In an era dominated by digital transactions, Know Your Customer (KYC) emerges as the linchpin safeguarding financial integrity. As regulatory authorities intensify their focus on combatting financial crimes, experts shed light on the importance of KYC in ensuring secure, compliant, and credible online engagements.
Know Your Customer: How KYC secures foolproof financial transactions in the digital era. Experts take
What is KYC? KYC, or Know Your Customer, is a prerequisite process individuals must fulfill before opening a bank account. This process entails verifying the individual’s identity, address, and other pertinent details. It necessitates in-person verification.
Importance of KYC in the digital ecosystem As digital transactions see exponential growth, KYC serves a crucial role in safeguarding the integrity of economic systems. “By verifying identity and assessing risk, KYC checks deter fraudsters from exploiting loopholes. Simultaneously, seamless user experiences must remain a priority – cumbersome procedures irritate customers. Thus, leveraging technologies like AI, ML, and biometrics in KYC strikes the balance between security and convenience while also securing citizen data privacy,” said Ashish Aggarwal, Director, of Acube Ventures
With cyber threats on the rise, policymakers should promote innovation in paperless KYC to uphold public trust in an increasingly digital world, added Aggarwal
The RBI’s persistent emphasis on a rigorous compliance framework, facilitated by a robust KYC solution, underscores the necessity for businesses to prioritize a compliance-centric approach for enduring prosperity. Recently, the RBI directed card networks such as Visa and Mastercard to halt card-based commercial payments conducted by corporations and small businesses.
“Such regulatory hurdles can be avoided by adhering to regulator’s rules and guidelines through innovative KYC solutions. It becomes imperative for financial institutions and fintech players to ensure that all financial transactions taking place are within the regulatory ambit and that no fraudulent or unauthorized transactions are occurring on the digital platform while maintaining the security posture,” said.
Overall, KYC plays a crucial role in upholding the integrity of the digital ecosystem, and guaranteeing the security, compliance, and credibility of online transactions and engagements.
