To counteract security threats, and meet updated know-your-customer (KYC) and anti-money laundering (AML) standards, the banking, financial service, and insurance (BFSI) industry is leveraging AI and facial recognition technologies. These technologies can prevent payment fraud, deter financial crime, and enhance customer identification and authentication processes.
With biometric technologies like eKYC (electronic Know Your Customer), operators have access to an additional layer of fraud prevention, all while digitizing core transactions and processes. With the boom in remote services due to the Covid-19 pandemic, all financial institutions should implement eKYC measures to step into a more secure future.
KYC is a system to protect financial institutions, and their customers, from fraud. It utilizes safeguards like passwords and two-factor authentication. KYC also tracks money in the economy based on where it originates and who is involved. Global spending on KYC was projected to total 1.4 billion USD in 2021.
As financial institutions face greater security risks, eKYC (electronic Know Your Customer) has grown in popularity, providing more benefits to customers and brokers than KYC.
eKYC makes the traditional KYC process more secure, more efficient, and is accessible remotely by using digital identification and biometric tools such as facial recognition. The benefits of eKYC include:
To ensure that eKYC processes meet the same safety standards as traditional methods of identification and face verification, companies must implement electronic identification processes that feature high levels of safety and reliability.
Let’s look at the three main biometric identification technologies, or vision technologies, used in eKYC that protect both customer and broker.
Financial institutions are increasingly using advanced technologies to ensure the security of their assets. The three main technologies used in eKYC processes are:
Each of these three methods have their strengths and weaknesses. Use the chart below to further understand the benefits of each solution.
Block listed & Stranger Prevention
Iris recognition can be fast and highly accurate but only select expensive cameras are designed to perform these tasks. Beyond the hygiene concerns associated with fingerprint verification, dirt or oil from fingers can interfere with the efficacy and integrity of sensors.Facial recognition is recognized as the superior method of vision technology because it is affordable, hygienic, and flexible. Additionally, you can install a solution like FaceMe® Fintech on a wide range of camera-equipped devices to perform edge-based facial recognition.
Facial recognition technology is instrumental in strengthening security measures in many BFSI settings. Let’s walk through a few of the most transformative examples of eKYC.
When a customer entrusts a financial institution with their money or information, they expect the highest level of security. Banks can establish this trust by implementing eKYC during the customer enrollment process. This is the broadest use case across the BFSI industry, from opening a bank account to applying for a loan or credit card. eKYC speeds up the process of cross-checking a customer’s identity with other financial, public, and employment records.
When opening a bank account, facial recognition factors into this process as follows:
A similar eKYC solution can also enhance the process of opening brokerage or insurance accounts:
There is a growing preference for contactless digital solutions: 76% of Americans have used their bank’s mobile app to perform everyday transactions. Using biometric verification in mobile portals diminishes concerns about sensitive information being intercepted.
Deploying edge-based facial recognition on mobile devices embeds information in the devices, eliminating lag from cloud-based processing. Devices only send small, encrypted templates for validation to a database of encrypted templates hosted on the financial institution’s server. This means that operations are faster and more secure – completed within milliseconds.
Mobile eKYC solutions move beyond daily banking transactions, allowing customers to remotely and securely apply for additional products like credit cards, loans, or securities accounts. Customers can also use tablets and other mobile devices inside physical branches to enjoy the security of biometric verification.
Many customers use browsers on laptops and PCs to conduct banking or brokerage transactions and apply for various financial services and products. Facial recognition technology can make these arenas more secure and efficient.
If a user wanted to open a brokerage account via their PC they can verify their identity using a webcam to capture facial vectors and images of ID cards. The system quickly processes the data on the cloud using the same encrypted template process as with mobile devices. Even though the entire process is off-premises, biometric verification links the user’s identity to the new account, ensuring it is secure.
Despite the rise of mobile banking, ATMs are still essential for some in-person transactions. Facial recognition technology enables cardless ATM transactions. Once an ATM camera captures a customer’s face, the facial recognition system looks for a 1:1 face match within the database. The customer then enters their PIN for a second form of authentication and confirms their identity. They can then begin the transaction without needing to take out their wallet or even carry their ATM card.
As banking and other financial activities increasingly go remote, so will customer service. Customer support conversations often involve exchanging sensitive information, so verification of a customer’s identity is imperative. The security questions that customer service representatives usually ask at the beginning of a consultation are often predictable and easily accessible to identity fraudsters. However, facial recognition technologies can help protect sensitive information in virtual customer service interactions.
First, a user contacts customer service via videoconferencing and gives their consent to use facial recognition. Their facial features are then matched with their profile that is already stored in the institution’s database. When the representative confirms the user’s identity, they can be sure they are conferring with the actual accountholder.
Some customers still prefer in-person customer service. Transactions at a teller window can also benefit from the additional layer of safety provided by eKYC facial recognition technology. Brokers can use eKYC verification on their tablets or PCs to quickly onboard customers or perform identity checks. In-person interactions are faster and more secure with the use of eKYC.
Although financial processes and security concerns are moving further into the digital realm, physical banks and financial institutions are still vulnerable. Facial recognition cameras placed at ATMs or in branches instantly identify block-listed individuals, confirm their identity, and notify security who can take immediate action.
Imagine an entirely integrated branch security system using eKYC across multiple AIoT devices. A local workstation at the branch would connect to the clerk’s POS terminal and employees’ tablets or PCs for facial and identification captures. The information would also be linked to IP cameras for security and surveillance. ATMs and online verification could even incorporate facial recognition to extend the reach of a single branch’s security. eKYC builds upon the web connectivity of IoT devices with machine learning, creating more secure physical and digital banking operations at every point of interaction.
Facial recognition is poised to become an integral part of the BFSI sector. With continued increase in identity theft and fraud, considerable losses loom for banks and other financial institutions that don’t follow KYC standards. eKYC, through facial recognition, can empower institutions to secure their assets and information more effectively.
Financial institutions can be empowered by eKYC technologies that enhance security, prevent fraud, and simplify authentication. With mobile eKYC tools, financial institutions can streamline insurance, loan, and credit card applications, and extend the reach of their customer service without compromising private information.
Facial recognition tools like FaceMe® Fintech use highly accurate verification to strengthen mobile access points, streamline account creation, and secure physical branches. In the years ahead, financial institutions will continue to incorporate such solutions to meet the demand for more flexible and more secure banking experiences.
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