As the financial and banking sectors shift more and more of their services to digital platforms, the need for remote identification services is higher than ever. But more reliance on digital platforms means more significant cyber threats. Fraudsters and scammers are getting smarter with each day, looking for an opportunity to pounce on prey.
The KYC process forms the backbone of secure and simpler customer onboarding. Today, we need better and more capable KYC solutions, and video identification is one answer.
What is video identification? How does it work? What sectors use it? Let’s dive in deeper and find out.
What is Video Identification?
Video identification is a way to verify a person’s identity with a complete guarantee through a video. The process requires a camera-enabled device like a computer, smartphone, tablet, internet access, and legal identity document. It is a highly secure method that offers great convenience to customers during the onboarding process.
With a secure video identification process in place, there is a decreased chance of identity fraud of any kind. It works as a damper for fraudsters and identity thefts looking to attack.
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The Available Technical Solutions
Video identification providers like iDenfy work as a window between the business and new customers. It swaps places with personal identification at branch offices through accessible online platforms. An employee can conduct video identification asynchronously (timely deferred recording) or synchronously (live chat). The employee can even use Artificial Intelligence (AI) to scan ID documents and match biometric features in real-time. The AI can use a liveness detection to differentiate between actual humans and fakes like photos or recorded videos. Using facial recognition software, the AI can look for unconscious movement or request specific actions from the person, like blink the right eye twice.
How does Video Identification work?
The whole idea of digital user onboarding is to offer a better user experience through accessibility and convenience while maintaining complete security. Identification companies like iDenfy have developed solutions that provide complete remote identification and adapt according to company requirements to encourage customer acquisition techniques.
The process is quite simple and involves these steps:
Step 1: The customer will register with the financial institution for the onboarding process. The system verifies the details mentioned in the form and approves it.
Step 2: An agent from the institute will schedule an interview with the customer.
Step 3: Once the interview starts, the agent will ask a few questions to the clients and use different interface options to take the user’s and their identity document’s pictures.
Step 4: The AI will verify the documents based on presets, regulations and checks.
Step 5: Once the system verifies the documents the agent will confirm the outcome.
Step 6: All the data collected during the interview is stored for auditing and analyses purposes.
General Customer Due Diligence
Germany’s Anti-Money Laundering Act (GwG) controls all cases where banks, financial institutes, and other entities use video ID applications. According to the general due diligence stated in the GwG, all entities must identify the contracting party using their legal ID documents before establishing any business relationship or executing specific transactions. The regulations or guidelines direct “physical examination” of identity documents or use “another procedure” that offers equal security. The German Federal Financial Supervisory Authority (BaFin) sanctioned a similar procedure and permitted using video ID given that they fulfill specific criteria.
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Apart from Germany, other countries that have allowed or are in the process of adopting video identification in their KYC system are:
- SEPBLAC (Servicio Ejecutivo de Prevención de Blanqueo de Capitales) – Spain
- BdP (Banco de Portugal) – Portugal
- FKTK (Financial and Capital Markets Commission) – Latvia
- CSSF (Commission de Surveillance du Secteur Financier) – Luxembourg
- FCIS (Financial Crime Investigation Service under the Ministry of Interior) – Lithuania
- FINMA (Swiss Financial Market Supervisory Authority) – Switzerland
- RBI (Reserve Bank of India) – India
- Finantsinspektsioon – Estonia
- CNBV (Comisión Nacional de Bienes y Valores) – México
Some Benefits of Video Identification
For the company
Fraud elimination: Video identification acts as a significant deterrent for fraudsters since the process mixes human inspection with software and AI machine learning. The whole process ensures decreasing online fraud risks
Faster customer onboarding: With video identification, the KYC process is now quicker, more thorough while reducing onboarding costs and improving user experience.
KYC/AML: Video identification with KYC helps in complying with KYC/AML regulations. With KYC/AML compliance, financial institutes and banks can build their trust and gain a good reputation.
For the customers
The biggest benefit for the customer is a smooth and guided onboarding process. With video identification in place, the onboarding process will take a few minutes and the customers can return back to their activities. On top of it, the customer can schedule KYC onboarding anytime they want, so they have full control over when and how the process goes.
What are Video Identifications Used for?
The financial sector is one prominent industry that has asked for and is using video identifications. Other users include ICO‘s and cryptocurrency service providers.
Financial sector: banks, financial institutes, and other businesses use video identification during their KYC process to prevent fraud and identity thefts. With video identification, they can also safeguard customers and thus, maintain their trust.
Blockchain: Cryptocurrency service providers use video identifications to maintain their compliance and trust standards.
Customer experience: One goal of video identification is to make customer onboarding a smooth and convenient process. A smooth process means the customer gets good results quickly, and thus, they enjoy an excellent customer experience.
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Video identification is not just about a video. Designers created a well-thought-out process that involves different subjects like criminal psychology and deep analysis of documents and biometric features. AI machine learning uses several valid criteria to ascertain a clear-cut direction for video identification. Identification through video offers complete regulation compliance set-up by different countries, thus, safeguarding business and customers.