Customer onboarding in the fintech industry is like a marathon with too many hurdles. The process involves a plethora of paperwork, in-person visits, and the persistent worry that you might overlook a crucial document. We present Video KYC, a novel approach that is revolutionizing the onboarding process.
Video KYC helps verify a customer’s identity with live video interaction. In this manner, they deliver an instant and efficient onboarding experience. No more tedious paperwork or in-person visits; it is perfect for the high-speed digital world we are seeing ourselves living in.
In this blog, we’ll find out how Video KYC enriches the process of customer onboarding, what types of fraud it prevents, its impact on financial institutions, and why it’s becoming a necessity for fintech companies.
Understanding Video KYC
Video KYC is a process of digital verification in which companies can verify identity through direct live video interaction. In this process, the customer will be required to submit identification documents such as a passport or driver’s license, and a verification agent or automated system will guide them through the same process. It integrates real-time video communication technology with document verification technology, guaranteeing the identity of the person on the other end of the communication is the same person who will subsequently appear to possess that identity.
The video KYC process thus involves steps:
- Initiating: Customers initiate the Video KYC process through a fintech app or website.
- Identity Verification: They present identification documents during the interview, and interview with a verification agent.
- Real-time verification: The agent authenticates the documents using advanced technology for facial recognition and passive liveness detection.
- Completion: Once the customers confirm their identity, the verification process concludes, allowing them to continue with their onboarding process.
How Video KYC Enhances Customer Onboarding in the Digital Age?
Consumers demand fast, efficient, and seamless services. Video KYC perfectly aligns with these expectations, while at the same time bringing in several advances to remote customer verification in fintech:
1. Immediate Verification
Video KYC allows for instant validation of the identity of the clients, directly within real-time usually in less than minutes. This is much faster than conventional KYC processes taking days or weeks sometimes. Fast turnaround helps the customers by speeding up access to services thereby helping in improving experience.
2. Easy Accessibility
Video KYC allows customers to do this procedure anywhere, provided there is a stable internet connection. Geographical constraints will fade, while onboarding will become the halls of everyday life. Customers can do so from any convenience within their walls, on the go, or almost anywhere.
3. Personalised Interaction
Since video KYC is an online video format, it can be customized. This “touch of human” interaction between customers and verification agents will help fill up the gaps in onboarding. This will allow customers to answer queries and doubts in real time, and strengthen the rapport of trust between customers, accelerating the process of their onboarding.
4. User Experience Simplified
Fintech can easily integrate Video KYC into remote customer verification, providing a consistent experience from the moment a customer expresses interest in a service. It streamlines the onboarding procedure by reducing the number of steps and providing clear instructions to the customer. This results in a more user-friendly and frictionless system, leading to a higher conversion rate.
5. Enhanced Security Parameters
Security is paramount in the age of digitalization. Video KYC will add an extra layer of security to the verification process of the customers. There is a sense of security for customers, as their identity verification is done by advanced technology with human oversight, which makes them more confident about the financial institution.
Compliance and Regulatory Considerations
KYC procedures are bound to regulatory frameworks which vary from one jurisdiction to another. Any noncompliance may attract huge fines and loss of licenses, hence it is important for fintech companies to ensure they strictly comply with the regulations. Video KYC is designed to pass such tough compliance standards, which makes it a highly desirable solution for these fintech firms.
Many supervisory authorities now allow Video KYC as an alternative to traditional methods. Provided that the process is in adherence with all the KYC guidelines, fintech companies can comfortably implement Video KYC solutions.
What Types of Fraud Can Be Prevented by Using Video KYC?
Video KYC is relevant in the fight against and reduction of fraud types. Among these, some of the most key fraudulent activities that can be dealt with Video KYC are as follows:
Identity Theft: Identity theft is an act of impersonation where a person takes on the identity of another to gain access to the victim’s account or services, normally financial. Video KYC deters identity fraud because one needs valid identification documents from the customers for verification in real time.
Synthetic identity fraud: Synthetic identity fraud is the creation of a new identity by using a mix of real and untrue information. Their stolen Social Security numbers fit together with fabricated facts to open the accounts.
Account Takeover Fraud: In the case of account takeover fraud, the bad guy accesses an already existing account of an individual by getting hold of that particular individual’s credentials, Video KYC adds one more layer of verification to the financial institution, which makes it difficult for the fraudsters to take over accounts without proper checks for identity.
Document Fraud: Document fraud is when false or photocopied identification documents are used to deceive financial institutions. Video KYC can scan all the identification documents placed before the verification agents for any marks of forgery.
Money Laundering: Video KYC prevents money laundering activities by making sure that financial institutions authenticate the identities of their customers. Companies while onboarding can ensure compliance with AML regulations and ensure that this exchange is not being used as a conduit for illicit financial activities.
Impact of Video KYC on Financial Institutions
The implementation of Video KYC is changing the face of financial institutions. Here are some key impacts:
1. Enhancement of Trust
By adopting video KYC, financial institutions indicate that they are keen on security and compliance. This comes with a sense of comfort for the customer since most customers would prefer a service that proffers them security. A good reputation for safety can go a long way in building loyalty and retention among the customer base.
2. Better Regulatory Compliance
Ever-growing regulatory requirements are posing challenges in sustaining such compliances by financial institutions. Video-based KYC fulfills the regulatory requirements and enhances remote customer verification in fintech through a simple solution. Financial institutions will thus have complete records of the verification process that will easily clarify doubts during audits.
3. Reduced Cost of Operations
Video KYC saves money by reducing the need for physical branches and manual verification procedures, which frees up resources for increased profitability.
4. Scalability and Flexibility
Video KYC solutions offer ease of scalability with fast growth in the customer base. Financial institutions can easily respond to increased demand without a succession of dramatic infrastructure changes. This is an advantage to the fintech industries, where customer expectations keep going up.
5. Data-Driven Insights
Video KYC empowers banks to collate useful data at the onboarding stage. Such data is analyzed to obtain insights into customer behavior, preferences, and trends. These insights can be used in developing and implementing marketing strategies, products, and strategies for the betterment of the business.
Fintech Revolution: Are You In or Out?
As we close this tour into video KYC, it becomes clear that this is the next wave and not some fleeting fad, it is the future of customer onboarding in fintech. Say goodbye to lengthy wait times and tedious paperwork, and welcome to identity verification from the comfort of your couch with a smile on your face. Video KYC strengthens security and simplifies processes, offering a pain-free experience.
Deepvue is well aware of the seamless and secure onboarding process. This is why we have designed the identity verification API that seamlessly integrates with Video KYC solutions, ensuring effectiveness and proficiency. Integrate our identity verification API with your Video KYC process and transform the way you onboard your customers, providing security, compliance, and a smooth user experience.
FAQ
How does Video KYC work?
In Video KYC, customers video call verification agents. The agent helps them validate their identification details by showing IDs, answering security questions, and validating personal details.
What are the benefits of using Video KYC for customer onboarding?
Video KYC hastens identity verification and further streamlines the process of onboarding a user. It enhances user experience, and security with real-time validation of identities, as well as amplifies fraud prevention and regulatory compliance.
What types of fraud can Video KYC help prevent?
Video KYC will protect against all cases of identity theft, account takeover, and even document forgery. Businesses can reduce significant fraud occurrences by performing real-time identity verification and verifying the video against the documentation.
Which businesses does the Video KYC apply to?
Video KYC would benefit banking, fintech, insurance, real estate, and online marketplaces. Video KYC can streamline and secure the onboarding operations of any sector that verifies identities.
