Secure transactions are the customer’s right, which can be fulfilled if the companies comply with KYC regulations. Fraudulent activities can also be blocked through it.
KYC has now become the standard for business; not just financial institutions require it, but it is also used in other industries. Knowing your customers and partners is very crucial for the business. If a company does not know its customers, it can get the business into serious trouble. As it will increase the financial risk of the company. The data of the customer must have to be safe and secure; the company’s responsible for protecting the customers’ credentials from hackers. As this digital era has created ease for people, it also has given rise to cyber attacks. Scammers are advanced now; they decode passwords and steal user data. Companies must implement KYC solutions to mitigate all kinds of digital scams.
What is KYC?
Verifying a customer or partner before commencing business or partnership is known as KYC. It has become obligatory for the company to get their customers verified through online KYC verification because cyber crimes are increasing daily, affecting the country’s overall economy. The state of Telangana in India has the highest number of cybercrime cases; in 2021, more than ten thousand cases were reported in it. In 2016, the country reported an overall 12 thousand points, while in 2022, a significant increase can be seen. Almost 52 thousand cases were recorded in 2022.
How Does KYC Verification Work?
Various methods are involved to verify documents; here, we will discuss the most common procedures involved in this verification.
Documents are verified using automated KYC verification; this step verifies the user’s identity card, passport and driver’s license. This is also used in onboarding customers; client documents are uploaded and scanned.
In this type, online KYC verification uses the unique features of the customer to verify. These special features involve voice, fingerprint and facial recognition. This type of automated kyc verification is a mainly used solution.
In this type of verification, the information the user gives is matched against the data in the database. For example, the user’s name, address or identity card number is checked to confirm whether the information provided is correct. Politically exposed persons can be identified in this type of verification.
Advantages of Digital KYC Verification
Traditional ways to onboard and verify customers were very time-consuming. They were slow, and human resources were also required for it. While this automated kyc verification is rapid, this operation can be performed in seconds. No manual interference is required for it; the system can perform this whole task in seconds.
KYC verification online is very accurate, and the chance of mistakes is significantly less, while previous methods were prone to human error. The errors increase the cost of the business, so these solutions can be used to reduce the company’s expenditures.
These solutions can be changed according to the size of the business. If the company’s size increases and more customers are added to it. Managing all the data would be complicated and hectic for the human resource. Automated kyc verification can take this responsibility and control the data using its algorithms.
Prevent Fraudulent Activities
It prevents all kinds of fraudulent activities; scammers use stolen accounts and identities to perform illegal acts. If the user’s identity is verified and saved in the database, it would be impossible for the hacker to commit cybercrime.
Some businesses have to adhere to the KYC verification regulations. Otherwise, they have to face heavy penalties. Therefore, companies must execute digital kyc verification and prevent themselves from heavy fines imposed by the government.
Online KYC verification increases the companies’ security; only verified persons can enter any territory.
KYC verification can be used as an alarm, as it can be installed in any location where only authorized persons can enter. Any suspicious activity will be noticed and the police will be informed simultaneously.
Rapid digitalization has helped businesses increase their revenue, and this increase in profit has attracted the attention of many cyber thefts. These scammers hack the accounts, steal data and are involved in illegal activities. KYC is used to protect the business from all these kinds of fraudulent activities and get the company regulated with Anti Money Laundering (AML) regulations. The fake identities of the scammers can be identified through KYC verification. Businesses can build the customers’ trust if their data is secure and safe. Satisfied clients recommend the business to their family and friends, this will improve the brand image