Remote Identity Verification: Automated Onboarding & Continuous KYC

In 2017, one-third of the US population received a data breach notification—for instance, the Experian data breach exposed personally identifiable information for 143 million Americans per a NY Times article. As the supply of PII information increased and the cost decreased to as little as $4 per PII record (theconservation.com), nefarious actors found it easier than ever to open accounts under stolen or synthetic identities.

To mitigate the issue certain Financial Institutions are implementing more strict Know Your Customer (KYC) procedures but often at the expense of the customer’s experience or low-risk customers, specifically underserved or protected groups.

With a robust KYC program being the cornerstone of an effective BSA/AML compliance program and its criticality when protecting a Financial Institution from being a conduit for money laundering and terrorist financing, leading FIs are rethinking the KYC process to balance (1) experience, (2) effectiveness, and (3) efficiency by leveraging orchestration and remote identity verification technology.

Industry Trends

?63% of prospects fail to complete a new account application online due to high friction partially due to KYC and fraud challenges

80% of customers cite poor digital capabilities as a reason they moved to new FIs

At the same time…

Fraudsters are using stolen or fake identities to open drop accounts where they temporarily store stolen funds or sell on the dark web.

Industry Challenges

Manual identity verification is costly, time-consuming, prone to human error, and vulnerable to cultural bias. Besides, it simply can’t scale to support a growing customer base specifically with the acceleration of digital adoption post the recent pandemic.

Identity silos created by disparate customer identity and access management (CIAM) solutions compound these problems. It’s vital to assess risk and trust across the full identity lifecycle, well beyond onboarding as fraudsters are taking advantage of this by testing controls in all channels for weakness.

Solution

As noted above, leading Financial Institutions are leveraging remote identity verification tools such as Transmit Security and Socure to increase assurance while cutting costs and complexity. To prove users are who they claim to be, these tools rapidly verify:

The users’ government-issued IDs are valid

The correct person associated with the verified ID is interacting with the financial institution.

The individuals are not on a watchlist (some orchestration capabilities are needed). Some financial institutions leverage watchlists (internally created or from a consortium) to deny known fraudulent entities before processing the data in other vendor tools to reduce costs.

While these tests are performed during onboarding, the value of these tools is further enhanced when risk evaluations are performed continuously throughout the customer lifecycle automating the re-verification process. (For more details, please send me a message)

Key KYC Benefits

?Enroll more customers. An assisted self-service journey makes it easy for customers to establish trust. More people enroll if given only a few simple steps.? This is made possible by AI-powered digital identity-proofing solutions integrated with internal and external data.

• Re-verify on demand. Dynamic risk mechanisms continuously monitor customer behavior in real-time triggering the right response at the right time with automated customer journeys
• Simplify compliance. Rigorous but rapid background checks screen global watchlists, PEPs, etc. Know your customer (KYC) with confidence enabled by a consolidated identity technology stack.
• Prevent account fraud. Biometric matching, liveness detection, vision AI, and other smart tools discern if the individual, their documents, and their photo ID are legitimate.

Verify legitimate customers quickly

Deep document inspection examines every detail to discern if the ID is authentic and unaltered. Biometric matching compares the selfie and ID photo to determine if they match. Automated background checks rapidly screen AML & PEP watch lists — so you don’t have to.

Using remote ID proofing to your advantage

• Onboard customers with high assurance - Confirm if the customer really is who they say they are — before they open an account and transact with your business.
• Re-verify users on demand - Ask for proof of identity again during KYC refreshes, before high-stakes transactions, account recovery or anywhere you experience elevated risk.
• Taking an omnichannel approach where identity can be confirmed at the branch, the contact center, and online seamlessly with little friction.? We’ve seen the application of this tool to help mitigate the risk of check fraud.
• Reducing costs at the call center.? In addition to KYC benefits, these initiatives are often self-funded.? For instance, these systems can also help authenticate at the call center reducing the average call duration.? Some clients have seen over a 5-minute?drop in call time and some have eliminated forgotten password calls, saving millions.

Call To Action

If you are looking for a sample customer onboarding journey applicable to top-20 banks, Click here to get the sample customer journey.

Disclaimer:

The views expressed are solely mine and do not represent those of my employer, EY.