What is eKYC?

eKYC is the process of confirming an individual’s identity via digital and automated means.

KYC is becoming an ever more common process for UK businesses to include as part of their customer onboarding  journey. In some industries it is now ubiquitous due to the protection it affords companies and our economy, in fact any company that operates under UK AML regulations is required to complete KYC checks.

Due to this, many business directors and managers will be aware of what KYC means and its importance; but we are now much more commonly seeing the term eKYC used.

So what does this mean? How does it differ from regular KYC? And, what are its advantages?

What is eKYC?

eKYC means electronic know your customer and simply refers to any KYC check/process that uses digital and automated means to confirm identities.

These might be:

• Biometric facial recognition check
• Liveness check
• Document check
• Document verification check
• Digital IDV check

Red Flag Alert offers all of these checks in our fully digital AML & eKYC platform. Click here to see how we will improve your KYC process.

Why perform eKYC/KYC?

These processes protect businesses from the actions of fraudsters, financial criminals, and people who do not have the right to conduct business in the UK. Ultimately protecting the company from losing money, unintentionally aiding crime, or fines from regulators.

Companies in the regulated industry are actually legally required to perform KYC checks as part of their anti-money laundering obligations.

KYC vs eKYC

Whilst both of these processes have the same aim, to confirm an individual’s identity, they differ in both the methods and accuracy used.

Manual KYC relies solely on manual processes to do this. Usually a potential customer would be asked to physically go to the office of the business performing the check with official ID documents as well as other qualifying evidence, such as a recent utility bill.

These are then looked at by a member of staff to confirm their authenticity and that the photo on the ID document matches the person presenting it.

They may then confirm the address by checking the electoral register.

The obvious problem with manual processes is that to be effective they rely on a company’s members of staff to have the training, tools, and knowledge to be able to identify a forged document. This is a highly specialist role that requires years of training, knowledge of evolving forgery and criminal practices, and specialist equipment to be able to do.

This means that almost every company in the UK is unable to practice truly effective manual KYC processes. Pair this with the sophistication of modern forgery practices and almost all identity fraud techniques actually relying on manual processes to be effective, and you can see the risk that not having a technological KYC solution places on a business.

Even with the fact that the vast majority of people seeking to do business with any given company are genuine manual KYC processes are still not ideal. This is because they present an inconvenience to potential customers (as they have to take time from their day to physically travel to an office and may lead to them dropping out of the process in favour of a quicker competitor), they require a large amount of staff time, and they present a barrier to revenue.

On the other hand, eKYC uses modern technology to allow for quick and convenient processes that use modern technology to perform a level of analysis that would be impossible for a human to perform. The time taken from sending out a check, it being completed by a customer, through to a result is around 60 to 90 seconds.

Another key feature of eKYC over manual KYC is that the vendor and customer can complete the sales and onboarding process without every physically meeting. Allowing for a range of goods and services to be offered digitally.

Advantages of eKYC

eKYC has many advantages over manual processes. Here are the top 5:

1 - The first being its accuracy. Given the purpose of KYC processes being to protect businesses from being exploited by criminals it stands to reason that you want your KYC defences to be as accurate as possible.

Where manual processes are easy for professional criminals to beat, it is almost impossible to fool digital methods; especially if companies employ more than one.

2 – eKYC offers a much better customer experience than manual processes. Not only does it eliminate the requirement for them to expend time and effort visiting a physical branch and offer them a convenient alternative that allows for a deal to be approved almost instantaneously; but it demonstrates that your company embraces modern technology, is forward thinking, and suggests that your product/service will be superior to those that have not.

The importance of a positive onboarding experience can not be underestimated. Research shows that poo onboarding experiences will reduce the likelihood of repeat business and increase the chances that customers will perceive goods/services in a negative light.

While a positive experience drastically increases the chance of repeat business and not only makes customers feel more positively about their purchase/experience but does so even if there are any subsequence issues or problems.

3 – Despite there being a cost in purchasing access to an eKYC platform, it actually works out as being much cheaper than manual processes. Eliminating the need for staff to spend hours on manual processes saves the associated wage cost and means that those staff members are now free to focus on revenue generating activities.

As it is much more accurate, it also saves on the losses that would have been caused by criminals circumventing pre-existing manual processes.

eKYC processes also have much lower rates of customer drop off. Extended and inconvenient processes are prone to frustrated customers giving up an pursuing to deal with that business and seek a competitor that offers an easier alternative.

4 – It offers faster time to revenue. Manual processes often take days to complete and create a bottleneck to revenue. eKYC allows a deal to be agreed upon, the customer’s identity confirmed, and payment made in a matter of minutes.

5 – It provides a competitive advantage over the companies that do not use it. Surprisingly, most companies still rely on manually completing most of their processes and this is true of KYC. Not only do companies that have embrace eKYC offer a more convenient experience for customers but by eliminating the staff costs, lost business, and inevitable losses they are able to operate much more profitably than their competitors.

How do I introduce this to my business?

Red Flag Alert allows you to digitally transform your processes to eKYC and start protecting your business quickly and easily.

To see how we will make your company more secure, massively improve your client onboarding journey, and just how easy we make it, get a demo of the platform today .