Financial institutions all over the globe operate under strict regulations to reduce money laundering and terrorist funding. Complying with global regulations like FATF and EU Anti-Money Laundering Regulations can help in identifying people on sanctioned and politically exposed person lists. Following up with the AML regulations requires huge sums of money from financial institutions. Not being able to comply with FATF and AML regulations can lead the businesses to lose a lot of money, to put that in context, failure to follow the compliance led to fines reaching up to $36B in 2019 alone.
As demands rise for remote and digital account opening, it becomes harder and harder to detect which identities and documents are real and which are not. There have been instances of financial institutions being tricked with synthetic identity fraud and document fraud. To effectively scale remote customer onboarding while reducing the risk included and ensuring compliance. Financial institutions have taken the assistance of technology ranging from video conferencing to biometric tests to verify remote customers during the due diligence tests. Other technologies like online document verification can assist in secure document verification.
A lot of countries have updated their guidelines regarding customer onboarding. Due to the effects of a global pandemic, customer onboarding has changed a lot. Financial institutions need to follow the best practices for remote customer onboarding.
Best Remote Customer Onboarding Practices
- Blend Technology and Human Experience
The remote customer onboarding process can be an opportunity for cybercriminals. Using the remote onboarding process, fraudsters can do all kinds of financial crimes. Financial institutions need to bring a blend of technology and human touch into the remote onboarding process. They need to employ the best technologies to reduce the risk of financial crime. Online identity verification methods can help in making the process frictionless and secure. The use of online identity verification technologies can decrease the abandonment rate.
- Online Mobile Banking
We live in an era of smartphones, which means almost all the services need to be available on smartphones. Almost 56% of all website traffic comes from smartphones. As the technologies grow, this trend of website traffic will grow even more. To encourage remote customer onboarding, financial institutions need to offer online mobile banking services. To improve the customer experience during remote customer onboarding, online mobile banking needs to be incorporated into the services.
- Improve the Overall Customer Experience
Another best practice to enhance the remote customer onboarding process is to improve the customer experience. The traditional banking process used to take a lot of time and they weren’t secure. If a financial institution wants to encourage more customers to sign up with them, they need to improve the customer experience.
The remote onboarding process needs to incorporate AI-based techniques and algorithms that can smoothen the remote customer onboarding process. Video-KYC and digital document verification can verify the identity of each customer and offer an enhanced customer experience.
- Know Your Customer (KYC) Verification
KYC allows the identification and verification of customers. KYC process asks for a verification of customer’s identity i.e. personally identifiable information (PII) is checked and verified to meet their regulatory requirements. It also helps in reducing the risk of financial crime, KYC offers various opportunities to reduce the chances of financial fraud and enhance the remote customer onboarding process.
- Anti-Money Laundering Screening
Just like KYC, AML is also a law-required regulation, AML screening is a crucial part of the business. To comply with AML screening, a person’s identity is verified against sanctioned lists and PEP (Politically Exposed Persons) lists, and other global watchlists. Identity checks in AML screening verify the customer’s identity during the onboarding process and reduce the risk of financial crimes.
Why Is Digital Onboarding Process Transforming Businesses?
Companies operating in the financial sector have benefitted from the digital onboarding technology and its user-friendly framework. Firstly, banking services have become a lot better with the incorporation of digital services. The remote customer onboarding technology has made it easier for customers to sign up with new financial institutions. It turns a complex and long-lasting process into a matter of minutes. Using video identification, AI, and machine learning technologies, the remote customer onboarding process can be improved.
The traditional onboarding process which used to take at least 3 weeks on average, can be done in under 1 minute all thanks to the remote customer onboarding process and technologies. In this digital era, no one has the time to wait for 3 weeks to sign up with a financial organization while competitors in the market are offering real-time identification and onboarding. All these factors allow organizations to reduce their operational costs and increase their customer base with ease.
Solutions such as DIRO’s online document verification technology can easily help in verifying the customer documents such as driver’s license, bank account statements, insurance information, student records and so much more. By utilizing DIRO’s verification technology, you can verify documents instantly from all over the globe and improve the remote customer onboarding process.