This is a Guest Blog by Mr. Siddharth Kukatlapalli, Co-founder and CBO at Syntizen Technologies
A digital identity is a presence on the network that represents and conducts business on behalf of an outsider in an ecosystem. An identity may belong to a person, a company, a financial middleman, or even a tangible thing. Digital ID is a fundamental collection of enabling technologies that can play a crucial role in a variety of interactions between people and institutions. Similarly to dual-use technologies, digital ID technologies can be used by governments, institutions, or private individuals for both beneficial and negative objectives. A digital identity is very important in order to establish trust and understanding among stakeholders in an ecosystem.
The changing digital onboarding landscape
The incorporation of digital technologies in financial institutes and organisations has provided them to achieve a competitive edge, improve business processes, and produce value to boost their revenue. This is where digital onboarding finds its inspiration and has a huge positive impact on businesses and financial institutions. The onboarding of individuals into a company’s database enables the company to more easily keep track of its customers and to maintain its services in an effective, hassle-free, and simple manner. Digital onboarding has rapidly moved toward automation since the development of AI and ML. As a result, customer onboarding has been simpler, more efficient, and more profitable. It has also helped save several paid hours and resources.
Mentioned below are some technologies used for digital onboarding:
Artificial Intelligence: Financial institutes are making use of AI monitoring technology to their advantage which helps them to reduce fraud and along with providing a secure digital channel it helps the companies to leverage it for their profit.
Biometric: Digital onboarding has been much more effective for financial services organisations because of the usage of biometrics including Face, and it is now much simpler for users to access products. For example, the use of Aadhar in India has provided a more convenient and easy way for digital onboarding.
eForms, eSignatures: Digital advancements have allowed financial institutes a quicker digital onboarding process and quick completion rates. The use of smart eForms, and eSignatures eases a lot of work by reducing the fragmented onboarding process as they are simple to use and can be completed from any device.
Technology securing digital identity
Using artificial intelligence, machine learning algorithms, and NLP, digital customer onboarding implements a comprehensive next-generation customer onboarding and facilitates a digital straight-through procedure. The adaptable AI-ML algorithm makes sure that the data is processed accurately in less time and fulfils the threshold set by the financial institutes. Using machine learning and deep learning-based image analytics, a real-time customer photo is taken and cross-validated against all the photo IDs that the customer has provided. In addition to enabling cross-verification of customer data across documents, machine learning and deep learning also confirm the proper ownership of the documents.
Digital technology like Optical Character Recognition (OCR) enables zero manual entry extracting data out of images of customer documents accurately. Also, the use of API has enabled financial institutes to reduce fraud risk through real-time analysis and validation of customer data and thus eliminating the time spent on enhanced due diligence (EDD) which often slows down the process of verification.
Another major development in the establishment of digital identity is the growth of a video-based KYC model which ensures safe and secure identity establishment. Video KYC sets itself apart from existing KYC verification protocols due to the incorporation of video-enabled features, audio-visual interactions, facial matching capabilities, and general usage of AI technology to improve & accelerate the KYC verification process.
To conclude
The growth of digital identities in financial services promises to result in an overall improvement in efficiency and service by using big data and AI/ML to overcome information asymmetries, delivering a user-friendly user interface and ensuring an encrypted digital identity. As the prevalence of digital identity grows the risks associated with it grow as well. Due to the risk factor, financial institutes require solution providers who can enable them to mitigate it and establish trust in the process of data acquisition. Digital solution providers or fintech companies are supporting financial institutes by reducing integration headaches, and providing a multi-layered digital experience for customer onboarding, including OVD, sanctions screening and necessary KYC, AML checks supported by a single, stable and extendible API.
