Technology has evolved so rapidly over the past few decades, it can be hard sometimes for businesses to keep up. KYC is an essential part of many industries, but the slow nature of manual or in-person KYC doesn’t mesh with the demands of the modern customer. Efficiency and speed are the norm, and everyone is used to nearly instantaneous results.
With eKYC, or electronic know your customer processes, this instant gratification is closer to reality. Thanks to eKYC solutions, the process of customer authentication has gone digital. With the help of eKYC, finance, retail and other industries are able to keep up with the demands of their customers.
In order to keep up with this new era, you may be wondering where you should start. The choice of a KYC solution is one that shouldn’t be taken lightly. In this blog, we’ll define what exactly eKYC is and how it’s different from the traditional process, describe the different security and authentication methods and help you decide on the best verification solution for your needs.
eKYC, as we mentioned, is electronic know your customer. If you’re already familiar with the legacy KYC process, you know that it involves verification of certain customer information that proves their identity. This process is typically slow and painful for both the company and the customer. With eKYC, you can create a digital identity profile and verify remotely and online.
The impact of eKYC is that companies no longer are tied to the frustrations and slowdowns that come with the typical KYC regulations. KYC has evolved, and eKYC helps companies comply with KYC standards while still maintaining a high level of security.
eKYC is a much more efficient, effective process than the traditional know your customer process. With eKYC, there are a lot of differences that make it much better overall.
Here are the biggest differences between eKYC and the older way of doing things:
The advantages of eKYC allow you to save time and money, and they make for a better customer experience. Of course, the biggest difference between KYC and eKYC is the near instantaneous verification. In traditional KYC methods, verification can be an arduous process that takes time out of the day for your customers, employees and everyone else involved in the process.
When you use eKYC, digital security is going to be of the utmost importance. People are already wary of sharing their information online, so you have to make sure your customers are comfortable and earn their trust. High levels of digital security will keep your data from falling into the wrong hands. Typically, in the KYC process, customers will share sensitive information involving their identity, financials and other forms of documentation.
All of this information is something that people won’t be readily sharing online, so you have to make sure digital security measures like comprehensive security and compliance are regularly audited by your chosen authentication app. Encryption for sensitive values is also essential.
No matter what sector you’re in, you have to make sure your eKYC solution is secure. KYC is commonly used in banking, investing, retail and government agencies. Whichever industry you’re working in, your customers’ data is important to protect. You need to prioritize security to keep your business’s reputation intact and to keep your customers’ data safe.
Keeping all of the above information in mind, you might be wondering which way you should go for your authentication solution. There are a lot of ways to authenticate in accordance with KYC compliance, but some are much better than others.
If you’re wanting to choose among some of the most common options, here is what many companies use:
Knowledge Based Authentication: Many people are familiar with knowledge based authentication. This is where users are asked questions that only they know the answers to in order to prove their identity. There are two types of knowledge based authentication: dynamic and static. Static is where the questions are provided by the users, and dynamic is where questions are pulled from databases. The problem with KBA is that even the more secure method, dynamic KBA, is vulnerable to hacks and data leaks.
Biometric Based Authentication: Biometrics have advanced rapidly and now have become a fairly reliable form of authentication. Biometrics use your physical — and in rare cases behavioral — signifiers to verify your identity. Things like your facial shape, retinas, fingerprints and more can be used as a biometric signature. Although you’d think that this is extremely secure, since only you have these signatures, this data is still collected and stored, meaning it’s vulnerable to leaks. Biometric data is something you don’t want hackers to have, so this makes this solution less than ideal too.
Key-Pair Based Authentication: If you’re familiar with cryptocurrency, this is one of the primary authentication methods. This provides customers with a public and a private key. Their public key is used for transactions, and private keys are what the customers use to access their account. The private key isn’t meant for sharing. The issue with this method is that it isn’t uncommon for users to lose their private key and thus everything stored in the account involved with it.
ID Based Authentication: Although this is one of the simplest forms of authentication, it’s also one of the most secure and effective. With ID based authentication, initially all customers need to do is provide their name and phone number. They’re then immediately prompted by their phone to prove their identity. This makes things much easier for the customer as well.
The choice of authentication method is up to you, and you should always choose what works best for your company. But remember to keep in mind your customers’ onboarding experience and their information security. You want to make onboarding as easy as possible for them and make sure their information is always safe. The combination of these two factors is going to be the most important consideration.
Cognito provides advanced authentication solutions that allow you to make the customer onboarding process seamless and frictionless. With Cognito’s identity verification solution, your customers can be verified quickly and securely.
Cognito is a comprehensive authentication solution that offers identity verification, ongoing screening and business verification. If you’re wanting to automate your KYC, protect your business against fraud and protect your organization’s reputation, then Cognito can help.
Best of all, Cognito makes it easy to integrate our API with your existing onboarding processes. By seamlessly integrating our powerful KYC tools, you can ensure that KYC is easy for both you and your customers.
If you’re interested in the most comprehensive, secure and easy-to-use authentication solution possible, then choose Cognito. Get in touch with a member of our team to learn more about how Cognito can help you bring your KYC process into the new era.