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DigitalID

In the current landscape of regulation, financial crime prevention and the growing numbers of FinTechs, the question of proper verification and identification of customers, both retail and corporate, is one of the most important challenges to solve from an industry and regulatory perspective in near future in the European Union. Figuring out KYC is the key to unlock sustainable, profitable and compliant growth.

Past

Personal KYC Era

  • Customer goes to a physical branch and engages with physical “business” staff of the bank ●Manual Data Input into the bank system
  • Personal Identification and Verification
  • “KYC” staff conducting lengthy questionnaires (up to 200 questions) to conduct due diligence

Present

Remote KYC Era

  • Customer remotely is signing up with the digital business of a bank ●
  • Automated Data Input into the bank system ●Remote Identification and Verification of Customer
  • Various Methods: ○VideoKYC
    ○PhotoKYC
    ○PostIdent
    ○QES

Future

Digital KYC Era

  • Solution needs to see the entire digital presence of the customer
  • Solution needs to utilize metadata sources, records both public and private and the primary identification document
  • Solution needs to automatically and intelligently create customer profiles that fulfills due diligence

Zooming into European Markets (not even close to comprehensive)

VideoKYCPostIdentPhotoKYC**For Germany: Only in Passported Countries, not possible in GermanyLiveness Detection*Qualified Electronic SignaturePlus Another Form of Identification, e.g. 1st Incoming TrxnPlus Strong Req on Collecting TaxID and verifying suchPlus Strong Req on Add. Due Diligence QuestionsCurrent Debate of Reliance vs Outsourcing

Problems of Current Methods of KYC

Current methods does not effectively prevent financial crime. The lack of a common database fuels the money mule problem.

Current methods lacks harmonization across European locations, there is not a solution fits all KYC method currently.
This creates local problems subject to each method.

Current methods are one of the biggest cost drivers, causes audit findings and regulatory action, while hindering sustainable growth.

What to do for impact at KYC?

Know your Data Points: Utilize Advanced Data Points such as device ID, geolocation, IP Address

Integrate your known criminals: Integration of a ML based model of FinCrime Users

Sharing Patterns and Typologies of Account Opening Misuse, including Social Engineering, ID Theft, Forgery etc.

Standardization of needed information and automated profiling of customers, both in risk and complexity

Overview of a Prototype DigitalID

Average JoeWants an account at Bank and uses his digital ID, which consists of:Automated Verification of DocumentNonFI Third PartiesBank AccountsUtilization of OCR ToolReference to other bank account in his name, cross reference important data.Reference to other accounts in his name, e.g. AmazonIntegration of Local Public Offices recordsPublic Records

Harmonization and standardization of KYC processes across the European Union with a single identificator allows efficient and effective cooperation across jurisdictions, regulators and law enforcement agencies to understand illicit fund flows and combat financial crime more effectively.

High impact and effectiveness of proper KYC as existing customer data is augmented by private and public sector information (from tax data to, say, Spotify accounts)


Low-cost, high-efficiency solution that reduces human error and cost obligation allowing better scale of business, while providing a higher standard of security