Sep 15, 2022

What is eKYC and why it is the future of Know Your Customer?

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What is eKYC and why it is the future of Know Your Customer?

Probably, you have recently heard or read about the concept eKYC (electronic Know Your Customer or digital KYC). The needs of identification and user registration have increased with the transposition of the offer of products and services of all kinds to the online shpere.

The eKYC concept applies to all sectors of activity, but it is especially delicate in sensitive sectors such as those related to finance, investments and wealth.

In this article we will try to find out what eKYC really is and what meaning and interpretations this term has.

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How does eKYC processes work?

eKYC is the expression used to describe digital KYC processes. eKYC means Electronic Know Your Customer and is the remote, paperless process that minimizes the costs and traditional bureaucracy necessary in KYC processes.

Falsification of identity, signatures and phishing is very common. Specialist businesses dedicated to technological compliance solutions have developed completely secure eKYC processes with zero margins for the commission of these counterfeiting offences and related crimes.

From KYC to eKYC: Digital transformation

As we have already discussed in other entries of the blog, Know Your Customer or KYC is a procedure to identify and verify a customer’s identity. The process consists of a series of checks implemented in the first stage of the relationship with the client to verify that he is who he says he is, taking into account his identity documents and his personification.

This process is affected by a series of regulations in relation to, for example, anti-money laundering (AML), terrorist financing or electronic identification standards and trust services (eIDAS). 

And what is the main difference between KYC and eKYC? Well, KYC practices can be developed both offline (in person) and online (remotely). Here is where we can discern KYC evolution towards eKYC.

All businesses and economic agents, especially financial institutions and banks, are experiencing a drastic process of digitalization. Digital transformation has been part of the most relevant changes in organizations in the last decade, making that those who forget this task to lose opportunities in their sector or even disappear.

Companies and organizations are struggling to transform and digitize processes that seemed difficult to automate and get remote. However, specialized businesses have appeared in order to achieve this task, using cutting-edge technologies such as artificial intelligence and machine learning to transform and optimize processes

Companies we categorize as have appeared RegTech, accompanying businesses in the application of regulations and legal procedures with solutions that optimize, improve and reduce the costs of these processes. 

If you need more information about eKYC procedures, download this guide

eKYC online solutions

eKYC process is the digital and remote transposition of the traditional KYC process. Weeks needed for its completion become to seconds with a really lower cost in an optimized process. 

The identification and verification of the identity of the clients occur immediately, helping businesses to increase their conversion rate up to, for example in the case of eID solutions, 84% and offer a smooth, comfortable and simple experience to their clients. eKYC processes increase customer satisfaction and ensure that clients can make use of the service from the first moments in which the business has contact with them.

To ensure that eKYC processes meet the same safety standards as traditional ones of identification and face verification, companies must implement electronic identification processes with high levels of safety and reliability and following the rules set in AML5 or eIDAS regulations.

Get detailed information about European regulations that affect onboarding procedures here.

Electronic IDentification (eID), a pioneer in the digital identification sector, offers a wide range of eKYC API solutions based on artificial intelligence (AI) and machine learning that are helping dozens of companies in their digital transformation at the same time that complies with current regulations.

Our eKYC solutions and technology manage to reduce costs and bureaucracy, automate processes, and provide the highest levels of security; away from low-security solutions such as the ones based on selfies.

A sample of several of our eKYC solutions:

  • VideoID: The first eKYC video solution that verifies identity real-time without the need for agents with the same level of security and legality as face-to-face identification.
  • SmileID: The only eKYC authentication service on the market that can register customers with absolute guarantee in seconds.
  • SignatureID: Advanced electronic signature and cross-device solution.

If you want to try the most advanced eKYC solutions on the market, do not hesitate to request a demonstration.

eKYC services in different sectors

For almost a decade, the financial sector has been one of the first to implement the digitalisation of its processes, including the digital KYC process. Now, a person can complete the eKYC process online through automatic video identification and, within minutes and from anywhere, open a bank account, sign a loan, or even a mortgage.

The Fintech sector has been one of the first beneficiaries of the eKYC process, as companies in this sector have been able to carry out 100% of their operations online. For Fintechs, eKYC is the basis for their fast development regionally and globally by ensuring scalable growth, at very low costs and allowing an unparalleled user experience.

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