It defines the relationship that customers will have with an organization, helping to build loyalty and trust and is the basis of ongoing collaboration. Moreover, it leads to engaging possibilities for banking clients to acquire new products and sign up to new offers. Our digital era creates limitless opportunities, as well as a wide range of challenges that banking industry participants have to face.
Today, eKYC responds to banks’ goals in terms of client acquisition. Furthermore, it is one of the core elements of the onboarding process that enables customer recognition, creates a positive tone of further cooperation and prevents potential risks. It streamlines processes while devoting special attention to care and conscientiously performing duties with the utmost due diligence.
In modern times, when many customers are digitally savvy and any visit to a bank branch is perceived as a waste of time, an eKYC onboarding process should be as efficient, seamless and convenient as possible. Financial institutions should focus on decreasing time-consuming and frustration-generating activities. As 38% of banking industry customers claim that user experience is the most important criterion in choosing an appropriate bank1, creating rewarding and meaningful customer experiences should be a priority for financial institutions.
In regards to opening accounts, clients face the following challenges:
- A bank has an interesting offer for a current account package but doesn’t enable clients to start the account opening process online, thus a visit to a bank branch is needed.
- A bank claims that the online account opening process is available, however, after filling in a form a client is asked to visit a branch or use a courier service to complete the process.
- The account opening process in the bank branch is time-consuming and is connected with inordinate amounts of paperwork.
Bearing in mind that modern customers are reducing face-to-face contact and want the capabilities to perform all types of banking services regardless of time and location, an eKYC system provides opportunities to open bank accounts without the necessity to visit a bank branch and includes other benefits like:
- Opening a bank account, getting a credit card, personal loan, and executing more complicated processes e.g. applying for a mortgage or acquiring investment products.
- Boosting the flexibility of access to offered services & banking products.
- Giving clients a chance to choose between a virtual and stationary bank branch, depending on individual preferences and needs.
Furthermore, customers are provided with instantaneous support depending on their needs and employees are less burdened with paperwork, have real time access to records and can easily evaluate a customer’s details. This procedure is not only efficient but also cost- saving, and helps elevate a brand’s image.
Facing the challenges: legal, compliance and security factors
The ongoing development of the fintech and cryptocurrency sectors means the necessity of combating financial crimes has inevitably grown. Migrating safely online means assessing risks associated with customers and the security of their data, devoting special attention to money laundering, financing terrorism and all other possible criminal activities. Correctly identifying a customer and their identity is the paramount responsibility of financial institutions in preventing financial risk.
Unfortunately, global data regulations are not harmonized, which is a cause of difficulties in implementing an eKYC system. For example, in the Netherlands the identification via digital system is available but limited to the governmental and healthcare services, while in Estonia there are many, diversified purposes such as registration of a company.2 Due to the increased risk of fraud, financial institutions need to comply with the evolving AML/ CTF regulations (Anti Money Laundering/ Counter Terrorist Financing) and the entire KYC process must be adjusted so as to ensure that all information collected is respectively stored, monitored and managed.
Indeed, risk management strategies should focus on sensitive data security and draw on regular reviews. With this in mind, the object of financial institutions is to find a solution that will combine adjusting cost-effective operations to comply with legal requirements while decreasing onboarding time for customers. The fact is that KYC process is more sophisticated due to legislation and customer identification and authentication is becoming more complex. Risk assessment in establishing client identity implies collecting data from accessible Internet databases or external ones and also screening customers against a list of known criminals and politically exposed people.
Challenges are not only associated with legal regulations as the process of gathering clients’ data is varied and highly-specific as depending on the bank, country and legislation, the documents requested for client identification may differ.
Fit to real standards
With the evolution of technology and customers’ needs, the potential of channels that improve ‘bank – client’ cooperation is growing. In respect to the aforementioned differences in legal regulations among countries, Ailleron’s Fintech Division wants to continue to be flexible in meeting even the most diversified needs. Therefore, there are three types of eKYC systems available to be launched, depending on local legislation:
- Fully- human supported eKYC – based on continuous contact with an agent, who is engaged in the whole process, supported by OCR (optical character recognition) and face biometrics. In this process a customer visits a website and completes the form online. Subsequently, the process is finalized by an advisor from the bank.
- Semi-automized eKYC – a customer provides all necessary documents via online/mobile banking and is then connected with a LiveBank advisor who helps to finalize the process. A customer is asked to provide a selfie and a photo of ID card.
- Fully-automized eKYC – this process is finalized completely without human support. In case of any difficulties, a LiveBank advisor may join it for a second check.
The human-assisted process makes it possible to open an account within 15 minutes while the fully-automated option finalizes the process within 10 minutes.
With ongoing digital transformations and significant changes in customer needs, the digital onboarding eKYC presents significant opportunities for financial institutions, such as:
- acquiring a new bank customer in under 15 minutes
- granting automatic access to personal data after customer ID authentication
- providing high security of sensitive personal data due to biometric tools
- establishing brand perception as innovative and customer-focused
These are just a few of the multiple improvements seen in the banks that already use the eKYC process. However, with regards to guaranteeing the appropriate data security and efficient implementation of eKYC system, financial institutions must be ready for integration with future technological evolutions and constant legal changes.
Livebank, as the premier virtual branch banking solution, cooperates globally in terms of eKYC digital account opening process. As regulations and risk appetite vary among regions and local banks, a virtual branch banking solution offers full customer support and assistance at every step of the process. Hence, Livebank offers a two-fold strategy for eKYC digital account opening. Firstly, cooperation and alignment in terms of local regulations and secondly, the possibility of instant support of new to bank customers to mitigate the risk of potential drop-offs during the process.