Know Your Customer (KYC) Procedures For Banks In 2020

Melissa IN Team | India, KYC | , , , , , , , , ,

With more people choosing to conduct financial transactions through net banking or via a bank’s mobile app as compared to physically visiting a branch of the bank, Knowing Your Customer (KYC) has become more important than ever before. This refers to the processes followed by banks to verify the identity of a customer. KYC norms themselves have had to be updated to keep up with technology.

Why is KYC important?

KYC procedures are aimed at

  • Identifying and validating the customer’s identity
  • Assessing the nature of the customer’s activities
  • Ensuring the source of funds is legitimate
  • Assessing the risk of money laundering, financing terrorism and other illegal activities

Failure to keep KYC procedures updated doesn’t just put banks at increased risk of fraud; it also keeps them from meeting government anti-money laundering regulations and compliances. Failing to comply with these regulations can result in heavy penalties. The RBI recently fined a well-known bank Rs 1 crore for failure for non-compliance with KYC norms. Apart from this, it also damages the bank’s reputation.

KYC Procedures in 2020 – Updates You Must Know

Banks and other financial institutions conduct KYC checks on individuals as well as corporates who hold accounts with the bank. These checks are conducted at the time of opening accounts as well as on an ongoing basis while conducting transactions. The KYC policies followed by institutions can vary depending on the size of the institution, the technology available to them, the customer base, etc.

Electronic Know Your Customer or eKYC is very popular in India since a majority of the population has a digital identity. Some of the updated KYC procedures that are being followed include:

Digital Verification of Documents

Proving one’s identity through a government-approved identity card is the cornerstone of every KYC procedure. Where earlier, it was sufficient to submit a copy of one’s identity card, today, the identity can be digitally checked for authentication.

For example, banks can easily verify the validity of an individual’s Aadhaar card or Pan card by checking it against the national database. Similarly, other documents submitted for verifications such as electricity or telephone bills used as address proof can also be verified against the billing agency’s records. This allows them to conduct due diligence easily and streamline the customer’s onboarding process.

Biometric Checks

In addition to verification by documents, the use of biometrics for identity verification has also increased. Biometrics are valued mainly because they are considered very difficult to replicate and unique to every individual. Fingerprints are probably the most commonly used biometric measure for identity verification.

Other common forms of biometric identification include facial scans and iris scans. In addition to this, some banks may use additional biometric checks such as voice modulation matches and gait matches. Biometric checks may be required while conducting online transactions.

Video-Based Identification

Documents needed for KYC can be submitted online. This is convenient for customers but it carries the risk of a fraudster impersonating someone else by submitting their documents as his/ her own. Video-based identification processes can help fight this.

This involves a video call between the customer and a bank official where the customer displays their ID card while allowing the official to simultaneously see the card and the customer’s face.

The official may then capture the same as an image, timestamp it and tag it to the customer’s real-time geographical location. The customer’s face may then be compared with the photograph on the ID card for future validation. The Reserve Bank of India (RBI) recently allowed banks and other lending institutions to use this form of customer identification when onboarding customers remotely.

Incorporating Artificial Intelligence (AI)

Conducting KYC checks manually is time-consuming and frustrating for bank officials as well as customers. The introduction of AI in these processes makes the checks quicker and more reliable. AI and machine learning can be used to identify high-risk customers who need enhanced due diligence.

They can perform repetitive tasks without the fear of testing fatigue. Further, they can analyze responses through Natural Language Processing (NLP). AI can also monitor regulatory changes and identify gaps in customer information. This helps banks stay updated with KYC compliance policies.

In Conclusion

Complying with KYC norms is essential for banks and financial institutions to fight against financial fraud. At the same time, they must also ensure that the customer experience is smooth and hassle-free. The use of technology has helped to a great degree and KYC practices must be constantly updated to make maximum use of the technology available to us. The most cost-effective, secure and efficient way to do this – collaborating with an identity verification service provider!

Melissa Debuts Mobile KYC App and Business Portal to Simplify Identity Verification

Melissa Team | 2019, Digital Identity Verification, eIDV, EIV, Identity Resolution, Personator World, Press Release | , ,

Seamless Data Quality Toolset Includes Document Verification, Biometrics and Liveness Check

Rancho Santa Margarita, CALIF – August 14, 2019Melissa, a leading provider of global name, address, email, phone, and identity verification solutions to improve user experience and KYC (Know Your Customer) compliance, today announced Melissa KYC, a unified compliance toolset enabling businesses to verify the identity of their customers easily, securely, and conveniently. This end-to-end identity verification solution includes ID card and document authentication, biometrics, and liveness confirmation to streamline customer onboarding and customer due diligence processes so companies can confidently adhere to complex government regulations.

Because Melissa KYC is ready to use, regulated businesses can avoid the design, build, and test operations that turn compliance initiatives into costly, time-consuming projects. “Whether verifying an address or working to prevent online fraud, the business process must be easily implemented and meet customer expectations for convenience and speed,” said Greg Brown, vice president, global marketing, Melissa. “Melissa KYC ensures that compliance activities are seamless for the business and create a straightforward, friction-free experience for end-users.”

The Melissa KYC mobile app captures identity documentation, either in-person or remotely, in under three minutes. Using sophisticated facial recognition technology, this authentication process consists of three simple stages: digitally scanning documents such as passports or national ID cards and checking them by optical character recognition; verifying an individual’s “liveness” by the blinking of eyes; and biometric comparison to confirm scanned photo and live individual are the same person.

Melissa KYC’s verification feature authenticates each submission; real-time, multisourced data is used to standardize, correct, and match customer records globally, seamlessly validating customer or supplier data and identity. The company uses the business web portal to review the customer’s submission and generate and store customer due diligence reports to meet compliance requirements. These operations take place in seconds, reducing the strain of compliance on customer service and onboarding activities.

Click here to learn more about Melissa KYC. To connect with members of Melissa’s global intelligence team for support and solutions, visit or call 1-800-MELISSA.

Melissa Showcases All-in-One Identity Verification at Money20/20 Europe

Melissa Team | News & Events | , , , , , ,

Demos Highlight How to Combat Fraud, Minimise Risk and False Positives, and Maintain Compliance During Frictionless Customer Experience

London – 21 May, 2019 – Melissa, a leading provider of global contact data quality and identity verification (IDV) solutions, will demonstrate its all-in-one cloud IDV and enrichment solution at Money20/20 Europe, stand B91. Melissa’s IDV technology operates side-by-side with existing banking and payments software platforms, seamlessly verifying identity using a global dataset of billions of records. In real time and in compliance with the full spectrum of banking regulations and data standards, financial institutions are empowered with trusted banking relationships – combatting fraud and reducing friction in the customer experience.

Melissa works with organisations globally to unlock the value of accurate customer data, including Bank of America, Creditsafe, MetaBank, Tranzfar, BAE Systems, GSK, car2go, Microsoft, the NHS, and the Foreign and Commonwealth Office. Built-in data quality and verification enables new efficiencies, reduces costs, and guards against fraud in all financial operations. Real-time integration with banking platforms also enables bankers to meet customers’ high expectations for convenience, speed, and simplicity in operations such as onboarding, customer service, payments, international money transfer, and Forex. Melissa’s IDV solution enables:

  • Flexible, automated credit-checking and anti-fraud workflows
  • Entity resolution and compliance in areas of Know Your Customer (KYC), Anti Money Laundering (AML), Politically Exposed Persons (PEP), Office of Foreign Assets Control (OFAC) and Bank Secrecy Act (BSA)
  • Scoring and targeting of customers with detailed demographic and firmographic data appends
  • Protection against data decay with 2.1 billion clean, validated records, and enhancement of customer data with missing names, addresses, phone numbers, and emails

Booth visitors also have access to value-added opportunities, with free proof-of-concept and unlimited tech support for onsite purchases. Click here to confirm an onsite briefing, or visit the booth during regular show hours.

To connect with members of Melissa’s global intelligence team outside of Money20/20, visit or call 1-800-MELISSA.

New Report Examines Dueling Priorities in Banking: Identity Verification and Customer Experience

Author | Customer Identities, Data Quality, Digital Identity Verification, eIDV, GDPR, Global Data Quality, Global ID Verification, Identity Resolution, News & Events, Press Release | , , , , , , , , , , , , ,

Aite Group Assessment Highlights Melissa’s Approach to Verify Identity at Onboarding, Complementing Industry Mandate for Easy, Frictionless Banking

Rancho Santa Margarita, CALIF – February 27, 2019 – Melissa, a leading provider of global contact data quality and identity verification solutions, today announced availability of “Identity Verification: Successful Strategies to Minimize False Positives and Risk,” a new report commissioned by Melissa and produced by Aite Group. The paper explores the challenge of verifying identity without intruding on the customer experience, and the operational impact of false positives. Further, it addresses the need for next-generation solutions to help with identity verification (IDV) and presents Melissa’s approach to tackling these problems.

To better understand application fraud trends for both demand deposit accounts (DDAs) and credit cards, Aite surveyed executives from financial institutions (FIs) about their practices, perceptions and strategies, as well as 32 financial crime executives about pain points and planned technology spend. Given the size and structure of the research samples, the data provide a directional indication of conditions in the market.

Over 13 billion data records have been stolen or lost since 2013. Eighty-seven percent of those financial crime executives surveyed believe data breaches or phishing attacks are responsible for the bulk of digital channel fraud. Application fraud due to identity theft and synthetic identity fraud also play a substantial role. According to Aite, the combined impact of these attack schemes will cause more than US$2.7 billion in US credit card and DDA fraud losses through 2020.

“At the same time that the data breach threat rises, so do pressures on businesses to reduce or even eliminate friction from the customer experience,” said Julie Conroy, research director, Aite Group. “Today’s anytime, anywhere, 24/7 mindset has fueled consumer expectations for simplified yet elegant interactions with the brands with which they conduct business. The importance of ongoing investment in new technology cannot be understated. Data is the new currency and creating intelligence from data at scale can give firms a competitive edge.”

To address the dual challenges of reducing customer friction and mitigating fraud risk, FIs can leverage Melissa’s ID Verification technology which uses a multilayered process to access authoritative in-country data sets from all over the world containing billions of records to instantly validate an identity. The proofing process also includes national ID and age verification, and flags suspicious individuals who appear on any of dozens of Office of Foreign Assets Control and European Union watchlists to minimize risk and enable smarter decisions on next steps.

“When data quality is not part of the onboarding solution, the match between incoming identities and the repository relies on exact matching – an ineffective, error-prone practice that can result in myriad issues around KYC, or know-your-customer, and other regulations,” said Bud Walker, vice president enterprise sales and strategy, Melissa. “Melissa’s IDV solution works side-by-side with existing banking software platforms to increase match accuracy and reduce false positives, while ensuring the incoming data is valid and confirms the customer’s identity – effectively enabling new synergies between identity verification and positive customer experience.