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5 Benefits of e-KYC for Digital Banking Verification

5 Benefits of e-KYC for Digital Banking Verification

February 19, 2022

During the digital transformation in the past years, we have seen technological innovations in almost every aspect of our lives, and banks are no exception. Customers look forward to the system moving from traditional and manual to open and digitized. This one resulted in various banks starting to digitize and automate their operational processes, including customer onboarding that implements the Know Your Customer (KYC) process.

Digitizing the KYC process is crucial for businesses in the BFSI (Banking, Financial Services, and Insurance) sector. The aim is to be different and lead the whole market. That’s how we get the term "electronic know your customer", a paperless solution leveraging innovative technology such as Artificial Intelligence and Machine Learning to digitize the manual identification process.

There are many advantages that digital banking companies can benefit from by incorporating e-KYC in their  process. Let’s take a look at them below!

1. Readily accessible online banking services

Customers don’t have to visit the branch office to face-to-face verify their identity. Using the e-KYC process, banks can use human biometric authentication to verify customers’ identities remotely. Therefore, the whole process is shortened, providing a simple and convenient way to customers and banks.

E-KYC platforms can be extremely helpful for peer-to-peer lenders, crowdfunding platforms, online lenders, and credit scoring organizations. Case studies on these platforms show that they have a positive effect on the lending market as a whole.

2. Faster digital onboarding process with eKyc solution

Digital bank companies can reduce the time needed to ask customers for their data or documents. If the KYC process requires customers to manually fill in the personal details in the application form, this has been replaced by eKYC. Banks can leverage customer data more effectively while customers enjoy fast onboarding. Banks can also provide a more consistent customer experience and get them ready to transact, save, or trade faster using eKYC utilities.

3. Reduces fraud and operational risks compared to traditional KYC process

Compared to manual human input, many aspects of KYC can be automatized by technologies such as Artificial Intelligence and Machine Learning. Thanks to the technologies, multiple eKYC checks can be performed simultaneously and in real-time. Biometric recognition can help reduce the risk of breaches, fraud, money laundering, and terrorism financing.

This process is operational 24/7 and 365 days a year. It can automatically monitor accounts to verify if the user is behaving strangely. Security risks will be eliminated as well since there is no more room for manual error from keying and re-keying the same information from multiple systems, helping banks reduce fraud, laundering, and operational risks in the digital onboarding processes. The side effect of this is probably an increase in the trust level towards the financial service provider.

4. e-Kyc verification prevents document and information loss

Since it’s a paperless process, the e-KYC due diligence system eliminates the need for physical document management. This is great for ESG. Essentially, it means conventional banks can now reduce their carbon footprint by being mindful of how a business decision can affect the environment. Also, because e-KYC uses cloud-based cutting-edge technologies to gather, analyze and secure customer data to prevent data loss and ensure privacy. By reducing paper usage, e-KYC also helps reduce the total costs for KYC compliance, solving the overloading of documents and papers problems.

5. It saves time, reduces friction and improves customer experience

Dealing with customers means you must prioritize their experience to ensure they won’t abandon the process. According to the Signicat report, almost 2 in 3 people leave banking onboarding processes as a result of the methods being difficult, taking too long, and needing to provide too much personal information. This shows that poor onboarding experiences will actually harm your brand.

By replacing banks’ KYC processes with e-KYC in the digital onboarding process, customers can verify their identity online. Since the verification is faster and easier, there is a chance that they will buy additional services if a paper-based identity is not needed. Moreover, e-KYC helps banks’ staff perform customer support more quickly, efficiently, and accurately.

Fintech evolving things via digitization and automation have brought many new opportunities for the BFSI industry. By applying the e-KYC products in their process, digital banks will become more agile and can offer instantaneous onboarding experiences to their customers. This will be a significant advantage for the business, where they can meet their financial regulations quicker.

Overall, digital banking should consider this easy-to-use software solution that can improve the onboarding experience. Just like Ayoconnect, the largest open finance platform in Southeast Asia, our API service integrates with various platforms in Indonesia to provide companies with accurate data to conduct the e-KYC process. To know more, visit our website now!