In the olden times, manual processing was adopted at a large scale, and at that time, it was considered effective. This is because then the document identification authorities did not explore any new areas of improvement that could bring fruitful results to the business operations. As time passed new ways of doing business were introduced and this brought a revolution in the IT industry. Digital processes applied to identity verification practices were also a result of those advancements that took place gradually in the financial sector. Nowadays, it is not just enough to identify an entity but also it is considered mandatory to verify that identity. It helps to ensure the originality of the business for what it claims to be. There are different methods to verify documents.
Significance of KYC Verification
Document verification is preferred in the banking sector because of the sensitive nature of the business which makes it critical for the bank to ascertain maximum security through uncompromised verification of each and every relevant document of the client. Thorough document verification allows the bank to identify scammers and fraudsters. Document verification is not only limited to the ID card or image of an entity now. It has taken various forms.
Types of KYC Authentication
There are different documents and customer attributes that are analyzed for the purpose of detailed verification of the client. The bank performs the following KYC authentication methods
The age of a client is verified with the help of an ID card that contains the date of birth of that particular entity. Age verification allows the bank to collect information about an entity’s legal status or eligibility. For instance, if the bank finds an entity to be minor, It will run the due authentication process to ensure that the parents of that client are aware of this activity.
In another scenario, when it is confirmed that a minor client is having an account with the bank, the bank still authenticates one more factor which is the permitted use of credit or debit card. KYC-based ID verification through age allows the bank to take only those clients onboard who fulfill the defined criteria. Additional checks ensure to save the bank’s goodwill and reputation.
ID Card Verification
Bank authenticates the identity of an entity by running several checks on the provided national identity card. For example, the format of the name. Because, across different regions of the world, there are different formats that are applied while writing a name. In some countries, all three names that are the first, middle, and last name is written without any said segregation. Instead, the whole name is written as a full name.
Verification solutions help the bank to identify the pattern of name in accordance with the region if it is dealing with an international entity. The modules of machine learning and deep learning that are incorporated into the digital verification solutions help the banks to identify name patterns within seconds. The bank also verifies other pictorial data including the rainbow print, hologram, etc. The image of the ID card is verified by checking picture quality such as the pixel requirement and also the banks authenticate the type of ink that is used digitally on the ID card. This aspect facilitates the bank to verify if the document is forged.
Continuous Background Checks
KYC requirements also demand the banks for running multiple background analyses on continuous bases for those business entities that are subjected to high risk as compared to the general common customers. With the help of AI-supported verification solutions, this type of KYC authentication is performed for those entities that might be on the list of warnings or Politically Exposed Persons (PEPs). In the process of checking history, the bank is righteous to ask for the sources of income, funds, and the need for certain transactions done by the entity. Also, the bank observes the frequency of transactions and the amounts that are being transacted.
The bank authenticates the identity of a client using the technique of address verification. In this case, the bank usually asks for a rental agreement from the client to verify. If the customer is a tenant or owns a house. If the client owns a property then the bank would verify the tax returns on that property. All these processes are performed with the help of digital ID verification solutions. Other documents that the bank is likely to ask for include utility bills. This would again assist the bank to authenticate the current residential location of a client. This is necessary so that the entity does not appear to be a fraudster in the future. And is found to have no legal record of residence in the region stated in the documents.
Diversified techniques of document verification leave no room for doubt and allow the bank to ensure full security. Analyzing and verifying different types of documents help the banks to perform a detailed verification. It reduces the chances of identity theft, forgery, and manipulation of documents. The use of artificial intelligence resultantly makes the document verification process reliable and error-free.