Jumio publishes two eBooks to demystify biometric eKYC and APAC region digital banking
With online banking and financial transactions making up a large and rapidly increasing portion of the total, businesses and regulators alike have recognized the need for strong levels of trust with their customers, especially new ones, through mobile biometrics.
The issues that go with knowing your customer online are explored in some depth by two new eBooks from Jumio.
“The ABCs of eKYC” and “How eKYC is Streamlining Digital Banking: An Asia-Pacific Perspective” were motivated in part by a need for better global understanding of KYC requirements, which appears “still a bit murky” based on the fines being levied, Jumio VP of Global Marketing Dean Nicolls told Biometric Update in an email interview.
“Financial institutions were fined $26 billion for KYC and anti-money laundering (AML) compliance breaches in the past decade and prevailing inefficiencies are responsible,” he explains.
“KYC has become more and more complex. The notion of having banks verify customers are who they say they are, confirm they’re not on any prohibited lists and assessing their risk factors — are remarkably straightforward. But the guidance isn’t overly prescriptive, so banks and other financial institutions have taken a variety of approaches to compliance, some pretty complex.”
Jumio developed a flowchart, which is found in the eBooks, to outline key steps for financial institutions, and Nicolls notes that there are numerous ways to perform KYC and AML checks, and meeting the challenge often requires a multi-vendor approach.
“The ABCs of eKYC” is a how-to guide for companies that need to implement KYC for online transactions, covering the importance of getting it right, the commonalities and differences between KYC and eKYC, and who eKYC regulations apply to. The eBook goes on to explain the challenges of meeting those regulatory requirements, and how biometric technology is recommended by consultancies like Gartner to help organizations meet them.
The importance of accurately verifying the identity of the customer, performing due diligence checks to the appropriate one of three levels of detail, and conducting ongoing monitoring are discussed in some detail. Finally, Jumio provides a nine-point breakdown of what to look for in an eKYC identity verification solution.
While it is not mandatory for identity verification providers to comply with PCI DSS, Jumio considers the protection of PII with secure data storage and encryption in line with PCI standards appropriate to the value of the data it is handling, Nicolls says. The company conducts regular security audits, vulnerability scans and penetration tests to meet best practice and standards requirements, and works with clients to ensure that they are GDPR and CCPA compliant. Business customers are also given complete control over how long their user’s data is retained.
“How eKYC is Streamlining Digital Banking: An Asia-Pacific Perspective” provides an overview of the advanced fintech and digital banking environment in the APAC region, and the increase in account fraud activity and other challenges that have gone along with the sector’s impressive growth. Success factors and customer acquisition challenges, and how to address fraud without negatively effecting conversion rates are analyzed.
This eBook also explains false acceptance and false rejection rates (FAR and FRR), and offers eight tips for streamlining the onboarding process, along with the role of biometric authentication in eKYC. The full costs of onboarding customers in the region is examined, and emerging threats such as deepfakes are put into context. A breakdown of the features offered by vendors in the space outlines over a dozen different areas to think about when choosing among them.
Nicolls characterizes the APAC fintech market as a little more advanced but also highly diverse, and cites Deloitte stats showing fintech adoption quadrupling from 2015 to 2019 to reach 64 percent. The corresponding increase in fraud opportunities introduced by transactions in new channels is being handled in different ways, by a mix of global, new digital-only and traditional banks.
“What’s unique about APAC is how many banks are looking to solve the eKYC problem,” Nicolls observes. “Because labor is relatively cheap, we’ve seen examples where banks try to cobble together a variety of technologies like OCR, facial recognition, etc. to create their own online identity verification solution. Unfortunately, these DIY solutions are not exploiting the power of AI and ML to perform the necessary fraud checks and often take hours to complete (often because of the lengthy manual reviews) which ultimately translate into higher abandonment rates and increased customer frustration. Banks in the U.S., Canada, and EMEA are more likely to adopt off-the-shelf identity verification solutions that have more integrated functionality.”
Ultimately, the company is confidant in its ability to meet businesses’ identity-related requirements in all of the markets above, Nicolls says, pointing to the companies fully integrated KYC and AML solutions the leverages the ComplyAdvantage dynamic real-time database of people and companies that pose financial crime risk.
“The partnership will provide significant advantages for Jumio customers, giving them access to a global proprietary database of structured risk profiles covering enhanced sanctions, regulatory and enforcement watchlists, politically exposed persons (PEPs) and adverse media,” Nicolls explains.
The integration automatically flags new online customers on initial onboarding or enrollment if they are listed within any of the databases. He also cites Jumio’s single, automated solution and conversion rates he says are industry-leading as key differentiators.
With businesses in financial services and other industries increasingly relying on eKYC processes to meet regulatory requirement to conduct transactions, understanding biometric authentication and identity verification processes takes on an even greater importance in the APAC region and around the world.
Jumio’s biometric authentication technology was recently recognized with a 2020 Business Intelligence Group Innovation Award for account takeover and fraud prevention.