As technology and digital services continue to grow at a rapid pace, they are becoming more integrated into our daily lives. Traditional financial service providers need to revamp their strategies to accelerate digital services and products. Thanks to the digital-only mindset, we are seeing a global adoption of technologically advanced solutions for digital transformation and identity verification.
This adoption has led to the emergence of FinTech startups both in leading markets and emerging economies as well. The most rapid adoption of virtual banking or digital-only banking is seen through the emerging markets in Asia. Countries like Singapore, Malaysia and HongKong issued licenses to digital-only banks. The authorities are backing the digital currency revolution in these markets.
According to world bank data, 1.7 billion population around the globe is still don’t have access to financial services at all. A major portion of this unbanked population is in the Asian Pacific region and since they have wide access to the smartphones and internet, financial service providers can reach to them but there are few challenges that still need to be resolved to include the unbanked population in the financial system.
Challenge 1: Complying with ever-changing KYC and AML laws
Identity verification during the onboarding process is critical for banking, investment and even loan lending service providers. Verifying and authenticating a user helps financial institutions in fighting fraud and terrorism. This is why the regulators around the globe enforce stringent Know Your Customer (KYC) and Anti Money Laundering (AML) regulations.
Yet, the traditional KYC and Identity verification laws are not feasible for online financial service providers. The complexity and unclarity in the regional regulations make it difficult for the futuristic financial service providers to comply with laws. The regulatory authorities in the APAC are taking this challenge seriously and they are collaborating with industry players, stakeholders and vendors to make compliance easy for the digital financial institutions.
Challenge 2: Ensuring a swift customer journey and onboarding experience
Seamless customer experience gives a boost to your relationship with customers and has an overall positive impact on your brand reputation. Unfortunately, many companies are still focusing on fulfilling the regulatory requirements with none to a little focus on customer experience. Finding a balance between customer experience and regulatory requirements is hard to comprehend the challenge, which needs to be resolved.
According to a report, 40-50% of the customer leaves during the onboarding process due to delays, errors in the onboarding process. Financial service providers can employ end to end AI-based online identity verification solutions to find a balance between customer experience and regulatory requirements. AI-powered identity verification solution enables a seamless and swift onboarding experience for the customer while helping you in fulfilling the regulatory requirements.
Digital banks and other financial service providers need to renovate their KYC process by employing technologically advanced solutions for swift and accurate online identity verification during the onboarding process while staying compliant with regulatory measures.
Challenge 3: Combatting sophisticated frauds with advanced online identity verification solutions
While online businesses are always vulnerable to cyber attacks, financial institutions have the highest probability of these attacks because of the instant money that hackers to steal from someone’s bank account. Most of the data breaches in the recent past happen due to the easy availability of the user’s login credentials to the hackers.
Personal information such as passwords, pins, credit card information, as well as other identity verification and authentication documents could easily be stolen by different cyberattacks and they are easily available on the dark web. Even a novice hacker could buy a lot of credentials in just a few dollars. This makes login credentials unsafe. Some of the companies are using biometric authentication, but they are not so safe as well. In this tech-savvy world, hackers have become more sophisticated. Deep fakes are the recent addition to these latest attacks and it is based on AI that has the capability to defeat simple biometric authentication systems.
However, the fraud prevention industry which is actively fighting fraud has come up with more advanced identity verification solutions to tackle deep fakes. By incorporating liveness detection empowered with AI in the biometric verification solutions, businesses could easily detect deepfakes and spoof attacks.
Empowering digital financial institutions with online identity verification solutions
While the digitization of the financial system is inevitable the challenges mentioned above need to be resolved and AI-based online identity verification is the solution to all these problems. Financial institutions could incorporate online identification solutions to deal with these challenges.