How can digital identity solutions strike the perfect balance between guarding against financial crime and providing an amenable customer experience?
- Digital transformation offers a host of benefits, but as more people begin to conduct more of their activities online, there is also a growing need to protect against highly sophisticated financial criminals.
- In the face of rising risk, banks and other FIs must balance their KYC compliance obligations with the need to ensure a favourable customer experience, and technology is stepping up to the plate to deliver innovative solutions to meet this challenge.
- The value of a trusted brand technology partner is that they are able to deliver proven depth and breadth of tools and data, along with scale and flexibility.
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Digital transformation continues to accelerate across industries. Driven by constant fintech innovation and the ongoing impact of COVID-19 – which overnight forced many firms to reconsider their digital offerings to clients – our world is increasingly moving online. While this brings a host of benefits, it also introduces a range of new risks.
As more people begin to conduct more of their activities online, enjoying the benefits of enhanced connectivity and 24/7/365 availability, there is also a growing need to protect against highly sophisticated financial criminals who are harnessing the same digital capabilities to defraud both organisations and individuals.
For firms conducting business online, ensuring that their cyber security is adequate can quickly become a minefield. Many firms are still constrained by legacy systems that lack sufficiently robust security features, and still more simply do not have the funds to invest in cutting-edge security.
A balancing act between compliance and clients
Against this backdrop of rising risk, banks and financial institutions (FIs) must ensure that they are taking adequate steps relating to fraud management, and that they are screening customers and third-parties, both at the start of any new relationship, and on an ongoing basis.
Consequently, KYC remains a central focus for FIs that operate within a strict regulatory environment, and one in which the threat of regulatory action, financial penalties and potential reputational harm remain ever-present.
A focus on KYC, however, can quickly present a challenge at the start of any new relationship. Banks and FIs typically face a balancing act in which they must ensure that they meet their compliance obligations, whilst also controlling costs and ensuring a favourable client experience.
Watch: Reimagining digital banking: the implications post-pandemic
Digital identity and eKYC
Innovation in the KYC space is stepping up to the plate to solve these challenges.
Digital identities in particular offer tremendous opportunity when compared with the old-school approach of identity verification that relies on hardcopy documentation. Unsurprisingly, these traditional processes are fast being replaced by digital equivalents.
Digital identity solutions can vastly improve negative client experiences in contrast to manual, often paper-based KYC customer due diligence (CDD) processes that are typically time-consuming, inefficient and costly, leading to customer frustration.
They also offer fast, reliable digital ID verification and screening across all geographies; can boost operational efficiency; and generally enhance compliance levels, as they remove the factor of human error.
Many FIs are undoubtedly turning to digital onboarding, eKYC and digital identity verification because they appreciate that these processes form an integral part of a new client’s first impression, and as such can set the tone for future engagement.
Ever-increasing competition in the digital space means that all firms certainly need to fully complete their KYC processes, including identity and document verification, and deliver a seamless and engaging client experience, right from the get-go.
When digitally onboarding customers, many fintechs – including crypto-exchanges, payments firms, online asset managers and brokers – realise that, in order to stay that crucial step ahead of the competition, they need the power of a trusted brand technology partner with proven depth, breadth and scale that can flexibly adapt to changing requirements and bring trusted data and tools to the table.
Partnering with Refinitiv will empower you with holistic digital identity solutions to deliver a superb customer experience while meeting regulatory requirements.
Our best-in-class solution, Qual-ID, was built with highest security standards, is powered with the most accurate data for global identity verification in the market, proofs documents instantaneously and leverages our World-Check Risk Intelligence database to help compliance teams pinpoint potential financial crime-related risk and make better risk-related decisions.
As the digital revolution continues to offer both opportunities and challenges, Refinitiv will continue to support firms by delivering the data, technology and human expertise they need.
This combination can help to solve the juggling act that many firms face – one in which they must embrace and manage digital transformation, fight financial crime and meet their compliance obligations, while protecting the all-important client experience.