eKYC (electronic Know-Your-Customer) is a concept that you've probably heard or read about. With the migration of a wide range of products and services to the internet, the necessity for digital customer onboarding has grown.
The procedure entails a series of tests carried out in the early stages of the customer connection to ensure that s/he is who s/he claims to be, taking into consideration his/her identity documents and persona. A range of rules, such as anti-money laundering (AML), counter terrorism financing, electronic identification standards, and trust services (eIDAS), have had an impact on this process. eKYC solutions are seen as a response to traditional problems that come with customer onboarding.
All organisations and economic agents are going through a significant digitalisation process. Digital transformation has been one of the most significant shifts in organisations over the last decade, causing those who ignore it to miss out on possibilities or fail in their industries entirely.
Companies and organisations are battling to transform and digitise processes that previously seemed inefficient. However, specialised solutions have emerged to accomplish this work, transforming and optimising processes using cutting-edge technology such as artificial intelligence and machine learning. As the future grows evidently more tech-reliant, eKYC stands as a strong pillar for many security, regulatory and consumer-related aspects for various businesses.
eKYC for financial services is obvious in its benefits, as it is mainly driven by regulatory compliance while keeping up with the customer demand for self service channels. On the other hand, could non financial sectors, especially when not driven by regulatory compliance, reap some benefits from eKYC in favour of businesses and consumers?
Here are a few benefits that eKYC has to offer non-financial sectors:
1. Better Operational Measures for Government Agencies
Apart from financial institutions, government bodies and agencies can greatly benefit from the implementation of highly advanced security innovations, and eKYC matches the capabilities necessary for more effective processes.
In many parts of the world, government agencies rely on systems and digital platforms that are either outdated, inefficient or occasionally unreliable. Fortunately, the tide is turning and the digital era has transitioned to include the improvement of many of these government-related systems. However, security and authentication measures must still be kept as a top priority, since there are a lot of verification phases related to many services that fall under the government.
Whether it’s for documentation renewal and identification confirmation or paying of fines and registering new companies, eKYC can help iron-out authentication processes. In other words, eKYC technology adoption can help to enable uncompromised accuracy when it comes to customer identification and verification. This can be used to ensure safe and secure application processes under government agencies, or the facilitating of supervisory oversight from an internal operations perspective, as well as the improvement of control measures against criminal activities.
2. More Trustworthy Secondary Market Merchants
Secondary market merchants can benefit from the eKYC notion of stronger security measures and better authenticity brought on by advanced tech. Seeing that eKYC can protect the interests of various bodies through the validation of legal, regulatory and policy developments, the secondary market can begin to effectively identify reliable prospects and merchants from unreliable players in any given platform.
Safety is a big concern here as well. In fact, there is a current major focus on the regulation and safety aspects across many verticals, especially since digital inclusivity leads to a higher volume of users on countless platforms. This means that cybercrime, fraudulent activities within financial and non-financial context, as well as digital conflicts are all rapidly on the verge of breaking many areas of any given market. For instance, many media outlets within Malaysia alone had reported a rise in cybercrime activity since the MCO, totaling to a 441.7% increase.
In order to mend trust between businesses and customers, regulators and service providers are working together to implement practices and limitations to prevent crimes. eKYC is a crucial part of that strategy, in order to stop malicious behavior in its tracks through stronger authentication requirements.
3. Restore Visitor's Confidence in the Hospitality Industry
What's interesting about the technological preferences between the hospitality and financial industries is that they share many striking similarities, especially when it comes to the need for seamless verification and security. What's more, a post-COVID future relies heavily on the trust and comfort of customers as well as tighter control under regulatory and policy measures. As the hospitality industry opens up again, a new battle ensues to attract patrons to physical spaces when hesitancy is at an all-time high.
eKYC works to provide features that can help to restore the confidence of visitors, using components like facial recognition technology via face image retrieval or face comparison devices to help identify prospects or optical character recognition based on documentation or passport details.
This security is coupled with the potential for better contactless services through verification features that don’t require customers to touch devices or linger around registration areas too long. eKYC ultimately helps in the fight against COVID-19 by creating better environments with social distancing in mind and safer hospitality spaces in general.