Building Automated KYC: Sumsub’s Insights on Effective Customer Onboarding

Source: Sum&Substance 2020-08-13

While automated KYC procedures can help you to onboard customers efficiently and save a fair bit of money, getting automation to work can be quite challenging. How can you reduce manual labor but still stay compliant with AML requirements? In addition to this, how can you make automation feel personal and help customers to start using your product seamlessly? We hope that this inside look into the Sumsub platform can provide answers to these questions and more.

What is KYC automation

Traditionally, verification and the onboarding of customers were performed manually by a company’s employees. While manual onboarding is still in operation, many businesses have switched to AI-based machine learning systems that can accurately check ID documents and run customers’ profiles against various AML data sources.

How KYC automation can improve the workflow

We often hear that automation is helpful, but what does this actually mean? Here, we’ve gathered the main benefits of a transition to automated KYC.

Reduction of manual labor and associated costs

Automation decreases the number of workers who are needed to perform particular routines. This allows employees to focus on more creative tasks. Automation also helps companies to reduce HR and KYC training costs, while maintaining working conditions.

Less room for human error

We are all humans, and mistakes can happen due to a sleepless night, or just because we aren’t in our optimal, concentrated state of mind. However, AML compliance is an area where there is no room for error. Automated systems are never tired. They can notice tampering that human eyes cannot and are able to check clients against thousands of databases in no time at all.

Increased pass rates

Efficient onboarding creates a great customer experience and results in a higher conversion rate. Automated KYC allows companies to check numerous customers without hiring more employees. Thanks to automation, Sumsub managed to reduce manual labor and compliance costs while increasing conversion while improving conversion rates twice over.

However, even if an automated KYC offers many benefits, automation that is complicated and unreliable may become a problem. We want to share some of our tried and tested tactics that make our KYC automation efficient, user-friendly, and secure.

Implementing automated KYC that works

When it comes to KYC automation, there are four objectives to consider:

Creating an excellent customer experience
Recognizing and preventing fraud
Complying with regulatory requirements
Making automation suit the company’s needs

At Sumsub, we work hard to balance these four points. Here, we would like to demonstrate our methodology, and why we think that it is important.

Perfecting customer experience

No two factors are as important for customers as speed and convenience. In other words, the KYC flow should not take up too much time and make clients perform unnecessary steps. Let’s dive deeper into this.

Time

Every second matters. A customer may be willing to spend 5 minutes on their onboarding process, but when it takes more than that, they might simply close your app and never use it again. For instance, when a person wants to use a car-sharing service to get to work, they cannot wait: they either onboard quickly and seamlessly, or leave your platform straight away and catch a bus.

Convenience

The user experience has to be pleasant. That means a nice clean interface, with only the essential onboarding steps and an overall consideration of the system’s suitability for the clients’ needs.

Tip: Thoughtfulness is the key here. One of the features that we employ at Sumsub is to save users’ progress on our platform across devices. For instance, if a person started onboarding on their laptop but decided to switch to another device, they can resume the process right from the point where they stopped.

Pro tip: It is also good to be flexible. Think about offering your customers an opportunity to customize the onboarding flow. At Sumsub, we constantly monitor users’ activity, and if we notice that users drop out at a certain stage, we instantly offer an alternative flow.

Mitigating fraud

Apart from providing an excellent user experience, we cannot forget about AML compliance. Let’s see how we can automate KYC checks, while still staying one step ahead of fraud.

Examining customers’ identity

Checking users’ identity documents and selfies can be automated through the use of an AI-based system. In no time, it will detect digital tampering and other forgeries that a human eye simply could not.

It is crucial to ‘teach’ your automated system to recognize all types of documents and examine them against official templates and security features (holograms, watermarks, etc.). Also, make sure that your system recognizes various languages. That will allow you to onboard not only users from English-speaking countries but also customers who use different writing systems.

Tip: Some tampering might be relatively easy to notice, but some fakes are so sophisticated that even the most advanced systems cannot detect traces of intervention. In this case, it is useful to have an automated matching system. This system will check users against accounts of fraudsters that have previously failed to pass your KYC process and see if some of these accounts match the onboarding user.

Pro tip: Think about implementing automated liveness; it is one of the most sophisticated checks that confirms the presence of a live person and ensures that they are who they claim they are. Liveness can even help you to detect advanced identity fraud mechanisms such as hyper-realistic 3D masks.

Payment fraud prevention

An automated system that compares the data on the card with the applicant’s data can protect businesses from payment fraud. It is also possible to automatically analyze users’ metadata such as their IP address, location and device information to ensure that only verified persons make transactions.

Staying compliant with regulatory requirements

Now that we’ve talked about fraud prevention, let’s take a look at the two areas of compliance that global regulators require: AML screening and reporting.

AML Screening

It may take days for a person to check a single client against all AML watchlists, fraudulent data lists, and adverse media. An automated system can do this in minutes.

Tip: Aside from publicly available databases and watchlists, think about creating your own database that contains data of fraudsters that have tried to onboard via your system. Also, reach out to non-rival companies that work in your sector and make an agreement to share blacklists of fraudsters. This will allow all of you to prevent scammers that tried to onboard via one platform from onboarding via another.

Reporting

The manual transmission of data into a report takes a lot of time and is susceptible to human error. It is much more beneficial to use an automated system that, in just one click, extracts the user’s information and turns it into a comprehensive compliance report.

Tip: KYC obligations depend on what jurisdiction you are in and from what jurisdiction you onboard your customers. Create a system that automatically determines each customer’s KYC, reporting and data protection requirements. For instance, when you onboard a client from Germany, your platform should automatically ask this client to undergo video identification.

Suitability for the company

Your automated KYC process should suit your customers’ needs and regulatory demands, but it also has to suit you. Automation has to make your life easier—it must not complicate your workflow and slow down customer onboarding. Also, don’t forget that automated KYC is there to reduce your compliance-related costs.

When automated customer service is not the right solution

Not all applications can be automatically checked. Some complex cases like social engineering and new unprecedented types of fraud require human support. In these cases, it is reasonable not only to refrain from an automated check but even avoid digital onboarding entirely.

How automated KYC is paying off

To finish off, let’s look at some statistics that demonstrate the benefits of KYC automation.

90% reduction in manual workload
97% hit rate
50% decrease in compliance-related costs
Up to 2x times increase in conversion rates

KYC automation can largely benefit you and your customers. It allows your team to focus on more creative tasks and not be bogged down by monotonous work. At the same time, your clients get a quick and pleasant onboarding experience. However, don’t forget to maintain the perfection of your automated KYC system by keeping up to date with regulatory demands.

KYC

fraud

AML

Compliance

Building Automated KYC: Sumsub’s Insights on Effective Customer Onboarding

Subscribe to Our Newsletter!

Subscribe to Our Newsletter!