We already know that artificial intelligence (AI) is an advanced technology that helps optimize business processes. With everything moving to digital, the KYC (Know Your Customer) process now requires is also implementing digital processes by requiring electronic documents for customers. KYC process is used in many industries, including banking, lending, and fintech, it is important to ensure that the process runs smoothly and does not have a negative impact that leads to unwanted issues. This article will discuss how AI in the KYC process can help businesses better understand their customer and avoid making the wrong choice for an AI solution.
What is KYC
Know Your Customer or KYC is a process that businesses conduct to better understand their customers by verifying the legitimacy of their documents when they apply for loans, bank accounts, or insurance. This process commonly requires document such as identity cards, bank statements, and collateral.
How AI is Changing the KYC
AI is known for its ability to process documents faster and more accurately. It obviously saves time and effort compared to spending time on manual methods. AI in KYC speeds up the processing of documents, verifies legality, and makes smarter decisions.
These are the types of AI utilized in the KYC process:
1. OCR
OCR (Optical Character Recognition) is used for reading and extracting information from documents accurately, minimizing the need for manual data entry. It can read scanned documents, including images, and digital documents like PDF files.
2. Facial Recognition
To ensure that the applied identity card is not fraudulent or manipulated, businesses like lenders typically require applicants to upload their ID card along with a selfie. This aims to verify that the person in the selfie matches the ID card owner.
4. Machine Learning (ML)
Machine learning is used for fraud detection because of its ability to analyze specific information from a large amount of data. Moreover, it can also identify unusual patterns in documents.
Use Case of AI for KYC in Some Businesses
1. Banking
In the banking industry, KYC is implemented for opening new accounts and applying for loans. Traditionally, banks could take several days for document verification such as ID cards and other proofs. With AI in KYC, banks can complete these processes in just minutes. Using OCR and facial recognition, AI can match ID information with live selfies in seconds and spot suspicious or forged documents. By integrating AI into the KYC process, banks can increase efficiency, reduce fraud risks, and improve customer satisfaction. This also benefits customers by opening accounts entirely online with a quick and seamless onboarding without visiting a branch.
2. Lending
KYC is a crucial step in the lending industry before approving loans, credit cards, and other financial products. KYC is used to verify a borrower’s identity, assess their risk profile, and ensure compliance with anti-money laundering (AML) regulations. Lending requires many documents to check, like ID cards, bank statements, proof of income, and more. With AI-powered KYC, lenders can automate document checks, analyze behavior patterns to spot potential fraud, and speed up loan approval.
3. Insurance
Insurance implements KYC to verify the identity of policyholders and avoid fake claims. With the help of AI, insurance can validate identities and ensure that they are legitimate quickly and accurately. Furthermore, this is to prevent delays in claim approval and mitigate fraud risks.
Optimize Your KYC Process with Fintelite AI
Based on the discussion above, AI in KYC is critical for making the process run more smoothly and precisely. To choose the right AI for business, it should be based on needs and advanced features; Fintelite can be the best option. With its capability to process documents faster and spot fraud effectively, it is helping businesses across industries in achieving their goals and maintaining a productive workflow.
