How Are KYC Services Done – Common Solutions and Technologies

KYC can be carried out in several ways. The simplest way is by having the customer physically present to show their documents and perform the relevant checks on them. Customers can sometimes be asked to send scanned copies of relevant documents.  But this method opens itself up to a lot of forgeries or general abuse of the system, not to mention that it’s really slow.

That’s why KYC providers take this method to the next level with automated solutions, such as automated face verification and document reading AI. While this approach has many advantages, it is reliant on the accuracy of machine readings. Also, mistakes on the customer side, such as damaged documents, poor quality crooked pictures, or glare, can interfere with this process.

One of the most secure methods are video based KYC solutions. This is when a customer will either have a direct video call with a verification specialist or when customers will go through the process on their own but it will still be recorded on video. This is one of the best ways to deter fraudsters and stop automated scams in their tracks.

Most of these KYC software solutions will utilise several different technologies and methods. With manual checks, it is as simple as a person checking the data against a database themselves, although there is room for human error here. Face recognition algorithms is particularly important when it comes to KYC. In recent years, this tech has made staggering advancements, has been coupled with various liveness checks, and works on a still image and video. Although most of these checks are surprisingly easy to baffle with masks and other AI tricking technologies such as deep fakes. As AI becomes more popular, there are those working harder to find new ways to bypass and trick AI tracking systems to keep themselves hidden, and this can make KYC trickier.

Automated technology can also be utilised to carry out fraud checks on documents. Often very advanced machinery and specialists would be needed to tell if a document is a fake, whereas some AI can now do it all visually. This approach requires intense and precise systems and the thoroughness of the databases being accessed. As with any AI systems that concern KYC, human supervision is important to get the most accurate outputs.

Optical character recognition, or OCR, is an extremely useful tool for any KYC service. Simply put, it can study a scanned document and translate all the printed data into digital data without the need of someone manually typing it up. This is a powerful tool for collating an in-depth and accurate database for use further down the line. It can also be used to spot errors in fraudulent documents when searched against already existing data, which is useful for fighting fraudsters.

Video recording technology is extremely useful for both manual checks in a physical location, and for online KYC with a customer. Anyone whose goal is to commit fraud does not want their face / real identity recorded, that’s why in many cases they will not even attempt to game systems like that. Using this kind of solution will also reassure your customers showing them that you are serious about doing business and maintaining high standards of verification.

Ideally, you want a KYC company that is going to incorporate all of these elements in some shape or form. Your chosen KYC solution might lean heavier on a certain element, but when it comes to the following regulations and adhering to the law, combining all of those elements along with a video recording is a good way to cover all grounds.

Who Uses KYC Services The Most?

KYC is primarily used by industries that handle money, deal with financials, and/or can suffer from serious problems if they don’t verify their customers correctly. The most common industry this concerns is banks. Banking is one of the most vital aspects of both personal and business economics. The reason why KYC is so important in the world of banking is that if you have a bank account you have access to the whole banking and financial infrastructure. Allowing fraudsters is nothing but trouble. Fintech companies also utilise KYC services heavily as they are often producing and selling technologies and software that allow for the relocation and acquisition of large amounts of money. 

Cryptocurrency has become the next big thing in the world of finance. But with it is attached a large number of risks. Due to its decentralised nature, there is very little security attached readily to the currency itself. There have been a lot of reports about PEP’s, terrorists and general criminals using crypto, so it can be difficult to know who the money is coming from or going to. A good KYC provider can eliminate this doubt and make sure a business using crypto is still abiding by the AML regulations.

Even businesses that don’t necessarily need to follow strick financial regulations will still benefit from good KYC practices, especially industries based on financial trust or shared economy services. This can be seen at the lowest level where the general public interacts with itself conducting business to their community.