Going Digital while stopping Fraudsters at the door | HCL Whitepaper

Go Digital, Go Remote - with fraud detection uncompromised

Account opening is a critical process in a Financial Institution (FI), where verifying the identity of potential customers is a regulatory KYC mandate. While lapses in this process may result in large fraud related financial losses, it could also be a predicate crime that leads to money laundering and terrorism financing - attracting regulatory scrutiny, huge fines and reputational loss. The trend of rising identity / synthetic identity fraud is stimulated by both the spiralling adoption of digital banking and a huge marketplace for stolen data and personal information.

Identity Verification (IDV) is an early stage sub-process of the KYC process. Mandated by regulation, it is meant to ensure that the person applying for a new account is in fact a real person and is the one that he or she claims to be – thus preventing someone from opening an account using a false identity to perpetrate various Fraud schemes.

While banks have been practicing manual IDV processes, it requires a lot of human effort and time. Additionally, there is the constant risk of human error in all of the above three steps. Errors that could result in onboarding fraudulent customers who will inflict financial and reputational losses on the bank, resulting in regulatory scrutiny and subsequent action.

Advances in technology and the evolution of Artificial Intelligence (AI) and Machine Learning (ML) models are spurring innovation forward in many areas in the industry. Its use in the identity verification process has facilitated increased effectiveness and efficiencies in the fight against fraud.

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