In today's tech-driven world, you've probably come across the term KYC (Know Your Customer) on many platforms. It's not just a necessity for financial sectors anymore; but it's a trust-building tool, for many sectors. E-commerce, crypto, real estate, health, etc… This rapidly growing sector, valued at over $8 billion and expanding over 20% annually, as a result of expansion in sectors that need this solution. Shortly, we will witness more and more platforms across different sectors adopting this technology.

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Why Do The Companies Need KYC?

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KYC is crucial for both security and legal compliance.

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Legal Compliance: All countries and regions have different regulations when it comes to customer onboarding. Especially in finance, these rules have to be followed strictly. Otherwise, the firms are considered guilty of their customers' financial crimes.

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Risk Minimalizing: Even if the regulations are not strictly defined, firms should look for the measurements to not be involved in financial crimes. Knowing the customer and financial records is crucial to prevent involvement in financing terrorism, money laundering, and illegal goods and service trade.  

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Fraud Prevention: KYC processes boost platform security by preventing fraud. Fraudsters use stolen IDs and ID information, deepfake content, etc to perform different crimes. A good KYC process prevents these attacks.
User Security and Brand Prestige: Creating a secure platform is crucial to keep users' accounts safe and also for the brand's prestige.

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How Do KYC Processes Work?

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KYC processes differ across sectors and regions but here is the basic frame:

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ID Information: Users provide essential info like name, date of birth, and ID number. Firms check the governmental database to verify this information.

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Document Review: Firms check the validity of documents that users provide, such as national ID cards, passports, residence documents, etc… Synthetic or stolen documents are detected and denied.
Facial recognition: Another element of KYC is checking that the user is the same person as the ID owner. It is a crucial step to prevent stolen ID card usage.

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Multi-Factor Authentication: Mixing different security measurements is a secure way to enhance security. Using document and biometric verification together, adding SMS OTP, etc…
So, the information that has to be verified is framed, but the methods can be varied. Firms with low transaction volumes do this process manually. However, it is not efficient for firms with large transactions. They need to do it fast but also secure.

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KYC Process in Remote Customer Onboarding

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In remote customer onboarding processes, firms need to verify their customers' identities fast and securely. Document or knowledge-based verification is definitely not enough, and biometric verification is a must-have. Because documents, ID data, and passwords can be easily stolen or faked. But with deepfake technology, even the biometric data can be synthetically created. So what to do?

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To be secure and fast at the same time, AI-based verification models are the safest solutions. However, these models should be updated considering the newest fraud methods, scored by independent institutions, and managed by experienced experts.

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Which Sectors Need KYC Solutions? Which Ones Have Potential for the Future?

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As I mentioned before, digital transformation is inescapable. And more and more sectors will need cybersecurity solutions. KYC is the only first step of these solutions. So, let's take a look at which sectors already need and which ones will need soon.

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Fintech and Banking

‍We all know that finance is the number one client for KYC processes. Finance has always been under the greatest threat, and financial crimes can affect society nationally and even internationally. So KYC processes will continue to be integral in the financial sector, particularly in fintech and online banking. It will be needed to ensure compliance with regulatory standards, prevent fraud, and establish a foundation for secure financial transactions.

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Healthcare Industry

‍The healthcare sector started to use KYC solutions recently in different steps. Online consulting is growing, and health firms verify patients' and doctors' identities without violating doctor-patient confidentiality. It is also useful to be sure about the documents of doctors and prevent charlatans.

KYC solutions are also used to ensure the authenticity of patient information, secure access to medical records, and prevent identity theft in medical services.

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E-Commerce Platforms

‍As online shopping continues to flourish, KYC technology will be essential for e-commerce platforms. Verifying the identity of both buyers and sellers enhances trust and minimizes the risk of fraudulent activities.

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Gaming and Virtual Economies

‍In the gaming industry and virtual economies, KYC can be employed to authenticate users, especially in platforms where in-game assets hold real-world value. This ensures a secure and transparent gaming environment.

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Travel and Hospitality

‍KYC, more precisely, identity verification, can streamline the check-in processes for hotels and airlines, making travel experiences more convenient and secure.
It has been used in many airports, such as Istanbul, Amsterdam, New Delhi, etc. Passengers verify their passports and then, their faces with implemented devices and do not need to wait in long lines. It is secure and efficient at the same time.

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Real Estate Transactions

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Real estate transactions often involve substantial financial transactions. KYC technology can play a crucial role in verifying the identities of buyers, sellers, and agents, reducing the risk of fraudulent property dealings.

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Employment and HR

‍In the hiring process, KYC technology can help organizations verify the identities of job applicants more efficiently, ensuring the legitimacy of the workforce.

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Education Sector

‍Covid changed our view of education dramatically. Online education has a place in our society now, we all need to adapt and secure this new trend. In the education sector, KYC can be employed to authenticate students' and teaching experts' identities in online courses and degree programs, ensuring the integrity of academic processes.

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Social Media Platforms

‍Social media platforms can use KYC to enhance user safety by verifying the identities of account holders and minimizing the risk of fake profiles and online scams.

‍You may be interested in: Should KYC Processes be Solved with Your Own Resources or Outsourced?

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Choosing the Best KYC Provider

‍Choosing a KYC provider has crucial importance for your company's security. So choose it wisely!
You can read our article about how to manage KYC processes.

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