Digital Onboarding and KYC Report touts full digital lifecycle as regtech market soars
Inappropriate digital onboarding and the lack of KYC practices in line with AML laws are affecting the rate of customer onboarding in the financial sector. Not only do 40 percent of users give up on bank applications, but some $1.45 trillion is globally lost to financial crime, according to figures from Signicat and research by Deloitte, writes The Payers.
Drawing on the expertise of industry experts from Consult Hyperion, ID Crowd, OWI, and Self-Sovereign Identity (SSI) expert Kaliya Young, the Digital Onboarding and KYC Report 2020 analyzes the digital customer and cross-border onboarding process. Based on examples provided by participants such as HID Global, iDIN, InnoValor/ReadID, Keesing Technologies, LexisNexis Risk Solutions, Signicat and Verimi, the report says the biggest mistake service providers make is not focusing on the customer’s digital engagement potential, while instead concentrating on just one part of the digital lifecycle.
In 2022, Deloitte forecasts the market potential for innovative regtech solutions will near $76.3 billion and $10.7 billion in Europe. In the report, 4Stop, Global Data Consortium, Mitek, Trulioo and Web Shield share their experience of leveraging artificial intelligence, machine learning and blockchain to prevent money laundering and improve customer experience, while providing onboarding process security and cutting down compliance costs.
The report also looks into the importance of KYC utilities and how banks could use them to improve compliance by integrating a database with KYC information in standard format. Registries such as Nordic KYC Utility AB, Afreximbank’s MANSA Repository Platform and SWIFT Registry help solve the problem of working with multiple sources and outdated data.
Financial service companies can introduce biometric technologies for remote identification such as selfie-based identification to fight fraud with KYC checks, explains Daniel Suess, Commercial Director at Keesing Technologies, who also warns “biometric checks sometimes fail to meet legal requirements or security standards.”
The report states behavioral biometrics are great for customer experience, because the end user does not feel any friction in the data collection process, whereas they do with other biometrics techniques. Behavioral biometrics can easily analyze “how the device is held using gyroscopic measurements inherent within mobile devices.”
“This type of data is probabilistic rather than deterministic,” notes Mike Nathan of LexisNexis. “This means that it is generally used as a risk-factor on whether the transaction appears fraudulent rather than as a deterministic yes/no response that you might get with physical biometrics solution that use fingerprint or iris scanning.”
The Digital Onboarding and KYC Report is endorsed by One World Identity and Consult Hyperion.