The world bank provides reports that billions of online users are still not verified, despite problems caused by global pandemics, which have gotten worse at some point. People are consequently unable to access necessary services including healthcare facilities, social security, and banking. Although it can seem like these worries are unnecessary, they are not. These problems have drawn more global attention to and awareness of financial instability. They emphasize the need for significant improvements in financial institutions’ efforts to find answers. To deliver frictionless services to the customers that make up the “base of the pyramid,” all businesses must embrace digital KYC verification services.
Financial executives currently have a great chance to move towards more direct, practical, and socially acceptable methods. By doing this, financial leaders not only indicate that they prioritize the world over profits but also provide flexibility in unpredictably changing times.
Why Does Financial Inclusion Need Digital KYC Verification?
In a universal approach, financial inclusion guarantees each person’s access to all financial services while fostering long-term economic expansion. Therefore, promoting financial inclusion entails offering suitable and reasonable financial goods and services.
Gap Between Digital Financial Inclusion
Without addressing digital hurdles, addressing financial inclusion is pointless. The absence of digital identity is the main barrier to financial inclusion. Whatever the obstacles, businesses must guarantee complete access to financial services. Primarily because monetary services now come at a lower cost, travel farther, and move more quickly thanks to technology improvements, which have cleared road for closing the financial inclusion space.
Problems with Financial Inclusion
Online financial services offer a remarkable chance to enhance the distribution of financial services to a larger audience. Four billion individuals use the internet, meaning that billions of people are not connected to the internet, according to research from
International Telecommunication Union. Therefore, it implies that digitally settling financial matters has a great deal of leverage.
Online Banking
Similar to having banking insurance, an offshore banking service shields firms from unreliable financial systems. Additionally, it guards against disruption by insolvent governments. With an overseas investment account, businesses may also be certain to avoid pointless lawsuits. Having different currencies in offshore bank accounts simplifies the management of money. Without online KYC, opening an offshore bank account is just as difficult as onboarding a new employee.
Insurance
Another element of financial inclusion that every person, affluent or poor, has a right to is insurance products and services. These goods and services, however, were previously only accessible through in-person verification. Customers are unable to conduct business at their convenience, and their busy lives are disturbed while attempting to buy, amend, or cancel their insurance. Customers also have to rely on techniques like video conferencing and documents supplied through digital KYC verification.
Both the energy of clients and insurance companies is depleted by these activities. The onboarding process is delayed as service providers fill out mountains of paperwork for each client. Consequently, it is a serious issue for both parties. Due to the repetitive nature of the transaction process, a company risks losing a potential customer.
Providers of Credit Cards
Credit card onboarding is challenging and time-consuming for financial inclusion due to its complexity. Credit card companies carry out the entire process for free, and because of their strict procedures, customers may leave without receiving worthwhile services.
The usage of paper-based documentation prevents automation in identification process. Credit card companies rely on written KYC verification as a compliance requirement, which makes the onboarding process confusing. Credit card providers have since been dealt a curveball by evolving AML and KYC standards, which has cost them millions of dollars.
Loan Products
For lenders, manual paper-based loan applications create a lot of extra effort. Performance and client experience are reduced by these procedures. To guarantee that their clients are not breaking AML and KYC laws, loan lenders are required to conduct KYC verification and AML checks.
Through identity manipulation, fraudsters can easily control loan providers. To obtain sizable loans, the thieves only need their social security numbers and editing of their official identification documents. Until they demand loans and receive no response, loan lenders are unable to identify the loan. Criminal infractions, and these unethical transgressions damage lenders’ finances and brand names.
Conclusion
Online Know Your Customer (KYC) verification solutions are bought much more frequently, which makes it easier for the financial industry. Digital identity verification has made customer onboarding simpler while also assisting firms in adhering to strict AML and KYC standards. Additionally, it has produced a favorable environment for overcoming fraud, which has been prevalent for decades. Because of eKYC, financial service companies have been able to create tactics to fight fraud.
Online KYC verification strives to provide financial inclusion to the vulnerable population while setting reasonable expectations for people and enterprises. These essential financial services set profit-oriented objectives while upholding higher standards of conduct. In addition to these options, governments must create uniform laws and carry out active investigations into law enforcement.
