Top Trends of KYC 2024

Don’t you agree? Juniper Research predicts that the number of digital identity verification checks will exceed 70 billion by 2024, an increase of 16% compared to the previous year. As we approach 2024, the future of eKYC verification is looking up. Here are some key trends that will shape the future of KYC in the financial sector.

KYC Trends Your Business Must Know

Biometric Authentication

In 2024, the highest security, quality, and efficiency of biometric authentication will transform eKYC authentication. KYC document verification remains vulnerable to fraud in 2023. For eKYC verification, biometric authentication uses unique physical and behavioral characteristics such as fingerprints, facial features, and iris patterns. Find out how biometrics will shape eKYC in 2024:

Biometric authentication provides more security than traditional KYC.  It reduces the risk of identity theft and financial loss thus making it harder for fraudsters to trick legitimate users. Biometric authentication is fast, simple, and contactless. This eliminates the need for a physical verification process. This increases customer satisfaction and reduces waiting time.

By 2027 the global biometric authentication market is expected to reach $100 billion with a CAGR of 14.6%. Due to the increasing demand for user-friendly identity verification solutions, the growth of biometric authentication is increasing. Biometric verification KYC helps businesses comply with strict KYC regulations.

Improved Automation and Artificial Intelligence

The increased use of automation and artificial intelligence in the KYC process is the biggest development. KYC checks will be streamlined by automation and decision-making processes by reducing the need for manual checks. Customer data will be accurately analyzed by using AI from documents, transactions, digital footprints, etc., creating accurate risk profiles.

• Furthermore, low-risk clients can be hired quickly with intelligent automated screening.
• For initial collection and detection bots and virtual data will be used.
• To analyze text data such as bank statements Natural language processing can be used.

The AI market was worth $95,603 million in 2021 and is expected to reach $795,385 million by 2027.

The Rise of Open KYC

KYC data is not publicly available, creating vulnerabilities and disrupting the customer experience currently. In 2024, open KYC will increase removing barriers and making access to data easier and more efficient. To share data securely and seamlessly, a standardized KYC system will be introduced. Increasing transparency, leading to a higher customer conversion rate will reduce compliance and onboarding time. The use of shared KYC databases can save huge costs for companies. It paves the way for innovation by removing the burden on workers.  Sharing KYC data improves risk and fraud prevention and can help ensure compliance. Finally, open KYC allows companies to control their data, allowing them to choose who else has access to their KYC information.

The Advent of Regulatory Technology (RegTech)

Currently complex processes and guidelines are involved in KYC compliance. However, RеgTеch solutions provide automation and optimization, which makes the process more efficient. And it’s going up. The global RegTech market is expected to reach $87.17 billion by 2028. This shows great growth potential for this technology.

Manual tasks such as document verification, regulatory reporting, and data extraction are automated by RegTech. This reduces processing time and frees up resources. To detect anomalies and discrepancies, AI-powered eKYC solutions analyze more data. This ensures that the data is accurate and complies with the law. Automating and optimizing eKYC processes results in financial savings and reduces compliance risks associated with manual errors and outdated processes.

RegTech simplifies and speeds up the eKYC verification process and creates better onboarding for customers. eKYC verification using RegTech can improve resource allocation and user experience and help to stay ahead of regulatory changes.

Real-time KYC and Transaction Monitoring

In 2024, real-time KYC technologies such as API Connection and big data analysis. This includes analysis and real-time access to customer data to identify changes in customer risk profiles in real-time from AML watchlists, credit bureaus, sanctions, adverse media, etc.

The need to continuously track customer transactions across channels is increased by real-time transactions. It helps to identify suspicious activity using analytics and machine learning. Real-time KYC monitoring is important as it allows the risk assessment to be minimized.

Personalization of KYC Process

Based on changing characteristics, requirements, and risk levels of customers KYC orchestration allows companies to personalize their customer verification processes. However, as it reduces the number of KYC checks, reduces downtime, and improves user onboarding it is more beneficial for customers. Based on company policies, regulatory functions, licensing laws, and more there are a total of millions of KYC checks. Thus, companies can customize their customer verification processes based on these specifications, which was possible due to the emergence of customizable KYC controls.

Emphasize AML and CTF

With a stricter approach to regulatory oversight and non-compliance, financial institutions must focus on anti-money laundering (AML) and combating counter-terrorism financing (CTF). KYC is the basis of the AML/CFT program. In extreme cases, transaction monitoring and real-time analysis are done to identify risk relationships. The focus of compliance is to monitor the source of funds.

Additionally, RegTech solutions are widely used to support AML/CFT compliance through features such as predictive analytics, case management, and scenario-based alerts. KYC data quality management is also important for effective compliance.

Perpetual KYC

Financial institutions and non-financial companies need to know who their customers are before they enter or do business with them. This is why knowing a customer verification check is critical to identifying and mitigating customer-related red flags or risks. To identify and prevent emerging risks, ongoing KYC verification will become standard in 2024. In the current KYC area, high-risk companies are evaluated annually, while market demand and low-risk companies are evaluated every three and five years. However, as the number of these crimes increases and regulatory processes become more complex, companies are moving from periodic audits to perpetual KYC. automated update of risk profiles and fast-tracking of ongoing risk assessment can be done by using technologies such as artificial intelligence, data analytics, and machine learning.

Document-free Verification

Document-free verification is expected to be introduced in the upcoming year, which will allow customers to check in quickly and easily. Using a database or a quick facial scan without having to scan documents most users will be able to verify their identity. This is especially important if someone needs a job quickly and doesn’t have an identity card.

Global Convergence of KYC Standards

KYC standards and document requirements will increase in some financial sector jurisdictions. This will be facilitated by global harmonization of AML/CFT standards, such as the FATF guidance. Many countries have used the FATF to standardize their KYC standards. Industry-level services such as MyInfo Singapore, which provides official government identification, also support standard eKYC verification. Common standards will reduce the variability and complexity of institutions operating around the world. It will also enable open eKYC solutions and global technology players to provide standardized KYC services.

The convеrgеncе of KYC standards is driven by the worldwide initiativеs likе thе Financial Stability Board (FSB) KYC Principlеs and thе Intеrnational Organization for Standardization (ISO) 20022. By еmbracing worldwide convеrgеncе you can еxpand worldwide rеach, rеducе compliancе costs, and improvе opеrational еfficiеncy.

What to expect for the unexpected?

Looking ahead to the industry’s potential challenges in 2024, more regulation is expected at the global level, driven by increased geopolitical tensions and legal and economic factors that increase volatility. Adapting to change and leveraging technology for agility is essential for business and commercial banks. The removal of access to Beneficial Owner Records in 2023 indicates a possible trend towards more rules and restrictions. It is recommended to anticipate unexpected changes and be agile in responding to them, paying close attention to the use of technology to increase efficiency.

In short, the future of KYC in 2024 will be characterized by technological advances, greater collaboration, and a continued commitment to customer experience and compliance. In an ever-changing landscape financial institutions and industry players are preparing for a transformative year, facing regulatory changes and leveraging technology to stay nimble.

KYC AML guide is a research-based consultancy that can help businesses find the best KYC solutions by offering services like KYC technology buying and KYC vendor analysis.