KYC Compliance Made Easy: Real-Time ID Verification for Financial Services

The pressure on financial institutions to meet stringent KYC (Know Your Customer) and AML (Anti-Money Laundering) requirements while maintaining a seamless customer experience is greater than ever.

In just the past few years, some of the largest AML fines in history have been imposed for regulatory non-compliance – including $1.4B against UBS in 2023 and over $2B against Danske Bank in 2022.

Is your financial institution prepared to meet today’s compliance demands?

A critical piece of maintaining AML and KYC compliance in the financial sector is ID verification – a process that is still often handled manually, despite advances in digital identity. But manual identity verification methods create problems for financial institutions…  increasing customer friction, delaying account access, and elevating your risk of fraud.

Instead of relying on manual or legacy identity verification methods, let’s explore how modern, real-time ID solutions transform and simplify your customer due diligence (CDD) initiatives, reduce your risk of fraud, improve the customer experience, and lower your operational costs.

The Importance of KYC in Financial Services

Did you know that between 2-5% of global GDP is laundered every year? According to the UN Office on Drugs and Crime, this estimate could be even higher, due to the covert nature of money laundering. The sheer magnitude and expensive consequences of this illegal activity is undoubtedly strengthening the regulatory drivers behind KYC and AML. More robust compliance through stronger identity verification methods in the financial services industry not only protects your organization against fraud and financial crime but also builds longstanding trust while ensuring customer safety.

Challenges of Traditional Verification Methods

It’s important to note that not all identity verification methods are created equal. Traditional ID verification methods involve a lot of manual processes, such as manually conducting identity management and document checks, which cause delays in account access, collections, and claims processing. These traditional methods also involve lengthy and friction-filled processes that require submission of multiple documents, which lead to high dropout and abandonment rates for loans, credit cards, and new accounts. And these disjointed ID verification processes not only create customer dissatisfaction and slow processing but also increase your overall operational costs and heighten your compliance risk.

What is Real-Time ID Verification?

Thankfully, there’s a better, modern, and more cost-effective option compared to manual identity verification for financial services organizations: real-time ID verification. Real-time ID verification is handled through instant identity checks during live customer interactions. Complete with AI-powered document recognition, data extraction, and biometric validation through facial matching and liveness detection, real-time ID verification allows you to manage customer due diligence instantly and virtually.

How Grypp Enables Real-Time KYC Compliance

Grypp enables real-time ID verification and KYC compliance through a comprehensive suite of visual engagement solutions. One of those key features is Grypp InteractiveDocs, which empowers financial institutions to view and complete documents live with your customers – together, in real time. With integrated AI-powered KYC capabilities, you can validate identity documents instantly and extract key data fields seamlessly to unlock fast, secure customer onboarding from anywhere – with no physical paperwork needed.

Sign by Selfie, a part of InteractiveDocs, offers secure, real-time, intelligent document signing by allowing your customers to first verify their identity with biometric analysis, and then legally e-sign documents from anywhere. Instead of relying on just a scribble on a screen, Sign by Selfie has advanced facial recognition and built-in 512-point facial verification for an added layer of security.

This biometric verification technology is conducted seamlessly during a secure live session with a customer. First, the customer is prompted to capture a live selfie with their device’s camera. Built-in spoof and liveness detection prevents spoofing and ensures that the person is physically present. AI-powered facial matching then compares the live selfie to a previously verified photo, such as a government-issued ID. The facial match is verified in real time to immediately confirm that the person signing via selfie is the same person whose identity has been validated.

Finally, once the ID verification is successful, the customer’s selfie and session metadata are securely stamped into a PDF document or digital record to create a full audit trail with timestamps. Not only does InteractiveDocs enable you to satisfy your KYC compliance and other regulatory requirements, it eliminates costly back-and-forth with asynchronous signing platforms by resolving identity verification and document completion in a single visual interaction.

Key Benefits for Financial Institutions

There are a number of benefits for financial institutions that make the switch to real-time ID verification solutions worthwhile. One of those key benefits is faster onboarding and account opening by allowing customers to verify their identity and sign documents instantly, which reduces friction in applications and compliance processes.

Another benefit is the reduced risk of fraud and non-compliance occurrences. Traditional ID verification methods, which rely on physical paperwork or asynchronous digital platforms, create more steps and open your financial institution to more risk of fraud and non-compliance. With enterprise-grade security features, Grypp’s digital identity verification tools enable you to speed up document signing and identity verification without sacrificing security and compliance.

Real-time ID verification solutions also significantly improve the customer experience. When you eliminate unnecessary friction in ID verification, KYC checks, form fills, and e-signature completion that traditional verification methods create, you also streamline the customer journey and boost overall satisfaction rates.

Finally, financial institutions that adopt real-time ID verification methods also enjoy lower operational costs through less manual effort. By reducing friction in tasks such as overdraft limit increases, payee management, and transaction disputes, you’re able to ensure accurate data collection and form completion in a single interaction and increase first call resolution (FCR) rates. And by reducing repeat calls and manual processes, your agents have more time – improving your operational efficiency and boosting your bottom line.

Financial Services Use Cases

Let’s explore some examples where real-time identity verification can simplify KYC compliance for financial institutions.

Real-time ID verification allows financial organizations to seamlessly verify customer identity for KYC, digitally and securely complete forms, and capture e-signatures for new accounts openings or loan applications. It also enables you to rapidly verify identities during high-value transactions, which carry a great deal of more risk in terms of fraud and compliance.

Further, real-time identity verification tools support remote KYC for online banking customers – enabling your customers to verify themselves, sign documents, and open accounts or applications from wherever they are. And for investment account setups and trading authorizations, a modern customer identification program (CIP) solves KYC compliance while creating an exceptional experience for your investment and trading customers.

Compliance and Security Highlights

Grypp’s ID verification software is developed with security and compliance at its core. Our commitment to security is demonstrated through certifications and aligning with compliance standards:

• Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations:
  • Real-Time ID Checks: Verification of government-issued IDs during live sessions, reducing the risk of fraud
  • Facial Recognition and Liveness Detection: Ensuring the person presenting the ID is physically present and matches the ID photo, through biometric verification and advanced liveness checks
  • Secure Data Handling: Adherence to data protection standards to safeguard personal information during the verification process, through secure and encrypted storage and strict access controls
• SOC 2 Type II: Certification indicating effective controls for data security, availability, and confidentiality
• GDPR: Ensuring data processing practices meet the European Union (EU) General Data Protection Regulation
• PCI DSS: Ensuring all payment interactions, whether via phone, chat, or digital channels are handled securely, protecting cardholder data and reducing risk in accordance with the Payment Card Industry Data Security Standard