Frauds are increasing and the businesses are always looking for ways to mitigate them by hook or by crook. As the primary source of fraud are customers it’s necessary to verify them before accepting them as a dear asset of the company. That’s why the regulatory authorities have set Know Your Customer (KYC) standards and require the businesses to verify the identity of their customers. Now, these regulations also require to verify the identity through some sort of legal documents as any other documents are not credible. But with a technically advanced crime, the risk has increased multiple folds, manual verification of identity documents is not feasible. Hence a huge number of businesses are using digital document verification solutions.
What is digital document verification?
Digital document verification is the process of online document verification. The identity documents such as ID card, passport, etc. are verified digitally using Artificial intelligence (AI). The document is checked for the default format, and the information collected with the help of OCR. Later the information is verified in real-time.
The document is verified within seconds, and the customer is onboarded. The verification results are shown to the customers in real-time and updated in the back-office.
Why do businesses need to verify documents?
Verification of the documents is necessary for the businesses, it has several benefits for the businesses as well as the changes in identity screening and they need to identify their businesses with the help of identity screening and they’re required to make the changes in the best of the solutions
Fraud prevention
Businesses these days are exposed to a plethora of fraud and crime risks. Fake identities, account takeover fraud, credit card fraud, payment fraud, etc. are a few to mention here. All these frauds can be reduced with the help of digital document verification. If the customers are verified through their government-issued identity documents, the credibility of due diligence increases. The businesses can reduce frauds with digital document verification.
Regulatory obligation
KYC and AML laws require the businesses to verify their customers at certain times such as when they’re registered, make transactions, or access their accounts remotely. The regulatory authorities require the businesses to verify their customers through their legal identity documents. Previously only manual verifications were allowed but now the authorities are allowing digital identity screening as well.
Recently FATF issued the digital ID system guide. It has listed all the regulatory, and technical requirements of such systems and also specified the scope of the regulation.
Benefits of performing digital document verification
Customer experience
Long identity screening methods demotivate the customers and often makes them abandon their cart. Digital document verification helps the businesses to onboard trustworthy clientele without sacrificing customer experience. If the customers are verified using a document verification solution the process is completed within seconds, on the other hand, manual verification takes longer.
Technical expertise
Digital solutions available in the market are easy to integrate with existing systems (website, web portal, and app). An API is integrated with the system to perform verifications. So the businesses that lack technical resources are utilizing these solutions to gain a competitive edge.
Developing in-house solutions using artificial intelligence requires hefty technical and financial resources. Small businesses and startups don’t have enough resources for this.
Cost-effective
It is no secret that businesses spend a lot on enhancing customer experience, either it is through enhancement of packaging, better customer support or better user experience. On the other hand, fraud prevention is also one of the primary operating costs of businesses. But still spending within the budget is necessary. Some service providers provide quite economical solutions, so if chosen wisely, outsourcing proves to be quite cost-effective.
To wrap up, businesses are exposed to huge risks, and proactive fraud prevention is inevitable. Also, the regulatory obligations are increasing so business entities around the globe are opting for efficient customer due diligence. So the businesses are using digital solutions for document verification. As the world is moving towards digitization businesses are also opting automation to keep up with the pace, and using digital methods for customer screening takes them one step closer to total automation.