Key Considerations for Choosing eKYC Solution
Before we learn how to choose eKYC solution, you need to understand what eKYC exactly is. eKYC stands for ‘electronic Know-Your-Customer.’ It is more than a simple solution; it is a platform of several technologies including Optical Character Recognition (OCR), Face Matching, Fraud Detection, Liveness Detection, etc. Mostly designed for banks and financial institutions, eKYC solution make customers’ identity and activity is legitimate, and no fraud or money laundering are committed.
Types of KYC
To understand eKYC solution, you first need to break it down into various components that make it up. eKYC solution could be considered as an umbrella term incorporating a variety of different technologies within it.
- KYB (Know Your Business) is a subset of eKYC that helps verify companies as a whole, rather than individual customers. KYB is one of the most important eKYC component, as most banks and financial institutions have business clients as largest source of revenue. Banks need eKYC solution to ensure that the business they are working with is legitimate, can fulfill requirements, and is represented by the right person.
- CIP (Customer Identification Program) is the foundation of any eKYC solution. It’s where banks define the main framework and guidelines for verifying your customers are who they claim they are. CIP is the most traditional way to collect customer data, think of the forms in your mobile app that ask users to enter their personal details such as name, date of birth, address.
- CDD (Customer Due Diligence) has 2 categories: SCDD (Simplified Customer Due Diligence) and EDD (Enhanced Due Diligence). CDD is the process of analyzing in-depth information about customers with the provided data. It includes looking into their credit score and past credit activities(for individual customers) or business activity (for business clients) to estimate the customer’ risks.
- Digital onboarding is simply the process of verifying customers’ identities. KYC is now a must for banks. Gradually, banks are completely digitizing their digital onboarding. Now,eKYC does the busy work a human would normally have to do, checking documents and data against government records and stored information concerning a customer.
- Sanction screening / PEP checks look at local and federal law enforcement databases to prevent dangerous individuals. These screens are highly important. It’s because if banks conduct businesses with prohibited individuals, they can should several complex ramifications. These individuals are known as PEPs (Politically Exposed Persons) and a PEP screening is a more in-depth CDD check that distinguishes a normal customer from a dangerous one.
Establishing Requirements for Choosing a KYC Provider
It’s time to come to what you need in an eKYC solution. This process is not as simple as deciding what eKYC approach sounds best and going with it. It requires lots of planning. There is not necessarily a one size fits all eKYC solution. There are a few factors you need to consider when choosing an eKYC solution provider.
You need to know what regulations affect you. The banking industries have different regulations on what they can, and can’t do when it comes to eKYC, digital onboarding, and general customer interaction. Generally, you will need to do the research and consult a legal expert to have a good idea of what you need to do.
What experience do you want the eKYC solution to provide your customers/users? Depending on the bankings service you are providing you may want something more streamlined and easier to use. If you are concerned with security, regulations, and risk, you will want to look at a much more in-depth and secure form of eKYC solutions.
Conversion rate or risk reduction: what’s more important to you and your customers? A fast and convenient eKYC solution always has more security vulnerabilities than stricter solutions. You need to find an eKYC solution that can meet both your needs in terms of security and convenience.
When you select your eKYC solution, you also need to decide if you will go to multiple providers for different eKYC components (OCR, face matching, fraud detection,...) of it or if you want a one-stop provider to get an all-in-one eKYC solution. While diverse suppliers might be more specialized in each eKYC technology, you will have to bear the nuisance of coordinating with a lot of different vendors, contracts, and facilities. Instead, you can get an all-in-one package to facilitate everything.
Other than the above factors, you need to know what is important for you and your product:
- Is it important to you that only the right people are using your service?
- What countries are your customers from?
- How will your chosen eKYC solution fit with your user journey and your existing applications?
You could build an eKYC solution in-house, of course. But there are several reasons why you should choose to buy a package of eKYC solutions rather than building one.
How to Choose the Right Service Provider
If you have decided to purchase an eKYC solution, you now need to determine which kinds of features and services to use. Here are some key functionalities you should bring up when talking to your bidders.
Enable Auto-ID Capture
Your eKYC solution should be able to automatically captures the user ID once it is clear and properly positioned in the camera frame, which helps to eliminate extra steps and increase accuracy. This simple functionality can help banks increase by as much as 30% acceptance rate compared to manual ID capture.
More Capture Channels
Allow your users to open accounts via APIs, mobile SDKs (apps), and mobile web. This is especially critical if you're attempting to reach out to a variety of populations that like different types of media.
Provide Clear Instructions
Give users context and justification for why they need to go through the identity verification procedure. Don't use jargon and frame it in a good manner.
Eliminate Unnecessary Screens
As much as feasible, make the user journey as simple as possible. Conversions are higher when there are fewer screens. "The most important feature of a great account opening experience is speed - the faster an account is started, the less likely the consumer is to demand anything better." (Deloitte).
Read more: Must-have Features of an eKYC solution
Provide Instant Feedback
When an ID or identity is refused, look for an identity verification solution that delivers precise rejection codes. This allows the user to immediately change their path, retake their photo, and resubmit their ID. In fact, providing precise feedback in real time has been shown to increase onboarding conversion rates by 15%.
Utilize Intuitive Liveness Detections
The practice of establishing if someone is physically present during a transaction is known as liveness detection. It forms the chain of trust and anchors the digital identity of a genuine person if you can verify liveness. Additionally, it aids in the prevention of phony account creation by fraudsters, spoofs, deepfakes, and bots.
Reduce the Need for Manual Review
Make sure the identity verification system you're using provides clear yes/no replies. "Maybes" lead to time-consuming manual assessments on your side to ascertain if the consumer is authentic or not.
Finally, while approaching a KYC organization, keep rules in mind first and foremost. The finest system in the world is useless if it does not adhere to regulations. The finest solution for you is one that satisfies all of your requirements and adheres to all of your safety and regulatory requirements.
At KMS Solutions, we provide an end-to-end eKYC solution that helps banks and financial institutions provide a user-centric, convenient onboarding experience while ensuring a high level of security. Contact us for a demo now.