Financial Institutions are facing technological advancement. The banks have gone online to deal with all their monetary services. However, the fraudsters have also found ways to take part in criminal activities through these online platforms. Identity theft has become more common than ever and money-laundering has become so easy due to online services. Information can be stolen from online accounts and hackers can use this information for blackmailing purposes or stealing. This is a stress that is not required by the companies anymore. The banking industry is in dire need to eradicate this problem. They must verify each and every customer before onboarding them. However, verification is also a very tedious process that can not only cost millions to them but can also prove to be inaccurate. This is why video identification is required. Video identification is the process of carrying out the KYC through a video-based interview online with a KYC expert. Let us talk about how video identification has helped the banks for fighting fraud.
Risks that banks faced
Consumer Sentinel Network states that identity theft has become a major part of criminals to use for their criminal activities. Identity theft cases in 2019 are reported to be more than 3.2 million and the loss faced was $1.9 billion.
FTC reported that 271,000 people have reported that claims that their information was wrongly used to start a new credit card account. Credit card fraud has been on the top of the list in regards to identity theft.
Following are the ways that banks can face fraudulent activity:
- In an attempt to steal a charge from a stolen card, fraudsters can steal the identity.
- Personal information like SSN numbers can be stolen and the fraudsters can use that information to open up a bank account. This way banks can face a lot of loss.
- Customers can ask for the money back and claim that they weren’t the ones who made the transaction. Banks have to reverse the transactions. This is called a chargeback.
- Banks can unknowingly get involved with money laundering activity and get their repute ruined due to it along with being charged penalties.
KYC requirement
KYC is the method that banks have to follow to check their clients’ identities.
According to The Bank Secrecy Act of the 1970s, all banks are required to record and identity verification of each and every customer before onboarding them. In case they fail to comply, they will face a large number of penalties and a risk of permanent closure of their business. If they suspect any suspicious activity, they must report to the authorities to carry out more investigations. These regulations were made to eradicate financial crimes.
However, verifying each and every customer can be time taking. The managing cost of a huge staff and then the operational cost of the KYC process can cost a lot to banks. The data security of the customers is also a concern since everything is managed manually. The accuracy of the KYC is not guaranteed either. This is why a more authentic solution is required.
Video KYC
This is a process of verifying each customer through a video call interview with a human expert. This process uses artificial intelligence and human intelligence to verify the customer. It can take only minutes and can verify the customer from the comfort of their home.
Here are some steps of the video identification process listed below:
- The customer has to fill a registration form online on the website.
- Once the form is filled, a video call is connected with a customer, and a KYC expert guides through the call.
- The KYC experts are authorized by the customer to record the call.
- Facial recognition technology is used to verify the face of the person.
- The document of the person is also verified through AI-powered technology.
- The document is matched with a previously submitted document to ensure the identity of the person.
- Once the process is completed, it is saved in the back office.
