The need for reliable verification solutions has increased with the imminent threat of cybercrime and data breaches. Potential vulnerabilities for a startup or business can result in significant capital loss and a compromised reputation in the market. In the COVID-struck era, online verification solutions have become the need of the hour. Biometric and facial verification are the two major options that are currently in use by enterprises for validating the identity of their customers.
Another rapidly evolving source of identification is Video KYC, which incorporates a live video interaction with the intended customer using identity documents. By verifying the digital identity of the client, Video KYC solutions act as a deterrent against online fraud and provide secure customer onboarding. A statistics report by Wyzowl claims that nearly 97% of customers believe that video communications serve as an effective means for acquiring a good client base and educating new customers.
How is Video KYC performed?
Video KYC, as the name implies, uses video-based verification techniques to perform Know Your Customer (KYC) for a business’s customers. Apart from the popular two-factor mobile authentication and biometric fingerprint verification, Video KYC involves verification of documents, addresses, facial features, and the user’s consent through a real-time video-based conversation. It creates a safe and secure communication channel that significantly reduces online fraud.
A comprehensive suite for Video KYC comes with a set of AI-based mechanics with a reasonable accuracy rate for identity verification. Off-site video verification utilises machine learning algorithms to extract the required information from identity documents presented by the verifying user. The authentication process based on pre-defined procedures takes into account the liveness factor of the user as an identification metric.
The customer verifies identity by displaying their face in front of the smartphone’s camera or a webcam on the computer, while the backend system performs identity checks. The further step involves matching the user’s facial identity on the screen and the document.
The Risk of Potential Impersonation
When it comes to customer onboarding, the identity of the users is of prime importance. Enterprises are always at the possible risk of false and illegitimate customer acquisition. Fraudsters often intend to impersonate themselves to propagate their dubious behaviour. To pursue their illicit motives, they would seek cover in stealing the identity of another person, either to escape the legal prosecutions or to damage the person’s reputation they are imitating.
With the power of Video KYC, the effect of impersonation becomes null and void since the onboarding customer needs to interact with a KYC expert in a live video setup, show their facial identity, and take part in a verification session by displaying government-issued authentic documents.
The robust Video KYC process involves not only a KYC expert but also AI-based verification mechanisms. The person at the verifying end is evaluated in realtime to reduce the likely risk of impersonation in the best possible way.
Identity Theft and Mitigation
With the exponential increase in digital services and products, online identity theft has also become a significant security concern. The annual report issued by the Federal Trade Commission (FTC) states that there were nearly 651,000 complaints related to identity theft and a sum of $1.7 billion lost on online fraud cases.
Stealing of payment card data is the most common type of identity fraud carried out by online scammers. A cyber attack in 2019 on MasterCard’s Loyalty Program in Germany compromised the identity information of millions of users including payment card credentials and client address. Nowadays, online financial corporates are more prone to identity theft due to fake account openings and data breaches. With a good Video KYC service, identity theft is much easier to detect as artificially trained algorithms provide better accuracy than a human expert. Tracking down stolen card information from the databases is better performed as a computerised operation.
Another widespread type of identity theft is application fraud that refers to criminals indulging in activities such as using stolen documents in opening online accounts and building up their own synthetic identity using someone else’s personal information. Online businesses are moving towards improved security solutions to prevent loss of sensitive data during identity verification procedures.
Video KYC solutions are a valuable addition to the security toolkit of a corporation providing online services. They minimise the risk of identity theft by making the client verification process transparent and easy to implement.
Secure Onboarding Process
Verifying customer identity while onboarding could prove laborious and risky when working with a human workforce. Moreover, the process of keeping manual documents is error-induced and requires substantial time. With criminals finding new ways for online fraud, enterprises and financial corporations are at a higher risk of dealing with illegitimate identities.
The onboarding process is the most important part of the customer-business relationship, and Video KYC services are the ultimate source of creating a loyal customer base for an online business. The video-based verification process is done either by using digital document verification or biometric recognition. Both provide appropriate means of conforming to the AML/KYC compliance.
Video KYC allows customers to verify themselves digitally from the comfort of their homes by interacting with a KYC expert in realtime and following the instructions provided. The verification process is complete when all the documents and the facial identity is verified by the expert. It helps mitigate the possible risk of application fraud. Soon, video identification will become a new normal in the identity verification market, amid its rising popularity.