Differences Between Manual And Digital KYC
Customers are the unit of every business, and this is why businesses always take time to understand who their customers are. Hence, raising the conversation about know-your-customer (KYC) is a procedure for complying with existential regulations and reducing associated frauds.
Therefore, the role of KYC in business can not be overemphasised.
As a result, businesses have two (2) different ways of verifying a customer’s identity – which is manual and digital KYC.
To this end, you will understand the differences between manual and digital KYC as it borders on the benefits and limitations of each type of KYC.
Understanding Of Manual KYC
Manual KYC, also known as traditional KYC, is the customer identity verification process that employs physical methods.
The type of KYC is characterised by much paperwork, with the business customers going to physical locations to fill and submit necessary documents as part of the verification process.
Here, businesses may require the expertise of a workforce that discharges the duty of verifying every customer.
Understanding Digital KYC
Digital KYC is the remote verification of a customer’s identity. This can be achieved through government data analysis, identity document analysis, and biometric information.
Businesses can adopt the approach of verifying identification data like name, national identity number (NIN), and bank verification number (BVN) by comparing the data with the existing data sources to establish authenticity.
In addition, digital KYC involves the analysis of digital images of identity documents captured using smartphones or desktops.
This is to ensure the originality of the identification – concerning being representative of the person who submitted the image document.
Moreover, biometric verification entails using fingerprints and liveness checks to vet the identity of customers.
What Are The Differences Between Manual And Digital KYC?
- Speed And Efficiency
Manual KYC often borders on storing and extracting data in a large volume of physical documents. So, this can be monotonous to achieve, even as the documents may likely get missing or stolen. This is largely a slow and less effective process.
Digital KYC employs Optical Character Recognition (OCR) and other high-tech tools to automate and optimise document handling speed.
This process is considerably fast as it requires little effort to verify a customer‘s identity.
- Security
Manual KYC is usually more prone to fraudulent activities like identity theft and scams.
This is because human judgment is the fulcrum of this process, in which human eyes are needed to detect fake documents. However, this process can be flawed, with errors deemed imminent.
Also, there is no foreknowledge of the preventive mechanism of fraudulent schemes. Therefore, it creates a crack that fraudsters can easily exploit to access businesses.
Meanwhile, digital KYC provides a sophisticated security system safer than manual KYC.
This type also employs advanced algorithms and data analysis to verify a customer’s identity accurately.
Innovative tools like artificial intelligence (AI) and machine learning (ML) technologies are used to detect suspicious activities and forestall possible fraud.
- Cost
While manual KYC requires ample resources like renting an office space, buying different equipment, and hiring a team of experts, digital KYC is more cost-effective for businesses.
This enables businesses to save more on cost and focus on other activities of interest for optimal productivity.
- Customer Experience
It is common knowledge that a seamless experience piques customers’ interest in a business.
In manual KYC, customers may be frustrated due to its time-consuming feature. This can lead to a high rate of customers abandoning the business during the onboarding process.
On the other hand, digital KYC provides an excellent customer experience, thereby increasing the success rate of the onboarding process, including the loyalty of customers.
- Scalability
The scalability level in manual KYC is relatively low compared to digital KYC. This is owed to the difficulty and high cost of scaling manual KYC.
The scalability of businesses using manual KYC can be low and inefficient as the customer base grows.
On the contrary, scalability is more efficient and effective during digital KYC. As such, the customer base of businesses can grow extensively as customer onboarding and verification become simplified.
Peppa Promotes Digital KYC
Peppa provides digital KYC tools for businesses to ace their customers’ onboarding and verification process to forge sustainable relationships.
You can integrate the Peppa KYC API, widgets, and no-code tools to provide an excellent onboarding experience for your customers.
Conclusion
KYC is an integral step in the growth of businesses. Irrespective of the type of KYC you use, customer data is of the essence, and that is what underscores the customer experience and business performance.
However, it is important for businesses to adopt digital KYC to enable an excellent customer experience as they increase the success rate of the onboarding process.
