KYC (Know Your Customer) or sometimes Know Your Client is a mandatory process to identify and verify the client’s identity upon opening an account. Banks ensure clients are who they claim to be. Use know your customer software to identify and avoid fraudulent activities through the following functions:

• verifying customer identities
• detecting suspicious patterns
• conducting risk assessments

A business can reduce the costs associated with:

• manual verification
• compliance management
• potential regulatory fines

The role of KYC

KYC software has a set of identity verification procedures through which a business authenticates the clients. Here are some of the role of KYC software:

• customer identification
• customer due diligence
• monitoring for suspicious activity

The initial role of KYC compliance is to protect businesses and financial institutions from being used as channels for:

• money laundering
• terrorist financing
• fraud
• other illegal activities

KYC protects customers against identity theft and legal consequences of unintended facilitating crime. KYC is a non-negotiable aspect of regulatory compliance in most businesses.

Driving efficiency with KYC software

Traditional KYC processes are time-consuming and boring. It involves extreme documentation and is prone to human delays and errors. In digital ecosystems, traditional security measures may fall short as financial crimes increase in number and sophistication. Sophistication and automation in compliance processes press priorities today.

There are the latest technologies that let KYC automation and simplify identity verification, namely:

• RPA. Robotic Process Automation is a process that was previously handled manually. These include collecting the following:
  • customer information
  • data entry
  • report generation

RPA is key in the following:

• reducing costs
• streamlining customer onboarding
• freeing up human staff

• Document verification systems. These systems use OCR (Optical Character Recognition) and NFC (Near Field Communication) to extract data from identity documents, such as:
  • ID cards
  • Passports
  • Utility bills
• Biometric identity verification. It is a secure and quick method to authenticate customer identities for KYC compliance. It has biometric indicators to integrate multiple gadgets, including:
  • Smartphones
  • ensuring convenience

Biometric technologies are user-friendly and are an effective weapon against identity theft. Biometric identity verification has features to make it more effective, such as:

• Liveness detection
• Facial recognition
• Voice recognition
• Fingerprint recognition
• Iris recognition

• Electronic IDs (eIDs). These are digital IDs issued by the government to allow customers to authenticate identities online without providing physical documents.
• Blockchain technology. The software offers a secure and decentralized ledger to store and share customer data, such as:
  • identity documents
  • proof of address
  • transaction information

Blockchains can facilitate KYC compliance procedures by meeting CDD and regulatory requirements.

• Artificial Intelligence and Machine Learning. AI and ML are valuable in:
  • automating KYC processes
  • enabling risk assessment
  • fraud detection
  • AI/ML tools can perform several tasks, such as:
  • analyze vast datasets
  • swiftly identify anomalies
  • flag potentially fraudulent activity in real-time

As a response to the demands of the changing regulatory landscape, businesses are increasingly leveraging KYC software to increase the accuracy and speed of KYC compliance.