. Scalability and global reach. With eKYC, you can verify the identity of potential customers from virtually anywhere in the world, without requiring them to be physically present in the country. In the case of Didit, we accept documentation from more than 220 countries and territories, allowing us to help businesses scale more internationally.

In this way, eKYC has become a strategic tool for companies in all sectors, as it helps them comply with regulations and allows them to verify users remotely, without requiring them to be physically present.

eKYC use cases: the industries that benefit the most

Remote identity verification is a versatile solution that can bring value to companies in virtually any industry. However, in some industries, its adoption is proving to be much more beneficial, mainly due to issues such as regulation, onboarding, or scalability.

These are some of the eKYC use cases:

• Financial and banking sector. Banks and fintechs are subject to strict Know Your Customer (KYC) and anti-money laundering (AML) regulations. eKYC helps financial companies comply with these requirements more efficiently.
• Telecommunications. Telecom operators must also comply with KYC and AML regulations when onboarding new users. But remote identity verification can also help operators solve new technological challenges: this is how eKYC helps eSIMs.
• Online gambling. Online gaming platforms must verify the identity of their users, ensuring that they meet the minimum age required by law. This is how identity verification can help online betting houses and casinos comply with KYC and AML regulations.
• Hospitality and traveltech sector. Manual check-in processes that cause long queues are outdated. eKYC can allow accommodation companies to remotely verify the identity of their users before they arrive at the facilities. This ensures compliance with regulations and offers an exceptional user experience.

4 keys to choosing the right eKYC solution for your business

Choosing the right eKYC solution is crucial to ensure that your business complies with regulations, optimizes its processes, and offers a satisfactory user experience. But how can you make sure you make the right decision?

1. Technological capabilities and integration. Make sure that the identity verification solution has advanced technologies, such as document verification, facial recognition, or liveness tests. Also, consider the ease of integration with your current systems.
2. Compliance with regulatory requirements. The eKYC provider you choose must guarantee compliance with the regulations of both the regions in which you operate and the industry in which you operate. We are talking about regulations such as KYC, AML, GDPR, or PSD2.
3. User experience. The identity verification solution you choose should be intuitive, fast, and frictionless for your users. What should you consider? Usability, verification time, or the possibilities to adapt to your specific needs.
4. Flexibility and scalability. Your business evolves, so your eKYC solution must also be able to adapt to your changing needs. Also, make sure that the solution you choose can handle peaks in demand without compromising stability or performance.

Didit: your free, unlimited, and forever eKYC solution

At Didit, we understand that security and trust are fundamental to the success of any business. That's why we have decided to offer our eKYC solution for free, unlimited, and forever. What's the reason? In this digital age, where generative artificial intelligence and deepfakes pose new challenges for identity verification, we believe that having a reliable KYC solution should not be a luxury but a fundamental right.

We tell you more about our free verification solution in this blog article.

How does Didit work? We combine advanced technologies such as document verification, facial recognition, or liveness tests to ensure that your customers are who they really claim to be. But what sets us apart is our commitment to accessibility and the democratization of this technology. It doesn't matter if you are a startup, an SME, or a large corporation, at Didit we believe that identity verification should be free and we are committed to it.

If you want to know more about how our platform can help your business comply with regulations, prevent fraud, and improve your user experience, don't hesitate to contact us. Our team will be happy to show you how Didit can make a difference in your identity verification strategy.