Online KYC Verification – Redefining the Future of Identity Verification
From banks with no physical branches to gamers who entertain millions worldwide, one standard connection powers these futuristic technologies. However, online KYC solutions reduce the need for physical visits to verify identities. Institutions that deal with financial transactions remain the biggest victim of this lack. This gap is where the connection forms; online KYC verification allows these technologies to prosper.
With an estimated loss of $800 billion – $2 trillion due to money laundering each year, it becomes paramount to implement a robust identity verification solution. Moreover, this age represents the move from manual to digital, but it cannot be sustained unless digital identities are protected. Keeping these points in view, this blog discusses how online KYC is helping usher in the age of tomorrow.
Online KYC Verification – A Quick Overview
Know Your Customer (KYC) is the practice of rigorous identity verification to differentiate genuine users from potential scammers. KYC is more prevalent in financial institutions. However, more and more industries are adopting this practice because of the rising number of fraud cases.
Moreover, these are not just safe practices; KYC authentication represents international, federal, and state laws that must be followed. The 5th Anti-Money Laundering Directive (5AMLD) is a notable exemplar of these regulatory measures. Although traditional know your customer standards allow physical authentication, online KYC processes are becoming the norm in this digital age. Most emerging technologies and industries today stand on the pillar of KYC online verification to be operational.
The following industries require the online KYC verification solutions;
Digital Banks
As mentioned above, financial institutions are at the forefront of deploying this process. In addition to 5AMLD, regulations like Electronic Identification, Authentication, and Trust Services (eIDAS) bind these institutions to perform deep analysis on their customers.
This step is critical in the onboarding process and the real-time monitoring of transactions. However, apart from traditional banking systems, online KYC is the backbone of digital banks, also known as neobanks. Therefore, this process has proven to be the initial spark of an entire banking industry.
Online Gaming and Live Streaming
In recent years, e-gaming and livestreaming have taken the world by storm. Apart from the entertainment perspective, most gaming platforms now offer in-game purchases through virtual currencies. Moreover, streaming platforms, such as Twitch, allow the audience to send donations to the streamer. Therefore, many global players are now professionally playing games.
However, rising demand for gaming allows cybercriminals to fraud unsuspecting youth. A money laundering ring recently used small streamers to launder $10 million in Turkey. Given these activities, gaming studios and partner financial services should utilize online KYC to facilitate the players and their audience.
Crypto Market
Whether it’s buying non-fungible tokens (NFTs) or trading cryptocurrencies, the crypto market is rapidly increasing in size. The global crypto market currently stands at a high total of $1.17 trillion. One primary reason behind its widespread use is the broad application of blockchain technology, which powers crypto functionality.
From gaming to making secure financial platforms, blockchain allows almost everything. However, scammers can take advantage of the anonymity of blockchain. Therefore, companies should ensure proper online KYC to secure their interests in the crypto space.
Remote Work
Even though the COVID pandemic is almost over, most companies worldwide still offer remote work. It allows employees to work from their desired place, ultimately increasing productivity. However, remote work introduces the risk of imposters penetrating a company to conduct malicious activities. Therefore, organizations should ensure that their employees are appropriately vetted through KYC verification online. This way the businesses can ensure security on their end, and the employees can ensure privacy.
Cybersecurity
Cybercriminals have started taking advantage of the excessive reliance on digital standards. It means that even if the world entirely shifts to digital processes, fraud cases will remain as high. Such criminals use phishing, re-KYC, identity fraud, and other attacks to bypass organizational cybersecurity.
In such circumstances, improving security measures and implementing a robust online KYC solution becomes essential. Nevertheless, businesses revolve around customer needs. Even though a business should prioritize customer data security, ease of use becomes a problem in such a case. The only remaining solution is online KYC, which reduces verification times while offering better security.
Final Thoughts
Online KYC is the first step and the heart of the customer verification and onboarding process. It ensures correct financial transactions and secures the identity of customers. Since all industries are now rapidly deploying digital technologies, it has become essential to have proper security measures in place. Online KYC provides that and much more for organizations to shape the world of tomorrow.
