Five Ways KYC API Solutions Can Help You Achieve Compliance, Security, and Customer Satisfaction
As Know Your Customer (KYC) guidelines have adapted to keep pace with technological advances, Application Programming Interfaces (APIs) have become critical tools to help organizations comply with KYC requirements at scAs the demand for self-service onboarding solutions continues to grow, companies in the financial and fintech industries must rely on technology to ensure they’re prioritizing security and regulatory compliance without sacrificing customer experience.
In this article, we’ll showcase how KYC API technology enables companies to provide robust security without slowing down online customer transactions. First, we’ll look at what KYC processes are and why they can be inefficient using traditional methods. Then we’ll examine how KYC API tools automate the process of confirming customer identity. Finally, we’ll explore five advantages KYC API solutions offer over companies seeking to provide secure, satisfying digital customer experiences.
What Are KYC Processes?
Know Your Customer guidelines are policies and procedures used in the financial services industry to prevent fraud by verifying customer identity, authenticating transactions, and assessing risk. KYC supports broader Anti-Money Laundering (AML) requirements mandated by regulatory authorities to deter financial crime.
Implementing KYC guidelines requires procedures such as:
- Verifying the authenticity of ID documents, identification numbers, and employer identification numbers presented by customers
- Confirming that customers’ physical appearance matches that on ID photos
- Checking names, addresses, and contact data provided by customers
- Cross-referencing customer data with lists of individuals and organizations which have been flagged as high-risk by regulatory agencies, such as customers from countries listed on U.S. State Department sanctions lists
- Cross-referencing customer data with data from open sources such as business records and stock exchange listings
- Assessing the level of risk represented by customers and transactions
These procedures can be labor-intensive and time-consuming when performed manually, and they require significant paperwork and may require customers to visit physical locations for in-person identity verification. A human element is involved in this, leading to clerical errors and/or bias. In a digital environment where customers expect transactions to be processed in real-time, these delays and drawbacks make manual KYC methods impractical.
What is KYC API?
KYC APIs are designed to speed up performing KYC checks online. An application programming interface is a software script that enables two other software applications to exchange data and share workflows. For example, when a customer enters a name into a bank loan application, the program receiving the data can tell the API to ping another app linked to a database where lists of government-sanctioned entities are stored. Similarly, when a customer scans a photo ID or uploads a selfie, an API KYC interface can activate a facial recognition software program to authenticate their identity biometrically.
Five Benefits of Using KYC AML API Solutions
KYC API solutions offer numerous advantages for financial services and fintech companies. Here are five of the biggest benefits:
1. Cutting Costs While Speeding Up Implementation
Because an API connects to existing software apps rather than building a complete solution from scratch, organizations can incorporate APIs into their existing IT infrastructure, which can cut costs on software adoption while speeding up implementation. APIs integrate easily with an organization’s existing applications, so they don’t need to upgrade their entire technology stack to update their KYC process. This empowers organizations to quickly integrate new KYC technologies such as biometric verification into their existing customer onboarding process.
2. Enables Quicker Entry Into New Markets
Traditional KYC checks often require customers to make in-person visits to physical offices. This can be inconvenient and time-consuming for customers, making them more likely to consider competitors with faster service. In contrast, KYC API technology allows digital customers to verify IDs online. This eliminates the need for physical offices and makes onboarding more accessible, making it easier for companies to penetrate new markets.
3. Frictionless Onboarding Experience
By reducing paperwork and speeding up the KYC verification process, KYC APIs deliver customers a faster, more satisfying onboarding experience. This helps financial providers increase the number of completed applications while reducing the number of applicants who drop off. In a financial services market where customers often make brand decisions based on user experience, this can give your company a winning edge over brands that are slow to adopt KYC API technology.
4. Automation Reduces Clerical Errors and Human Bias
Manual KYC checks are prone to clerical errors from sources such as misinterpreted documents and typos. Moreover, human bias can skew procedures such as photo ID verification. By automating KYC checks, APIs reduce clerical error and human bias. This improves staff productivity while reducing the risk of a negative customer experience caused by clerical error or employee bias.
5. Ease KYC Compliance Requirements
KYC API technology makes it easier for financial service and fintech providers to comply with regulatory requirements. Using KYC APIs helps you automate collecting all required information and documentation from customers while reducing errors for more accurate record keeping. Additionally, KYC APIs can strengthen customer privacy by automating the process of securely storing sensitive information in a digital format.
Choose the Right API KYC Solution for Your Organization
Where traditional KYC compliance requires laborious, error-prone paperwork and in-person procedures, KYC API solutions streamline the identity verification and document verification to deliver digital customers a secure yet speedy online experience. For financial and fintech providers, KYC API speeds up implementation and entry into new markets while streamlining the onboarding experience, reducing errors, and meeting compliance requirements.
Realizing the benefits of KYC API depends on choosing the right solution. Incode’s Omni Platform offers developers a variety of integration approaches ranging from zero integration using Incode’s self-service portal to deep integrations through SDKs and APIs. Contact our team today to request a demo and see how Incode Omni can help you meet your KYC compliance needs while delivering your customers a frictionless onboarding experience.