Online KYC Verification – Combating Identity Fraud in Business Operations


Many financial institutions, such as banks, use the robust KYC verification service to accurately identify customer IDs during onboarding. However, the primary purpose of this is to restrict fraudulent activities such as terrorist financing and money laundering by identifying the authenticity of the claimed person.


In the past, when an individual wanted to open an account, the outdated KYC verification process required individuals to physically visit the banks, which is not feasible during the pandemic. Therefore, employees’ remote hiring drastically reduces due to this reason.


Firms are adopting digital ways to revolutionize their business process to combat this issue. Thus, by implementing comprehensive online KYC verification measures, banks can streamline the account creation process by digitally identifying customers. This way, they can analyze the client’s risk factors before onboarding them.

Manual VS. Digital KYC Verification

Verifying customer identities manually increases operational efficiency because it requires enough time in customer onboarding. However, it adversely affects the customer experience due to unnecessary complexity during onboarding. Moreover, high-risk criminals are using advanced techniques to bypass outdated verification procedures, which could lead to severe consequences. Even a single mistake in verifying the identities damages the business’s overall reputation.


Financial institutions can build a risk-based strategy in determining their customers’ legitimacy by implementing the latest online KYC verification solutions. It thoroughly screens the users’ IDs against different government databases and restricts fraudsters from becoming part of the company. Moreover, it allows firms to keep track of user’s transaction history to ensure they are not dealing with illegal activity. In addition, it uses AI algorithms that automate manual identity verification procedures, which reduces the overall time and enhances the customer experience.

What are the Methods of Online KYC Verification?

Companies can conduct online KYC verification through different methods, including:

  • Digital KYC Form

In this type, customers must fill out the online KYC form and then submit it to the relevant authority. Moreover, it also asks the user to add their signatures to this form, and they can add it through the below-mentioned methods:


  • Users can add their signatures by printing the KYC forms and sending them to the company’s physical address after signing them.
  • In addition, customers can also sign this form using electronic methods and then send it back to the company.

  • Video-Based KYC

Financial firms are now using video-based KYC procedures to verify their customers’ identities, which is the most authentic method. However, it is an audio-video interaction where the KYC analyst captures the users’ pictures and official documents. In addition, this process is mainly used by banks in the account creation process. The following are the steps through which businesses conduct video-based KYc verification:

  • Before using the service, the customer is asked to log in to the verification application and complete the KYC identification procedure.
  • The user then gets the verification link through the email they provide and then needs to click on it.
  • On the other end, an analyst from the company will handle the video KYC process.
  • After this, the KYC analyst will thoroughly analyze the user’s identity by capturing his photo and official documents, such as an Aadhaar card.


Once the user completes all the KYC verification procedures, he will be notified of the final results within a few days.

  • OTP-Based KYC

Another know-your-customer verification method is the OTP-based KYC verification, primarily used in opening bank accounts or digital wallets. However, the user mainly receives the OTP in the form of messages by using the registered mobile phone number with the Aadhaar card. The following are the steps of this process: 

  1. The customer opens the Aadhaar online KYC tab and enters his details.
  2. After this, the user is asked to add his Aadhaar card number.
  3. Then, the user gets the OTP on the mobile number associated with his UID card.
  4. In the end, when a user enters the OTP, the application verifies his identity and notifies him about completing the online KYC verification process. 

Final Thoughts

In today’s dynamic world, companies are adopting online KYC verification methods to automate their identity validation procedures. This allows them to verify the users’ identities quickly and accurately while providing a seamless onboarding experience. This way, companies combat identity theft in business operations and gain customer trust, which increases financial growth.