Automation in KYC: how to streamline individual customer verification?

Despite the increasing digitization of processes, KYC (Know Your Customer) procedures are still largely based on manual work.

It is estimated that in more than half of financial institutions, as much as 31-60% of KYC processes are still done manually (source).

Manual processes primarily mean:

• slow customer onboarding, which can take days instead of minutes,
• high operational costs, associated with compliance and operations teams (often focused on repetitive tasks),
• the risk of human error, which can lead to serious regulatory consequences (as in the case of the fine of 18 million zlotys imposed on ING).

At the same time, the market is clearly showing us the direction of change.

As much as 62% of organizations plan to invest in KYC/AML technologies, seeing automation not only as a way to reduce costs, but more importantly to improve the customer experience.

So how do you approach the automation challenge?

You can read about it in the article below.

What is KYC automation (and what isn't)?

KYC (Know Your Customer) is a set of procedures used by, for example, banks, fintechs or financial institutions to confirm a customer's identity, prevent fraud, comply with legal requirements (e.g., anti-money laundering, AML, due diligence) and ultimately confirm that a person is actually who they say they are.

KYC automation is the use of modern technology to streamline the identity verification process without (or with minimal) human involvement.

It includes a variety of methods, from video verification and liveness check (verification of vitality) to authorization after logging into banking institutions or government applications (scanning a QR code in the mCitizen app).

However, it is worth remembering what KYC automation does not mean.

Automation does not completely eliminate human participation from the verification process, it is not a "black box AI without any supervision" and it does not replace regular updating of customer data (perpetual KYC).

It is a tool to support the work of compliance and operations teams, allowing them to act faster, more precisely and more securely, but always in a controlled manner.

Real-world examples based on services available from Autenti

KYC process automation is really a set of technologies that together create a cohesive, automated customer identity verification process.

These technologies consist of.

With Autenti, you integrate only once (via Autenti eID API), and you gain access to multiple verification methods (mCitizen, banking, video and others) and multiple providers, eliminating the problem of dependence on a single provider.

1. Video verification

This is one of the most common methods used in KYC processes for individual customers, especially where speed and convenience are important.

The user takes a picture of the document and then takes a picture of his or her face or takes a short video. The system automatically reads the data, compares the face with the document and checks the so-called "viability," i.e. whether we are dealing with, for example, a photo or a previously prepared recording.

In this process, the automation includes document analysis as well as biometrics and detection of fraud attempts.

As a result, onboarding can take a few minutes, without human intervention.

2. Verification with e-card (with NFC layer)

In this case, the burden of verification shifts from the image to the data stored in the electronic document layer.

The user applies the e-card (or other document with an electronic layer) to the phone, and the system automatically reads the data and confirms its authenticity cryptographically.

The automation here consists primarily of direct reading of the data and its validation, which virtually eliminates the risk of human error.

3. Verification by electronic banking

Another automated method of verifying an individual customer takes advantage of the fact that the user's identity has already been verified by the bank....

The customer logs into his electronic banking and confirms the transfer of data, which the system automatically retrieves.

The biggest advantage of this approach is that there is no need to send documents and the process is very fast.

The automation consists mainly of integration with external sources of confirmed identity and immediate confirmation of data.

4. Verification using a qualified signature or trusted signature

Qualified signature (QES)

This is the most formal and legally mandated method of identification.

The user signs a document with a qualified signature, and the system automatically verifies the validity of the certificate and the data assigned to the signature.

A qualified signature (QES) is an electronic representation of an individual customer's handwritten signature, which allows confirmation of the customer's data.

Automation here includes validation of the signature and linking it to a specific person.

Trusted signature

A trusted profile and associated trusted signature can be compared to a digital document that uniquely identifies a user online. The data assigned to the profile are first name(s), last name, date of birth and PESEL number. Each person can have only one unique trusted profile.

The process of verifying identity using a trusted signature follows simple steps:

1. Start the identity verification process online.
2. Select verification using a trusted signature.
3. Log in to the trusted signature service.
4. Confirm your identification information.
5. Authorize the signing of the document according to the instructions on the screen (usually by SMS code).
6. Wait for automatic confirmation of your identity.
7. Receive information about the result of the verification.

Advantages of this method in KYC:

• Full automation of the verification process.
• Quick and intuitive process for the user.
• Data is uniquely assigned to a specific person, reducing the risk of fraud.

5. Trusted systems, such as mCitizen

Analogous to identity verification using e-banking, the customer simply logs into their mObywatel application to confirm identity.

This identity has already been verified, allowing for a quick and simple process without the need to send documents.

The mechanism is based on the use of so-called electronic identification means issued by trusted public institutions, which confirm the user's data and transmit it to the system in a secure manner.

In the coming years, this type of solution will also be joined by so-called digital identity wallets (Digital Identity Wallets), being developed at the European Union level.

From a KYC perspective, this means:

• even faster identity verification,
• greater user control over data,
• reduced need to send documents,
• a high level of security based on European standards.

In this article, you will read detailed information on each of the above-described methods of verifying an individual customer and find out which method is best for your situation.

How does KYC automation work at Autenti?

Autenti's KYC process is comprehensive and covers the entire identification cycle, from configuration to reporting of results.

At the outset, you define the process, selecting the appropriate identification methods, the scope of data required, and the types of documents the customer must provide. Then you define the purpose of identification. This can be both to collect new data and to verify it against the information you already have.

The next step is to launch the process to the customer.

You send an invitation for identification via email, SMS or an individual link, and the customer goes through a simple remote verification process (e.g., data entry, uploading a document, photo or video). The whole process takes place fully online.

Autenti also enables full integration with your systems via API, so you can automatically initiate KYC processes directly from your application and receive the results with a set of data and materials (e.g. photos, recordings, verification statuses).

On the platform you have constant access to all identifications, you can monitor their statuses, view their history.

However, the key element of the process is the reports: once the identification is completed, a detailed report is generated, including the verification result, customer data, evidence (document photos, face photos) and data validity analysis.

Reports can be exported to PDF files and stamped with a seal of approval, increasing their evidentiary value and usefulness in compliance processes and audits.

And what about security?

The Autenti platform is designed with the highest standards of security and data protection in mind.

The system meets the requirements of international standards, including ISO/IEC 27001:2022, and regulations such as eIDAS and RODO.

In addition, advanced mechanisms are used, such as regular backups, security monitoring and strict access control.

As a result, customer data remains confidential, integral and accessible only in a controlled manner, and the entire identification process complies with the requirements of the financial sector and other regulated industries.

Manual vs. automated customer verification

Terms such as KYC, AML, biometrics and process automation can sound abstract, especially when described through the lens of technology and regulation.

As a result, it's easy to lose sight of what's most important, which is what the process actually looks like in the "here and now," from the perspective of the customer and the organization.

That's why, instead of more definitions, it's worth looking at a concrete scenario.

In our article, it will be the financial industry where a customer applies for a car lease online. We will first go through the manual KYC process.

The manual process (what KYC looks like in many companies)

The entire process begins with the customer filling out the form and uploading scans of the required documents (ID card, driver's license, personal information).

Then:

• the employee transcribes the data from the documents into the system (name, surname, PESEL, ID number, driver's license expiration date, license category, etc.),
• manually checks the correctness of the data and their compatibility,
• compares the document photo with the uploaded selfie (or skips this step),
• contacts the customer in case of deficiencies or errors,
• passes the case on for decision.

The entire onboarding process stretches from a few hours to even a few days, requires the involvement of many people and manual processing of data.

Along with this, the risk of errors due to transcription of information or illegible documents increases, which further generates corrections and delays.

Such a model is operationally costly, and for the customer it means a long wait and uncertainty, causing some to give up even before the process is completed.

Automated process (same scenario after implementing KYC automation)

Let's go through the same process, but automated.

Then the customer goes through a single, consistent flow (using video identity verification as an example):

• the customer receives a unique link to go through the verification process,
• takes a photo of the document (driver's license), and the system automatically reads the data (OCR),
• takes a selfie or short video, and the system confirms the identity (biometrics + liveness),
• data is automatically validated,
• data goes directly to the leasing system in the form of status and report,
• after a positive decision, the customer immediately signs the contract electronically.

Verification and onboarding is reduced to a few minutes. Most of the steps are done automatically and without involving employees.

The customer's data is retrieved and processed without manual transcription, virtually eliminating errors and the need for later corrections.

The entire process is smooth and predictable from the user's perspective, so they are less likely to give up during the process, which directly translates into higher conversions.

How to implement KYC automation step by step (+ checklist)

Implementing KYC automation is a process that first and foremost starts with understanding the current state and gradually moves into optimization and scaling.

Therefore, the first step should be an audit of current processes.

It's worthwhile to carefully analyze which elements of KYC are done manually, where delays are occurring, and how much time customer onboarding currently takes. This allows you to identify the problems actually occurring, rather than optimizing the process "blind."

Next, locate bottlenecks/narrow spots, i.e., places where the process stalls or slows down significantly.

Often this is manual verification of documents, lack of integration between systems, or the need to enter the same data multiple times, repeating steps unnecessarily and "eating up" the compliance teams' working time.

The next stage is a strategic decision: build your own solution or use off-the-shelf tools (build vs. buy). In practice, most organizations opt for external solutions, which are faster to implement, comply with regulations and, above all, provide a guarantee of data security.

After choosing a direction, the time comes to select specific tools.

At this stage, it is worth paying attention not only to functionality (e.g. video verification, e-card, banking integrations), but also to regulatory compliance, scalability and ease of integration.

After implementing new KYC automation tools ,testing and optimizationare essential . It's worth checking how the process works in practice, where users encounter difficulties and whether the system makes the right decisions. Based on this, improvements can be made.

The last but equally important element is monitoring and iteration.

KYC automation is not a "finished project" once it is implemented. It requires constant adaptation to changing regulations, new types of fraud and the growing scale of the business.

Checklist for implementing KYC automation

• Conduct an audit of current KYC processes
• Identify manual steps and bottlenecks
• making a build vs buy decision
• selection of tools tailored to the level of risk and business needs
• integration with internal systems (API)
• conducting tests (UX, effectiveness, errors)
• optimization of the process based on data
• implementation of monitoring and regular reviews
• preparing the process for further automation (e.g., pKYC)

Such a structured approach allows you not only to implement automation, but most importantly to do it in a controlled way, compliant with regulations and ready for further scaling.

Benefits of automating KYC processes

KYC automation translates directly into operational efficiency for the organization.

First of all, it significantly reduces onboarding time. Processes that previously took days can be completed in minutes.

At the same time, it reduces manual work, allowing teams to focus on more complex tasks instead of repetitive tasks. As a result, it also leads to a reduction in operating costs.

From a compliance and security perspective, automation reduces the risk of errors due to the human factor. Every step in the process is recorded, providing a full audit trail and making it easier to pass regulatory inspections.

Standardization of processes also makes it easier for the organization to maintain compliance with regulatory requirements, especially in the areas of AML and data protection (RODO).

The benefits are also apparent on the business side. Faster and simpler onboarding often means higher customer conversions, who don't give up during the complicated process.

In turn, better user experience (UX) influences positive brand perceptions, and the ability to automatically process a large number of requests allows a company to scale faster without proportionally increasing the team.

Moreover, not having to visit a bank or branch in person allows a company to expand globally. Onboarding can then be carried out from anywhere in the world, opening up access to customers outside the local market and allowing expansion into new markets without geographic barriers.

Why is continuity so important? Read more about pKYC

Perpetual KYC (pKYC) is an approach in which customer verification does not end at the onboarding stage, but becomes a continuous process.

Instead of a one-time identity check and risk assessment, the organization monitors customer data on an ongoing basis and responds to any changes in real time.

The system then automatically analyzes the customer's activity and checks the validity of their data. If there are inaccuracies or new risks, the KYC process can be restarted without the need for manual intervention at each stage.

This approach better reflects the reality that the customer profile is not fixed (one of the many common mistakes in the KYC process is looking at the customer profile in this way).

Electronic signature as a natural step after KYC

In many processes, especially those related to contracting, the next logical step is for the customer to sign the document.

That's why modern onboarding processes increasingly combine customer identification with electronic signatures in a single, consistent flow.

It then looks like this:

• the customer undergoes identity verification (e.g., using video verification, e-card with NFC layer, e-banking login),
• his data is automatically confirmed and stored in the system,
• and then can immediately sign the document online.

Types of electronic signatures in KYC

Depending on the requirements of the process, different types of signatures can be used:

• Electronic Signature (SES): the simplest and fastest based on, for example, email or SMS code verification. Sufficient for most standard business contracts, especially when dealing with individual customers.
  
  
• Advanced Signature (AES): requires additional identity verification (e.g. document + customer data), thus providing a higher level of security.
  
  
• Qualified signature (QES): the highest level, equivalent to a handwritten signature. It uses certificates and PKI infrastructure, and the identity of the signer is unambiguously confirmed.

The combination of KYC and e-signature means that:

• the entire process from identification to contract conclusion is fully online,
• customer data is used automatically (without re-entry),
• the organization gains a full audit trail,
• the time to finalize the entire process is reduced from days to even minutes.

Take the first step toward KYC automation

Reduce customer onboarding from days to minutes and minimize the risk of errors with KYC automation from Autenti.

Leverage various methods of individual customer verification, from video verification to banking integrations and qualified signatures, in a single, consistent online process.

Optimize compliance and operations teams.

Try Autenti and automate KYC in minutes or get back to our experts, we'll help select the perfect solution for you.

FAQ

What is KYC automation?

KYC automation is the use of technology to verify a customer's identity without (or with minimal) human intervention. This includes document reading (OCR), biometric verification and other methods.

Does automation completely replace humans?

No. Automation supports compliance and operations teams, speeds up processes and reduces the risk of errors, but requires supervision. Humans still make decisions in more complex cases and monitor processes.

What technologies are behind KYC automation?

Among them:

• OCR: reading data from documents, standardization and validation.
• Biometrics: facial recognition, biometric trait analysis, liveness detection.
• AI / Machine Learning: detection of fraud attempts, automatic risk assessment, learning from new data.
• APIs and integrations connecting to trusted data sources: connection to banks, databases and internal systems.

How to implement KYC automation step by step?

Implementing KYC automation starts with an audit of current processes and identification of manual steps, and then goes through locating bottlenecks, or places where processes are slowing down. The next step is to decide whether to build an in-house solution or use off-the-shelf tools, followed by the selection of technologies that match the level of risk and business needs. This is followed by integration with internal systems via APIs, testing and process optimization, and the whole thing is closed with continuous monitoring and iteration to ensure efficiency and regulatory compliance.

What is perpetual KYC (pKYC)?

pKYC is the continuous verification of the customer throughout the entire relationship. The system monitors the timeliness of data, analyzes risks and responds automatically to changes or irregularities, without the need for manual intervention.

How does KYC automation connect to electronic signatures?

The identification process can be directly linked to electronic signatures: SES (simple), AES (advanced), QES (qualified). The customer's data is used automatically, and the entire process from identification to document signing is done online.