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Best KYC Practices for Businesses in 2024

May 8, 2024

Key takeaways


1. The KYC process is essential to protect businesses from fraud and comply with increasingly strict regulations.

2. The latest trends in KYC include reusable digital identity management and the use of artificial intelligence to detect document forgeries.

3. When choosing a KYC software, it's important to look for solutions with advanced technologies such as biometrics and AI, decentralized data management, automation, and regulatory compliance.

4. Collaborating with an external provider specialized in identity verification, such as Didit, can optimize KYC processes and offer a smooth and secure user experience.

The KYC process has become essential for all businesses. According to the United Nations, money laundering and fraud move between 800 billion and 2 trillion dollars annually, representing between 2 and 5% of global GDP. This figure reflects that no organization, regardless of its size, is safe from financial threats.

However, the KYC (Know Your Customer) process has become the fundamental shield to protect companies and ensure the integrity of the financial system. Artificial Intelligence, biometrics, and other technologies are helping to revolutionize the sector, making this process more secure, efficient, and market-focused.

This identity verification process can become the key to your business success. KYC helps you comply with increasingly strict regulations, better understand your customers, prevent risks, and make smarter decisions: a robust verification system helps you build longer-lasting relationships and protect your reputation.

That's why, in this post, we'll share some of the best practices being implemented to protect your company against fraud, and we'll explain how Didit can become your strategic ally.

Regulations related to identity verification are becoming increasingly strict. In order to combat money laundering and create trusted environments, legislative frameworks are becoming more rigorous.

The eIDAS regulation, which establishes a common legal framework for trust services and means of identification within the European Union, is a clear example. But there are many more. For instance, the MiCA regulation aims to establish regulations for the management of crypto-assets, while the AML directives (the latest version being AML6) deal with the fight against money laundering and terrorist financing.

Thus, the latest trends must not only adapt to this changing regulatory environment but also offer users a brilliant experience.

Artificial intelligence and biometrics are key technologies in identity verification, as they enable the detection of document forgeries and secure and accurate user authentication

From Digital Identity Management to the Rise of AI for Identity Verification

This is where the digital identity of individuals becomes relevant. More and more KYC and identity verification services are taking into account the respect for this electronic representation of individuals, to the point that the concept of reusable digital identity is gaining traction. What does this mean? Your users will not have to repeat the verification process if they already have their credentials verified and will be able to enter your service with total security and regulatory compliance with just one click.

Artificial intelligence (AI) is becoming increasingly important in this entire process of validating people's identities. This development continuously trains to detect forgeries of official documents, such as ID cards, passports, or driver's licenses. This development helps improve the accuracy and reliability of verification systems.

5 Tips for Choosing the Best KYC Software

If your business requires an identity verification process and you are looking for a KYC service, here are 5 tips to help you choose well among all the options. All of them will help you offer an effective and secure onboarding to your visitors.

1. Adopt solutions that feature advanced technologies In the fight against identity fraud, technological advances are your best allies. When choosing a KYC software, make sure it incorporates cutting-edge technologies such as biometrics and artificial intelligence. Biometrics, which includes facial recognition or fingerprint verification, enables secure and accurate authentication of your customers' identities. On the other hand, AI can be applied in various ways, from detecting forgeries in official documents to analyzing suspicious behavior patterns. Moreover, the combination of biometrics and AI further enhances the effectiveness of verifications.

2. Decentralize identity data and document management The market is moving towards decentralization. Not only for the privacy and security of people's information but also for the ease that this type of technology provides when working with different entities. When choosing a KYC software, look for those that allow you to manage identity data and documents in a decentralized manner. Thanks to these entities, you will be able to request only the information necessary to validate your users without them feeling that you are invading their privacy. All this, of course, while complying with data protection regulations.

3. Conduct periodic audits and optimize processes To ensure the proper functioning of your business and comply with regulations, it is essential to conduct periodic audits of your KYC processes. That's why you should opt for an identity verification software that gives you the necessary tools and data to thoroughly analyze the performance of the processes you carry out on your site, in order to identify potential bottlenecks and opportunities for improvement.

4. Embrace automation to improve efficiency and user experience Manual verification processes are obsolete. That's why you should opt for an automatic KYC system, as it will allow you to increase the efficiency of your business and exponentially improve the user experience. This way, you will eliminate possible human errors, easily detectable with AI (for example), and you will be able to allocate resources where they really matter: to boost your business.

5. Outsource processes with industry specialists who have cutting-edge technology The key to taking your identity verification processes to the next level is to collaborate with external providers specialized in identity verification. These services have the experience and cutting-edge technology to optimize processes and ensure regulatory compliance, adapting, of course, to the unique and exclusive needs of your business.

How Didit Helps Businesses Verify User Identities

If your business needs to verify identities, Didit is the best KYC solution on the market, both for security and regulatory compliance, as well as for user experience. With Didit Business, you will find a development that allows you to meet the need to validate the identity of your users, adapted to the specific needs of your business.

Our technology for verifying identities is the most advanced and secure on the market. Why? The core of Didit is the combination of NFC (Near Field Communications) technology, OCR (Optical Character Recognition), biometrics, and artificial intelligence, which together form a virtually unbreakable formula.

How? Thanks to OCR technology, we read the information on government identification documents and, thanks to NFC and the chip included in them, we contrast this data with the information. Then, our biometric system powered by AI allows us to confirm that the person is who they claim to be. And all this, optimized with a machine learning development that improves with each verification attempt carried out. And, in case a user has already been verified, they will be able to enter your platform already verified in just three seconds.

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Didit offers an automatic and secure identity verification solution that combines advanced technologies such as NFC, OCR, biometrics, and AI, and complies with the strictest regulations, such as eIDAS 2 and MiCA.

An Automatic System that Respects the Strictest Regulations

As if that were not enough, Didit allows you to put your identity verification process on autopilot for your business. What does this mean? You won't have to worry about performing this process manually, as our technology is capable of carrying out the entire process on its own.

Moreover, it complies with all the strictest regulations on digital identity and respects people's privacy. Because Didit complies with regulatory frameworks such as eIDAS 2 or MiCA, to name a few of the most recent ones.

Conclusion: Find a Reliable Partner to Stay Up-to-Date Technologically and Regulatorily

In summary, the best KYC practices for businesses in 2024 involve staying up-to-date with the latest technological and regulatory trends, adopting advanced solutions such as biometrics and AI, decentralizing identity data management, conducting periodic audits, embracing automation, and considering outsourcing processes to industry specialists. Implementing a robust KYC process is not only crucial for complying with increasingly strict regulations but also offers significant competitive advantages, such as better customer understanding, risk prevention, and smarter decision-making.

In an increasingly digitalized and complex business landscape, having a trusted partner like Didit can make a difference in optimizing KYC processes. With its unique combination of advanced technologies such as NFC, OCR, biometrics, and AI, Didit offers an automatic, secure, and regulation-compliant identity verification solution. Moreover, its user-centric approach ensures a smooth and efficient onboarding process.

Want to know more about us? Schedule a meeting with our team and start applying identity verification best practices in your business


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