Why automating identity verification for onboarding is imperative

The automatic verification of someone’s ID is undoubtedly the first building block in the onboarding process of a digital customer. However, what is needed in this process and what should you be looking for in a tool? 

In a recent post by PassFort, the company looked into the process of onboarding and how the role of automation is and can continue to play a greater role in the process.

In the age of the pandemic, in-person KYC is becoming increasingly impractical in terms of both time and efficiency for the customer and the financial institution. As PassFort underlines, many customers now expect their KYC compliance experience to be digital now anyway.

According to PassFort, completing ID verification online is not likely to cause drop-offs in the process with genuine applicants – with the opposite likely to be true. Many financial institutions may be at risk of losing applicants if those people applying for products are unable to submit information digitally when they want to.

The firm said, “Financial institutions need a good, reliable way to verify a new customer’s ID online. Getting the basics right is so important because of the risk of fraud, money laundering, and other financial crime.”

The company cited research from last year that there were just under 190,000 cases of identity fraud in the UK alone. This was related to applications for plastic cards, with trends showing that instances of such fraud are only set to increase with the ongoing transition to digital financial services, online applications and automated onboarding.

Electronically verifying an official document can cover some of the basics of automated onboarding and risk management. This can include checking and verifying names and addresses.

In addition, PassFort noted that other more sophisticated checks can look for signs of forgery on an ID document, or even instances of fraud associated with a particular device used to make an application.

The aim, PassFort remarks, is to swiftly and confidently get a result for these checks first and to confirm IDs. Then, there is a clear pass or fail for the person applying for a product and the KYC or AML process can continue to complete onboarding.

To help create the most optimal and secure compliance experience online, using the right KYC tool is essential. This is where RegTech can come in. According to PassFort, using a RegTech solution that is digitally native to automate KYC checks creates efficiency for financial services businesses and convenience for customers.

PassFort claims that to minimise friction in this part of the due diligence process, a KYC platform needs to capture an individual’s document, such as a passport or driving licence, access data to automatically check or match the ID document and confirm whether the check has passed or failed.

The company added, “Another fundamental to look for in the technology used to automate ID verification is the ability to communicate directly with customers through the platform. It’s often necessary to request additional documentation and keeping it within the same process makes the experience seamless for the person checking and the person being checked.

“This integration of communication also has the benefit that once the new document is received the platform can continue the automatic validation process of the new customer’s ID – it doesn’t need a manual review process to complete due diligence.”

PassFort claims this level of automation minimises friction and enables applications to proceed through an onboarding journey with little to no human intervention. However, it also means trusted relationships with customers are initiated from the beginning of the relationship. In this, customers get a better onboarding experience, but they also know that you are taking time and care to manage your relationship with them and control risk.

The company concluded, “The aim should be to use automation in the majority of instances, ensuring a swift onboarding journey in most cases, while reserving the highly skilled and experienced compliance analysts’ time to work on cases that present a higher risk. This should create the right balance within the overall due diligence effort.”

Find the full post here.

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