Financial institutions, especially fintech companies, are the most vulnerable businesses to data theft and cyberattacks. Since these institutions function solely on the web without physical presence, criminals use the anonymity offered by digitization to target these financial institutions. Businesses in the financial industry face an average cost of $210 per breached record. Moreover, there is a considerable risk of losing customers due to the lack of trust created after the breach.
To combat the increased threat of cybercriminals and scammers, companies need robust solutions that keep pace with evolving threats and provide continuous monitoring, eliminating all possible threats.
Eliminating cyber threats: Why it’s so important
Data holds greater significance than physical assets in our fast-paced digital world, which is constantly changing. This is because it can generate fake identities and commit crimes under the victim’s name if they have been subjected to data theft. This makes it crucial for financial institutions and other businesses to eliminate all kinds of cyber threats before they even get a chance to cause damage.
Regions like Cyprus are potentially at a higher risk of these threats, as criminals often target untapped markets. KYC Cyprus is important because it can help protect a major potential market for tech advancements. Moreover, KYC regulations in these regions need to be polished and need proper attention from governments and tech companies.
Another primary reason for eliminating these threats is regulatory compliance. Governments and regulatory bodies worldwide impose regulations regarding digital security that companies must comply with. If an institution fails to comply with these regulations, it is subjected to legal fines and charges, sometimes even more significant than the financial loss itself.
Identity verification and cybersecurity: What is KYC?
Know Your Customer (KYC) is a branch of the field known as identity verification (IDV). As the name suggests, the general purpose of identity verification is to verify the identities of entities that establish any contact with a company. A due diligence test is conducted on individuals, and they are scanned against global watchlists to ensure they are not related to any criminal activities.
Modern identity verification solutions are now integrated with artificial intelligence (AI) and machine learning (ML) technologies, making them more effective. Automation technology, behavioural analysis, and big data analysis have enabled the creation of a suite of automated identity verification solutions.
Emerging KYC technologies: What’s essential
KYC has seen significant developments in the past few years. The widespread use of technologies like artificial intelligence (AI) and machine learning (ML) served as a major catalyst for KYC processes. If these developments keep their current pace throughout, a bright future for KYC processes is ahead for businesses.
Modern eIDV service providers have introduced perpetual KYC, a new method for conducting KYC verification processes that involve conducting ongoing verifications. Every onboarded customer and client is constantly monitored, eliminating the threat of any legitimate client committing a crime. Digital accounts often get taken over by hackers, who can then use those accounts to commit grave crimes. Perpetual KYC keeps a sharp eye out for these illicit entities.
Document verification is an essential aspect of the KYC process. Criminals are now significantly better at forging fake documents and committing crimes using them. Traditional verification methods are outdated and need help differentiating between real and fake documents. Optical Character Recognition (OCR) and Intelligent Character Recognition (ICR) technologies are now utilized by KYC verification providers for better document verification. These technologies can scan physical and digital documents precisely in seconds, saving businesses significant resources and potential problems.
Streamlined customer onboarding
Customer or client onboarding is a crucial aspect for fintechs. While registering an entity with a financial institution, the entity and its source of income need to be legit. Companies must stay aware of money laundering and terrorist financing activities, as they can have grave consequences. Moreover, this requires continuous reporting because previously onboarded entities can conduct illicit activities. KYC providers offer a suite of solutions that make the onboarding process efficient and resource-friendly.
Blockchain and cloud technologies
With the world now reliant on data, KYC technologies have started using cloud technologies to process and protect data better. This provides businesses with better infrastructure and safeguards data from criminals. Physical data storage methods have limited scope and are also vulnerable to alteration and solicitation. Cloud storage methods use blockchain technologies, ensuring data originality and preventing duplication.
Opaque ownership protection
Criminals often tend to mask the source of their finances or sometimes their identities as a whole. Opaque ownership is a trend that uses complex ownership structures to hide the true identity of assets or individuals. This can be used by money launderers and criminals of other sorts to bypass regulatory bodies and get away with crimes. Modern KYC technologies, integrated with AI and ML technologies, can detect these ownership structures and protect businesses against illicit entities.
KYC: A full-Scale verification solution
The global E-KYC market was valued at USD 1571.12 billion in 2021 and is expected to surpass USD 2792 billion by 2030, registering a compound annual growth rate (CAGR) of roughly 21.55% between 2022 and 2030. Businesses are now realizing the risk of compromising security; the market is ripe, and adopting KYC verification is at an all-time high.
Modern IDV solution providers like Shufti Pro present a whole suite of IDV solutions to users, including KYB, KYC, and KYI. Fintechs can adopt these solutions and get an automated, full-scale identity verification experience. With these solutions, companies get to focus on other aspects of their business and nurture growth.
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