5 Steps Involved in Implementing Digital KYC in Financial Institutes

Banks, insurance companies, and investment agencies implement digital KYC to onboard clients. This process reduces the risk rate of companies as they can get better knowledge about their user. Banks are more prone to fraudulent activities. Therefore, legal authorities have made it crucial for them to comply with KYC and Anti Money Laundering(AML) regulations. In 2021, 517 thousand cases of internet crimes were recorded, 249.2 of them were digital fraud cases. Such a large number of cases has enhanced the importance of digital KYC. Banks can only compete by following the guidelines of regulatory authorities, as these rules are for the safety of businesses. Digital KYC helps companies comply with all these rules, and businesses do not have to keep a record of changing regulations; digital KYC automatically implements all of these rules.

What is Digital KYC?

Verification of the clients is done by digital means; their documents and identity are verified to ensure they are the same person they are claiming to be. If both comparisons are identical, the person is authentic; otherwise, the verification is rejected. Banks onboard their customers and their employees through it; their risk assessment and continuous monitoring are also done through digital KYC verification.

Steps of KYC Process in Banks

Financial institutes can achieve the KYC by performing the following steps:

  1. Customer Identification

When a new customer opens an account, their verification is done. The first step of digital KYC onboarding is to check the client’s identity; for this purpose, clients are asked to upload scanned copies of their documents. These papers include an identity card, residential address, and bank statement. The legal articles are matched against prior stored templates in the database. If they are the same, this means the user is genuine. Otherwise, verification will not proceed further and label the person with a red flag. In some cases, clients are asked to upload more documents for verification. 

  1. Risk Assessment

The risks of the users are measured and classified according to their risk rate. The company builds relationships with their clients according to their risk assessment; their due diligence is performed for the users marked as high risk. Businesses prevent them from future loss, as they have complete records of their clients and know their customers’ source of income. Partners can also be verified through it so the company can get better information about their partners before committing any legal commitment.

  1. Customer Due Diligence

This process is done to monitor the client’s activities and check the customers’ income sources; this process also ensures the user is not involved in any illegal activity.

  1. Monitoring

Banks monitor their clients to measure their risk rate; they can even keep an eye on their employees to check whether they are performing their tasks well. Digital KYC verification solutions can save their employees’ attendance records, check-in, and check-out.

  1. Record Keeping

Many customers log in to the banks daily, and keeping a record of the vast clients’ stats takes a lot of work. Online KYC has solved this problem; banks can maintain and verify the records of their clients and employees with just a single click. The process is streamlined by adequately implementing and utilizing this solution in their daily activities.

Importance of KYC in Banks

Digital KYC verification solution plays a vital role in the banking sector as they prevent money laundering; when the client’s due diligence and monitoring are done, the company gets a complete client record. The activity and transaction status of the client is continuously monitored; if any suspicious activity is detected, it is immediately noticed and informed to particular authorities. The company’s Financial services are also enhanced as the company does not have to hire more staff for the daily operations; most of the task is performed by the system. The digital system has made it convenient for companies and clients; time and money are saved through it. Client trust is also built upon the companies that protect and secure their information.


Digital KYC aids in the company’s daily activities and has enhanced the business’s efficiency and effectiveness. Banks increase their revenue by implementing it properly as more clients are attracted to the company that facilitates them and simplifies the registration process. A significant rise in the companies’ income is observed that they are utilizing it in their operations, as they can perform more tasks in less time. Client retention rate increases through it, as users do not switch the company that initiates digital KYC. These solutions have remarkable benefits in almost every industry and business

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