Innovations in KYC Technologies 2023
1) Mobile KYC
Another seamless innovation is scanning and uploading KYC documents through mobile phone cameras. Banks and FIs are striving to bring seamless customer experience by letting them remotely conduct their KYC. All they need to do is upload their identity documents via mobile phone camera. This saves time, effort, and cost as compared to Physical KYC by visiting the bank’s office. Through AI algorithms, Identity verification technologies like OCR, MRZ codes etc can now be done through Mobile KYC.
2) Zero Knowledge Proofs
It is a cryptographic technique that enhances the security and privacy of users where a party can provide documents for identity verification without revealing any information. For example, passwords and documents required during a sign-up are hidden and not revealed.
3) Augmented Reality (AR)
It is an innovative technique where users are guided to capture high-quality images of the identity documents via smartphone cameras. It uses AR overlays that provide visual cues to ensure that the entire document is captured and the image is readable. It increases the level of security by scanning holograms, watermarks, and special characters where fraudulent documents can be differentiated easily.
4) Video KYC
Remote customer onboarding is becoming increasingly popular as it offers a higher level of convenience. Video KYC is one of the trending innovations in KYC Document Verification. Identity documents are held in front of the camera where a video is recorded and then uploaded for verification. It can also be conducted via live video call.
Future Innovations in KYC Document Verification
While KYC document verification has seen significant advancements, there are still areas where further innovation can take place. KYC Solution providers can introduce newer and better techniques for improved document verification.
Here are some potentially untapped or emerging technologies that could shape the future of KYC:
|Homomorphic Encryption||Homomorphic Encryption can enhance the security of sensitive identifiable information present in KYC documents. The idea behind this technology is to submit the KYC documents in encrypted form and share them accordingly. Once, the KYC is complete there is no decrypted information present that can be exploited.|
|Self-Sovereign Identity (SSI)||Customers have full control of their digital identities in SSI. Being a user-centric identity model, it uses Decentralized Identifiers (DIDs) that reduce the reliance on centralized identity databases for verification.|
|Edge Computing for KYC||User’s KYC documents can be directly processed on the user’s device without transmitting sensitive information over networks through Edge computing for enhanced security and privacy.|
|Quantum-Safe Computing||The potential advent of quantum-safe cryptography can enhance security and minimize identity theft in document ID verification.|
|Tokenization||Identity Documents can be represented as digital tokens on a blockchain that increases interoperability.|
|Trust through AI||AI models for the KYC process increase accuracy and speed. They can also address concerns of transparency and bias with automated decision-making whenever a user submits KYC documents. Hence, the element of fraud is notably reduced.|
|Biometric Liveness Detection||Biometric technology is advancing and opening doors for the KYC process to evolve. Liveness detection can also be implemented in document verification to ensure authenticity.|
How can KYC Vendors enhance Document Verification?
KYC Solution Providers can enhance KYC document verification by introducing anyone of all of the above-mentioned innovative techniques. However, they need to ensure that innovation adheres to certain principles and considerations. A KYC Solution while innovating should possess the following attributes:
- An impenetrable security mechanism for securing customer’s data.
- Enhanced User Journey by improving design, technology and other aspects of the KYC Solution.
- Reduced Onboarding Time and effort through automated KYC document verification.
- Higher scalability to facilitate the growing number of users while maintaining the service standard.
- Increased Interoperability through integration with existing systems and collaboration with different platforms in innovation is the key to technological breakthrough and success.
- Explainability & Transparency (in case of AI and Machine Learning technologies)
- The ability of integration and adaptability to emerging technologies for continuous innovation and improvement to stay ahead of the competition.
As for clients like banks, Financial institutions & other regulated firms that require a robust KYC Document Verification system, the decision to choose their compliance partner is a crucial step that requires calculated and vigilant decision-making. KYC Technology Buying Consultancy can help in bringing the best-suited KYC Vendor for the minimized risk of non-compliance.