Know Your Customer (KYC) processes are essential for businesses to verify customer identities and prevent fraud. However, traditional KYC methods like physical documents and in-person verification can be time-consuming, expensive, and frustrating for customers.
That’s where eKYC (electronic Know Your Customer) comes in. eKYC allows businesses to digitally verify customer identities in real time using technology like document authentication, biometrics, and artificial intelligence. When implemented properly, eKYC can significantly improve customer onboarding and ongoing compliance.
In this article, we’ll explore some best practices for leveraging eKYC to achieve fast, seamless, and secure customer onboarding.
Use Omnichannel Data Collection for ekyc
The first step in eKYC is collecting customer data. Offer omnichannel options for submitting KYC documents and data:
Online forms – Allow customers to complete profiles and upload documents through web forms and mobile apps.
Email – Customers should be able to send required KYC documents and data via email. Ensure your email system is secure.
In-person – Maintain some in-person locations where customers can submit documents and biometrics. This provides an option for those without digital access.
Assisted digital – Have call center agents and local partners available to help customers complete eKYC digitally if they struggle to do so alone.
Omnichannel data collection meets customers wherever they are and provides a smooth onboarding experience.
Utilize Document Authentication Technology in ekyc
A core component of eKYC is using technology to authenticate government-issued ID documents. This prevents fraud from fake or forged documents.
Optical character recognition (OCR) software can extract data from ID photos and match it against fields the customer fills out. More advanced document authentication goes beyond OCR to verify security features like holograms and watermarks.
Make sure your software keeps up with changes to ID documents and security features. Partnering with a specialist authentication provider can help ensure your technology stays up to date across different document types and geographies.
Incorporate Biometric Authentication
Biometrics like facial and fingerprint scanning add another layer of identity verification to eKYC. The customer scans their biometrics which are cross-checked against the government IDs they submit.
Facial recognition matches their selfie to the photo on their passport, driver’s license, or ID card. Fingerprint authentication ensures the person submitting the documents is physically present.
Biometrics provides reliable digital identity verification. However, make sure you comply with regulations regarding biometric data privacy and consent. Allow customers to opt out of certain biometric collections if desired.
Leverage Artificial Intelligence and Machine Learning
Artificial intelligence (AI) and machine learning algorithms can be applied throughout the eKYC process to automate and enhance verification. Here are some examples:
Data extraction – AI can pull typed data from ID documents with higher accuracy than just OCR software.
ID authenticity – AI models can be trained to spot fake IDs by detecting abnormalities not visible to the human eye.
Facial recognition – Machine learning improves the accuracy of matching selfies to ID photos, even with changes in age, hairstyle, and glasses.
Document classification – Computer vision algorithms can automatically categorize different identity document types as they are submitted.
The more data you feed into your AI systems, the smarter they become at flagging inconsistencies and expediting verification.
Provide Real-Time Results and Feedback
Customers expect fast digital experiences. Build capabilities to deliver eKYC results in real time:
- Instantly approve and onboard customers with positive verification.
- If verification fails, immediately notify customers and explain the reason. Providing quick feedback allows them to correct issues faster.
- For pending results that require manual review, show progress trackers and estimated wait times. Avoid leaving customers hanging in limbo.
Smooth user experience requires optimizing every step, from automated document scanning to smart data extraction and analysis. Position eKYC as a rapid gateway to your products and services.
Enable Secure Data Sharing
To avoid repeating eKYC processes, customers should be able to securely share their verified identity and documents with other businesses. Solutions like blockchain and zero-knowledge proof cryptography enable this data portability while maintaining privacy.
Standards are emerging around decentralized digital identity networks powered by secure data sharing. Participate in and integrate with these networks so customers can reuse their eKYC data across multiple providers.
Consent mechanisms must be robust so customers stay in control of their data. However, removing redundant re-verification makes for truly seamless onboarding.
Continuously Monitor and Optimize
Apply analytics to monitor your eKYC system performance. Look for process bottlenecks impacting customer drop-off and abandonment.
Common optimization targets include:
- Improving data extraction accuracy
- Reducing manual review rates
- Speeding up biometric matching
- Decreasing decision times for flagged cases
Update algorithms, add data sources, and refine rules to enhance automation rates. The more your system learns, the better it will become at securely onboarding customers.
Maintain Human Oversight
While properly designed automation is highly accurate, have staff oversee eKYC operations and make final decisions.
Humans are still better at contextual judgment for complex cases. Manual reviews of flagged customers, backed by analytics, prevent bad risks from slipping through.
Oversight also ensures algorithms don’t inherit human biases. Rigorous governance and auditing are key, especially for facial recognition and other AI-powered systems.
The right mix of people and technology combines digital convenience with human discernment.
Prioritize Data Security and Privacy
With eKYC collecting personal data like government IDs, address history and biometrics, data security is paramount.
Follow best practices like:
- Encrypting all sensitive data in transit and at rest
- Restricting access to confidential data to essential staff
- Masking/tokenizing raw personal data where possible
- Using trusted cloud infrastructure with defense-in-depth models
- Frequently auditing systems and access logs for anomalies
Moreover, be transparent about data practices and allow customers to delete accounts and associated eKYC data. Make privacy a top priority to maintain trust.
Verify Against Sanctions and Watchlists
Screen customers against the latest international sanctions and regulatory watchlists as part of the eKYC solution.
Checks should include:
- Politically exposed persons (PEPs)
- Global terrorist lists
- Transnational organized crime lists
- Country-specific sanctions
These checks help identify high-risk individuals and prevent financial crime. Automate this screening using reliable data sources that are updated continuously.
Support Regulatory Compliance
Know and comply with all eKYC regulations for your jurisdictions. These include data residency, consumer consent, biometrics usage, automation transparency, and non-discrimination rules.
Regulators are still adapting to govern new eKYC technologies. Build robust compliance programs and anticipate heightened oversight. Conduct rigorous impact assessments before deploying AI algorithms.
Stay ahead of changing regulations through industry partnerships, legal expertise, and active policy engagement. Smooth compliance ensures that the benefits of eKYC outweigh the risks.
eKYC delivers major advantages over traditional KYC, from customer experience to cost reduction. But realizing its full potential requires optimizing processes, technologies, data practices, and oversight. Companies that follow these eKYC best practices will gain a competitive edge through fast, seamless, and secure digital onboarding.