Use Case: AI and the KYC Industry
Check out the Know Your Customer (KYC) industry and explore how Artificial intelligence can revolutionize it.
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Tech companies around the globe have started integrating Artificial Intelligence (AI) into their products for faster processing and substantially reduced manual work. Whether it is search engine results from Google or Siri from Apple, AI has been utilized with perfection by multiple industries to streamline their business practices for better service delivery. However, there are still various tech sub-industries and niches that can take help from AI to finely tune their products and come up with even more customer friendly services. Know Your Customer, also known as KYC, the industry has a lot to benefit from Artificial Intelligence. More and more businesses are being subjected to regulations that require these businesses to carry out full proof KYC verification with the help of an official identity document before a customer is registered. It is high time that AI becomes a cornerstone for KYC software industry for improving the standards of service in this field.
What Is KYC?
As explained above, KYC stands for Know Your Customer. It is a business practice that is conducted before any product is sold or service is utilized by an end-user. The service provider is required to collect comprehensive personal information from their customers. Verifying those credentials is the responsibility of the company that is collecting information from their customers. Most of the times, an official identity document is used to confirm the identity details of a customer. What aspects of a person’s identity are verified, depends on the regulatory guidelines or the nature of business performing a KYC verification.
Why Is a KYC Verification Performed?
In a formal economic system, it is important for a business or company to collect sufficient customer information. Most of the times, a KYC verification is performed by a company because of 2 reasons:
It is made obligatory by official authorities of a country to collect customer information.
Businesses collect customer information and verify it themselves to avoid encountering customers with a fake identity or doctored financial details.e.g.customers with fake bank account number, forged credit cards, or counterfeit identity documents.
Commonly, manual KYC is performed by company’s own staff. Some companies even use 3rd party KYC software to perform a digital and much quicker KYC verification. This procedure is also integrated into the web-based applications or online systems of a company as a unified business practice. A use case for this kind of unified business practice can be found in KYC verification performed by banks. They not only verify the credentials for walk-in customers in their branches for opening an account, but for those customers as well who opt to open a bank account with the help of a Remote account opening service.
What Kind of Businesses Use KYC?
KYC verification is something that should and can be utilized by all and sundry. From a financial institution handling large investment portfolios to a high-end gaming platform, every business has the need to verify the identity of its users. An e-commerce website needs to authenticate the identity of its users to avoid cashback requests or credit card frauds. A social media platform uses KYC verification to ensure that no fake user is permitted on their platform. Even an online educational website offering skills development courses can make use of KYC software to ensure that only "real" students are using their proprietary educational material.
What Can AI Do for KYC?
Well, the simple answer is: a lot. KYC verification becomes an automated affair with Artificial Intelligence working at its heart. Any attempt at tampering with personal information or using a fake document to perform KYC can be detected in real-time with the help of a smartly devised AI. Read below to accustom yourself with vast opportunities presented by AI for KYC.
As AI ensures that a KYC verification is performed in real-time, a typical KYC provider can increase the number of verification services that are offered to its customers. Facial verification, documents verification, address verification, and various other checks can be performed in a single cycle, as AI is fully equipped to perform sophisticated procedures instantly.
AI opens up the opportunity to offer multiple formats for KYC verification. OCR technology is available to directly extract data from identity documents that can be used by companies to verify an identity of their users. Live video verification and verification with the help of a recorded video clip are all possible scenarios that come into play, when AI takes over a KYC process.
Defense Against Facial Spoofings
Facial spoof attacks are becoming the bit of a norm in online fraud milieu. A nearly real yet fake image of a user is utilized by online scammers to falsely project an identity that they don’t actually own. Facial recognition technology takes help from AI and thus can rid the online marketplace from the menace of Facial spoof attacks, if integrated into a KYC software.
Most banking organizations and financial institutes modify their KYC software and identity verification services to adopt AML/CTF compliance measures. Still, it takes days, if not weeks, to complete AML-based background checks. AI has the ability to perform complex and big data analysis in real-time. AI can be designed in a fashion that can perform similar AML background checks in real-time, thus safeguarding banks and financial institutes from unwanted regulatory scrutiny and monetary fines. Not to mention, there is this added benefit of a low cost that these businesses will have to spend as compared to a manual review carried out by compliance officers.
With the ability to identify and read languages from all over the world, AI is the best chance for KYC industry to offer an amazing feature: Universal Language Support. A KYC system that can read any written script on an official document and match it against provided credentials is a huge boost for companies operating in multiple countries. It enables KYC service providers to offer a single product to its customers that can work just fine in more than one country.
Muhammad Imran is a professional web developer and internet marketer. He loves to write on the internet of things, Artificial intelligence, and mobile app stuff. He is also writing for online magazine and onairtrend.
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