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Key takeaways
KYC automation is essential to optimize identity verification and comply with increasing regulations. Adopting automated KYC solutions allows streamlining processes, reducing costs, and improving user experience.
Manual KYC processes are outdated and generate inefficiencies, errors, and high abandonment rates. Automating KYC with technologies like AI and machine learning allows processing more customers quickly and accurately, reducing operational costs by up to 30%.
Implementing an automated KYC solution offers 6 key benefits: increased efficiency, cost reduction, better user experience, regulatory compliance assurance, more secure processes, and adoption of new technologies like reusable KYC.
Key technologies in KYC automation are document verification, facial recognition, and AML screening. Combining these functionalities enables secure, efficient, and compliant digital onboarding.
KYC automation has become a must for many companies looking to optimize their identity verification and regulatory compliance processes. The regulatory environment is becoming increasingly demanding. In fact, more than 90% of companies consider KYC/AML regulations to be stricter than 5 years ago. That's why automated KYC solutions are becoming a real lifesaver for many companies.
Manual identity verification processes are outdated. These procedures generate bottlenecks that are difficult to overcome, human errors, and a poor user experience. The consequences are clear: cost increases of more than 30%, higher risk of regulatory sanctions, and a drop-off rate during the process that can reach up to 40%.
Given this situation, KYC automation is a solution to address all these problems. But what does automating the KYC process entail? What tangible benefits does it really bring to organizations that have implemented these processes? How can you successfully implement it in your business?
In this article, we'll answer all these questions and delve into 6 key benefits that are unlocked by adopting an automated KYC solution. Get ready to revolutionize onboarding with automatic KYC in your business.
KYC automation refers to the process of using digital technologies and software solutions to optimize identity verification (KYC) processes and ensure regulatory compliance.
Traditionally, KYC processes have been performed manually, which involves collecting and verifying identity documents, reviewing watchlists, and assessing the risk of each customer on a completely individual basis. It was the solution that existed. However, this approach is inefficient, error-prone, and difficult to scale in today's world, where digital transactions are the order of the day.
KYC automation addresses these problems. Thanks to advanced technologies such as Artificial Intelligence (AI) or Machine Learning, these identity verification processes can be streamlined and optimized. This way, companies can process a larger volume of customers quickly and accurately, reducing operational costs and improving user experience.
Another reason: working with an automated onboarding and KYC service helps organizations stay up-to-date in an ever-evolving regulatory landscape. As regulators impose stricter requirements for customer due diligence and anti-money laundering (AML), automated identity verification solutions allow businesses to quickly adapt to new requirements and ensure regulatory compliance more efficiently.
Implementing automated KYC solutions offers a series of significant benefits for companies looking to optimize their KYC/AML processes. Here are the six main key benefits that adopting automatic identity verification can bring to your business.
One of the clearest benefits of KYC automation is the ability to streamline and optimize digital customer onboarding processes. By putting manual and repetitive tasks such as collecting and verifying identity documents on autopilot, companies can significantly reduce the time needed to complete KYC procedures. The result is faster, smoother onboarding that improves the customer experience, which usually favors conversion.
Moreover, automating the KYC process frees up resources and allows compliance teams to dedicate more time to higher value-added tasks, such as risk analysis or strategic decision-making.
Automated identity verification also has a significant impact on reducing operational costs. By reducing reliance on human resources, companies can optimize labor and infrastructure costs. Additionally, putting identity verifications on autopilot minimizes human errors and inefficiencies associated with manual errors, reducing costs related to these corrections and avoiding regulatory sanctions.
Offering onboarding with automatic KYC has a positive impact on the customer experience. By streamlining processes and reducing wait times, companies can offer a smoother and more satisfying experience for their customers. Automated KYC processes allow for more efficient and accurate data collection, which also avoids the need for repetitive interactions and additional information requests.
These KYC solutions offer very intuitive interfaces, allowing customers to complete the processes remotely and autonomously (also known as eKYC).
Automated identity verification plays a crucial role in ensuring compliance with all regulations. By automating identity verification processes, companies can ensure that KYC policies and procedures are applied robustly and consistently, minimizing the risk of human errors.
Automated KYC solutions allow for different levels of customization and rules based on the latest regulatory requirements. This ensures that all customers are subjected to the appropriate level of due diligence.
Furthermore, automated KYC tools facilitate report generation and audits, allowing companies to monitor and audit their internal identity verification processes.
Automating KYC contributes to significantly improving identity verification processes. Automated solutions include advanced features, such as data encryption, continuous monitoring, as well as other advanced algorithms that combat fraud during the verification process, such as document verification or facial recognition.
These controls are especially important in this context of growing threat of financial fraud or identity theft. A good example of this is this article from El País, which talks about the surge in the use of deepfakes (article in Spanish).
The possibility of embracing our technologies, such as reusable KYC, is another advantage of automated identity verification. This development, for example, is based on allowing the reuse of previously verified credentials in other trusted services, and enabling secure and efficient onboarding with a single click.
Thanks to automating onboarding, customer information collected and verified during an initial KYC process is securely stored and encrypted. This information can be easily retrieved and reused, as many times as desired (and as long as the verification lasts), for future interactions with the customer. This eliminates the need to continually repeat identity verification processes from scratch.
What are the technologies that automated KYC solutions rely on? Mainly, two: document verification and facial recognition. Although for greater security and regulatory compliance, it is advisable to have an AML Screening service, which lays the correct foundations for the commercial relationship we are about to establish with users.
Automated verification of identity documents is the first key component within eKYC or remote and automatic KYC solutions. Thanks to different advanced algorithms, the authenticity of identity documents presented by users is validated, and key data necessary during the verification process is extracted.
Artificial intelligence and biometrics play a fundamental role during the facial recognition phase. The combination of these technologies is key when automating KYC. Through liveness tests, the presence of the person trying to verify their identity is ensured; providing security to the process and avoiding potential deepfakes.
To add even more security to the process, many automated solutions offer AML Screening to comply with anti-money laundering regulations. Verified identities are cross-checked against various global databases, looking for Politically Exposed Persons (PEPs), sanctions or watchlists, and adverse media. This information allows companies to make qualified decisions about accepting or rejecting an identity, and apply appropriate due diligence measures.
There are numerous use cases of companies that have incorporated automated KYC onboarding processes. One of them is GTBC Finance, which reported a 90% decrease in operational costs compared to their previous provider after integrating Didit.
Additionally, they have also reduced support tickets related to KYC/AML processes after partnering with our automated KYC solution.
Didit offers a free, unlimited, and forever identity verification solution. If you want to know how we can help you with our automated KYC solution, contact us by clicking on the banner below. We'll answer all your questions and you'll start optimizing all your processes!
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