As a result of the digitalization of banking, attacks such as identity theft and financial fraud or extortion have increased and KYC or “Know Your Customer” emerged as a preventive and security measure in the identification and authentication of customers.
Although for online banking transactions through browsers or APPs, banks already have identification measures such as fingerprint, passwords, or two-factor authentication (2FA); for calls, identification would be reduced to the request of data such as national identification number, address, or security questions, information susceptible to being supplanted. That is why many financial institutions are betting on KYC automation through Artificial Intelligence technologies that help to identify customers, especially in calls made by the Call Center, allowing to reduce identification times, greater accuracy of data, and provide better customer service while ensuring regulatory compliance in real-time.
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What is KYC?
KYC or “Know Your Customer” is the process of obtaining customer information for the purpose of accurately identifying customers, either through facial recognition, fingerprint, or any other human trait likely to be unique, such as voice. The KYC process is typically carried out by companies and other financial institutions when opening accounts with them or performing various banking transactions.
In Europe, KYC is regulated by the AML5 and GDPR, which are binding throughout the European Union. KYC aims to provide standards and methodologies that facilitate proper user verification compliance.
Broadly speaking, the verification process under KYC consists of collecting, analyzing information, and keeping it updated. A common standard does not yet exist and its regulation and adaptation is a developing challenge, as regulations vary by country and industry. The KYC process in the financial sector requires a more complex, specific methodology with more steps to ensure total reliability and security, due to the complexity of the sector.
KYC can be divided into two levels depending on how strict the identification is, with CDD (Customer Due Diligence) being a “laxer” identification and EDD (Enhanced Due Diligence) being recommended by regulators, especially for customers who are prone to commit crimes such as money laundering.
However, it is important to understand that KYC checks cover much more than basic identity information, but also check whether the user appears on international PEP (Politically Exposed Persons) lists, assess the risks associated with the customer, and monitor and track customer transactions.
Benefits of Automated KYC
Originally, KYC verification and registration of new customers were done by hand. An employee checked one by one all supporting documents of the potential customer, as well as their appearance in international registers and lists. Performing KYC manually involves long verification times, a great human effort that can be accompanied by possible errors and high costs, among other things.
New technologies have revolutionized KYC and remote identity verifications. Artificial Intelligence technologies have led to the automation of these tasks, making it possible to reduce waiting times and increase data accuracy, while ensuring real-time compliance. Some of the benefits of KYC automation include:
- Prevent fraud.
- Regulatory compliance.
- Reduce costs and time.
- Eliminate human error.
- Improve customer satisfaction by offering a fast, easy and secure experience.
KYC and Voice Biometric Identification for the financial sector
Some technologies based on Artificial Intelligence such as Voice Biometric Identification, in services such as Recordia, help to manage large call volumes and facilitate customer identification and authentication processes in banking call centers.
Customer identification and authentication in financial institutions takes between 2 and 5 minutes on average for each call and involves a large number of security questions, which lengthens waiting and handling times and has a serious impact on the customer experience.
To improve these processes and streamline them, automated KYC technologies, such as Recordia’s Voice Biometric Identification, help financial institutions to ensure regulatory compliance in real-time by being able to manage data processing consents and improve customer satisfaction while preventing fraud and identity theft, thanks to the fact that the voiceprint detected by the technology is unique for each person.
Learn more about Recordia Voice Biometric Identification and how to comply with KYC by clicking here.
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