Have you ever wondered why applying for a loan can be such an arduous process? As a borrower, you have to jump through all kinds of hoops to verify your identity and provide supporting documents. It’s time-consuming and frustrating for you, and for the lenders, it means higher costs and longer processing times. But all that is changing, thanks to video KYC. Video KYC or video Know Your Customer is transforming how lenders verify borrowers’ identities while streamlining the application process. With just a simple video call, lenders can see you, check your ID, and get the information they need. For you, it means getting approved for a loan faster without the hassle of paperwork. Read on to find out how video KYC is revolutionizing loan origination and why it matters for your success as a lender. The future of borrowing is here – are you ready?
The Importance of KYC in Loan Origination
The importance of Know Your Customer or KYC procedures in loan origination can’t be overstated. As a lender, verifying a borrower’s identity and assessing their ability to repay a loan is crucial. Traditional methods of collecting and verifying KYC documents like utility bills, bank statements, and photocopies of IDs can be tedious, time-consuming and prone to fraud.
Video KYC solutions allow lenders to verify a borrower’s identity remotely using live video conferencing. By using a borrower’s smartphone, tablet or laptop camera, lenders can see and speak with applicants directly, checking that their photo ID matches their likeness. This helps prevent fraudsters from using stolen identities or manipulated documents.
With Video KYC, the entire KYC process – from document collection to verification – can take just minutes rather than days or weeks. This speeds up loan processing and funding, allowing lenders to achieve faster turnaround times. Borrowers also benefit from a fast, frictionless experience.
Video KYC also enhances data security since there’s no need to handle and store physical documents containing sensitive information. Everything is done digitally in a compliant manner.
Using AI and machine learning, advanced Video KYC solutions can also analyze the video interview to detect facial expressions and voice patterns that may indicate fraud risk. Things like unnatural eye movements, inconsistent smiles or a shaky voice could raise red flags for further investigation.
In summary, Video KYC is transforming borrower verification and helping lenders reduce fraud, cut costs, improve security and achieve faster funding. For the modern borrower, it delivers a simple yet satisfying experience that keeps them coming back. If you’re looking to gain a competitive advantage, Video KYC is a must-have feature in any digital lending platform or loan origination system.
Challenges With Traditional KYC Processes
With traditional KYC processes, there are a few challenges you’ll likely face. For starters, collecting and verifying physical documents like utility bills, bank statements, and government IDs can be cumbersome and time-consuming. Not to mention, documents can be easily forged or manipulated.
Another issue is that traditional KYC often requires face-to-face interaction, like in-person interviews. This can be difficult to coordinate and prevent you from reaching more potential borrowers, especially those in remote areas.
Slow application processing
Traditional KYC using paper documentation and manual review also means a slower application process. It can take days or even weeks to collect, review and verify all the necessary documents and information for each applicant. This delays getting approved borrowers their funds quickly.
Higher costs
With so much manual labor involved, traditional KYC processes tend to be more expensive. More resources are required to physically collect, handle, review, store and manage all the paper documents. These higher costs are often passed onto the borrowers through higher interest rates and fees.
Impersonal experience
Finally, traditional KYC provides an impersonal experience for the borrower. They feel more like a set of documents rather than a real person. This can negatively impact customer satisfaction and loyalty.
In contrast, video KYC solutions like Celestiq LOS provide a modern, digital-first approach to borrower verification that helps overcome these challenges. By streamlining the KYC process through video interviews and AI-powered identity verification, you can onboard new borrowers faster, at a lower cost while providing a personalized experience.
What Is Video KYC and How Does It Work?
Video KYC, or video know your customer, is an online identity verification process that uses live video chatting to verify a user’s identity. Instead of relying solely on physical documents, Video KYC allows you to have a real person manually check a user’s ID and likeness over a video call.
How Does Video KYC Work?
The process is simple. Once a user initiates a Video KYC check, an agent will connect with them over video chat. The user will hold up a valid government-issued ID, like a driver’s license or passport, so the agent can compare their likeness to the photo ID. The agent will also ask the user some questions to confirm other details like their name, address, and date of birth.
If everything matches and the ID appears authentic, the user’s identity is verified. The entire process only takes a few minutes and can be done on the user’s own time whenever they have access to a phone, tablet, or computer with a camera. Compared to mailing in or uploading physical documents, Video KYC provides a fast, user-friendly way to complete identity verification.
For lenders and other financial institutions, Video KYC offers several benefits:
•Reduced fraud risk. Speaking with a real person and viewing an ID in real-time makes it much harder for fraudsters to spoof identities.
•Improved customer experience. Video KYC is convenient and leads to a personal interaction. Borrowers appreciate how fast and easy the process is.
•Regulatory compliance. Video KYC meets KYC and AML compliance regulations that require verifying a user’s identity before they can access products or services.
•Cost savings. Video KYC eliminates the need for physical documents and in-person meetings, reducing costs associated with identity verification.
•Faster loan processing. Automated video KYC platforms can verify a borrower’s identity within minutes, speeding up the overall loan application process.
Video KYC provides an innovative way for lenders to digitally transform the borrower experience through fast, secure identity verification. By embracing this technology, lenders can reduce fraud, cut costs, improve compliance, and decrease application processing times. For borrowers, Video KYC means a quick, simple, and convenient verification process so they can get access to funds faster.
Benefits of Video KYC for Loan Origination
Video KYC provides many benefits for loan origination. Celestiq LOS’s video KYC feature allows you to verify borrowers’ identities quickly and securely without them having to visit a branch.
Convenience for Borrowers
Video KYC is extremely convenient for borrowers. They can complete the ID verification process right from their mobile device or computer instead of taking time out of their day to go into a branch. This allows more people to apply for loans at any time from anywhere.
Faster Verification
With video KYC, identity verification is faster than in-person verification. There’s no need to schedule an appointment or wait in a long line at a branch. The entire video call typically only takes a few minutes. This speed allows you to approve borrowers faster so they can get access to funds sooner.
Enhanced Security
Video KYC also provides enhanced security over in-person verification. The video recording creates an audit trail that allows you to verify the borrower’s identity at the time of application and refer back to it later if needed. Liveness detection helps prevent fraud by ensuring the person on the video call is physically present. Government-issued ID authentication further validates the borrower’s identity.
Improved CX
Video KYC significantly improves the customer experience. Borrowers appreciate the convenience and speed. They feel valued because you’ve provided an easy way for them to complete the application process remotely. Video KYC also allows for a more personalized experience through live interaction with an agent over video. This human connection leads to higher customer satisfaction.
Cost Savings
For lenders, video KYC can result in major cost savings. It reduces the need for in-person meetings, freeing up resources. Automated ID verification and authentication minimize manual reviews. Video KYC also cuts down on costs related to fraud and bad debt since it helps prevent fraudulent applications from being approved.
With all these benefits, it’s easy to see why more and more lenders are turning to video KYC for fast, secure and cost-effective borrower verification. Celestiq LOS provides an innovative video KYC solution to help lenders improve the lending process from end to end.
How Video KYC Improves Borrower Experience
Video KYC, or video-based know your customer verification, significantly improves the borrower experience during the loan application process. Instead of submitting paper documents or coming into a branch, borrowers can simply complete an ID verification and consent process via a quick video call.
Convenience and Speed
Using video KYC, the entire ID verification process takes just minutes and can be done right from your mobile device or computer. No more taking time off work to go into a branch or waiting days for documents to be reviewed. This convenience and speed delivers an improved customer experience that today’s borrowers expect.
Reduced Fraud Risk
Video KYC also reduces fraud risk for lenders by allowing them to visually match a borrower’s ID to their live likeness. Lenders can ask the borrower specific questions to help verify their identity and spot any signs of ID impersonation. This face-to-face interaction provides an additional layer of security over traditional paper or digital ID checks alone.
Compliance and Accessibility
A video KYC solution that is compliant with all regulations surrounding ID verification and data privacy is essential. Look for a system that encrypts all video calls and stores data securely to properly safeguard borrowers’ personal information. It should also meet accessibility requirements to serve borrowers with disabilities or who speak languages other than English.
Seamless Integration
To provide the best experience, video KYC should be tightly integrated into your loan origination system (LOS) software. This allows borrowers to initiate an ID verification call directly within the online application, keeping the process simple and streamlined. Video recordings and results are automatically saved to the borrower’s file in the LOS for easy access by lenders.
Using an advanced video KYC solution, lenders can provide borrowers with a simple, fast, and secure loan application experience. This helps build positive relationships, improve satisfaction and retention, gain a competitive advantage, and drive more high-quality loan applications into your origination system.
Video KYC Enhances Security and Reduces Fraud
Video KYC enhances security and reduces fraud in several key ways:
Authenticates Borrower Identity
With video KYC, lenders can verify a borrower’s identity through a live video call. Government-issued ID can be checked against the person’s likeness in real time. This helps prevent identity theft and ensures the person applying for the loan is who they say they are.
Detects Fake Documents
It can be difficult to spot a forged ID or proof of income document just by looking at images. But on a video call, subtle cues like microexpressions, eye movements, and changes in tone can signal deceit. Trained specialists are adept at identifying these signs and determining if documents seem legitimate. Video KYC makes it much harder for fraudsters to trick lenders with counterfeit papers.
Strengthens Compliance
Regulations like KYC (Know Your Customer) and AML (Anti-Money Laundering) require lenders to verify a borrower’s identity and check for potentially illicit activity. Conducting this process over video helps demonstrate a good faith effort to comply with these laws. Recording the video call also provides an audit trail in case regulators want to review procedures. This documentation and compliance boost can lower risks for the lender.
Speeds Up Approval Times
Once a video KYC session is complete, there is high confidence in the borrower’s verified identity and documents. This can accelerate the underwriting and approval process, allowing lenders to swiftly move forward with qualified applicants. Borrowers also appreciate faster response times and access to needed funds.
Using video KYC for identity verification and fraud detection leads to enhanced security, improved compliance, quicker approvals, and an overall better experience for both lenders and borrowers. While an initial investment is required, the long-term benefits of video KYC make it a worthwhile consideration for optimizing the digital loan origination process.
Top Video KYC Solutions for Loan Origination Systems
When evaluating video KYC solutions for your loan origination system, there are several leading options to consider. These solutions allow you to verify a borrower’s identity remotely using live video and government ID authentication.
Jumio
Jumio offers a video KYC solution that allows you to verify borrower identities in real-time. Their automated system checks the borrower’s government ID for authenticity and matches it against their live video selfie. Jumio supports over 3,000 ID types across 200 countries.
Onfido
Onfido is a popular choice for video KYC. Their solution uses machine learning to detect potential ID fraud. Onfido’s video KYC process is quick, taking around 30 seconds for most users. They offer flexible pricing plans for companies of all sizes.
Veriff
Veriff specializes in automated identity verification solutions, including video KYC. Their service checks government IDs from over 190 countries for signs of tampering or forgery. Veriff uses facial recognition to match the borrower’s selfie video with their ID photo. They aim to provide a seamless user experience, with over 95% of verifications completed in under 60 seconds.
IDology
IDology offers a range of identity verification solutions, including video KYC. Their automated service checks physical IDs and matches the information to public records databases. IDology uses facial recognition and liveness detection to verify the borrower’s selfie video. They have over 15 years of experience providing identity services to companies worldwide.
Experian
Experian is a leading credit bureau that provides identity and fraud detection services, including video KYC. Their automated solution verifies government-issued IDs and facial biometrics. Experian checks IDs from over 200 countries and territories. They use predictive analytics and machine learning to detect potential fraud. Experian aims to provide a simple user experience, with an average verification time of around 30 seconds.
Choosing a reputable video KYC solution is key to reducing fraud, minimizing compliance risk, and improving the borrower experience in your loan origination process. These leading options provide automated, real-time verification of government IDs and facial biometrics to give you confidence in your borrowers’ identities.
Implementing Video KYC: Tips for Success
Implementing video KYC for your loan origination process requires careful planning and execution. Here are some tips to help ensure your success:
Start with a pilot program
Rather than mandating video KYC for all borrowers right away, launch a pilot program to work out any kinks. Select a small group of tech-savvy borrowers to trial the new verification method. Get their feedback and make improvements before a wider rollout.
Choose high-quality video technology
The video experience is key to user adoption and compliance. Invest in technology that provides a seamless, high-definition experience for borrowers, preferably with an option for mobile verification. Low quality, choppy video will frustrate borrowers and make ID checks difficult.
Streamline the process
Keep the video KYC process as short and simple as possible. Only ask for necessary information and documentation to verify the borrower’s identity. The more complex and time-consuming the process, the more likely borrowers are to drop off or go to a competitor.
Train staff and set clear guidelines
Ensure staff conducting the video calls are properly trained on the new technology and verification procedures. Provide checklists and scripts to promote consistency. Set guidelines for how long each call should take and the types of questions that can be asked. The more standardized the experience, the lower the risk of errors or non-compliance.
Be flexible
Despite best efforts, technical issues will arise and some borrowers may face challenges using video technology. Have contingency plans in place, such as allowing borrowers to submit scanned copies of IDs if video verification is not possible. Build in options to complete the verification over the phone as needed. The key is balancing compliance and user experience.
Monitor and optimize
Closely monitor the performance of your video KYC program and look for opportunities to improve. Review feedback from staff and borrowers, verification times, drop-off rates, and error/compliance issues. Make changes to technology, processes, and training as needed to optimize the experience for all parties. Continuous enhancement is key to long term success.
Video KYC FAQs: Answering Common Questions
Many borrowers have questions about Video KYC and how it works. Here are some of the most frequently asked questions and their answers:
How does Video KYC work?
Video KYC allows you to verify your identity remotely using live video chat. Instead of meeting with a loan officer in person, you connect via video call. During the call, you provide ID documents like your driver’s license or passport for the officer to review. They will also ask you questions to confirm details like your address and Social Security number. Once verified, your identity is confirmed so you can move ahead in the loan application process.
Is Video KYC secure?
Yes, Video KYC incorporates security measures like encrypted video streaming, ID authentication technology, and secure document sharing. Your personal information and live video are kept private and confidential at all times. Lenders also conduct Video KYC sessions on secure networks and devices to prevent any unauthorized access.
What documents will I need?
To complete Video KYC, you will need to provide government-issued photo ID, like a driver’s license or passport. The details on your ID, including your name, date of birth, signature, and photo must match the information you provided on your loan application. Additional documents may also be required to verify your address or income. Your loan officer will let you know exactly what you need to have ready for your Video KYC session.
How long does Video KYC take?
The Video KYC process typically takes between 10 to 30 minutes to complete depending on the lender and specific requirements of your loan. The actual live video session usually lasts around 10 to 15 minutes. Additional time may be required for the loan officer to review your documents. The total time will also depend on your ability to provide all necessary documents and information during the initial session.
Video KYC is fast becoming the preferred method for identity verification during loan origination. By answering common questions upfront, you can feel fully prepared for your Video KYC experience and get your loan application approved as quickly as possible. Let your loan officer know if you have any other questions!
Conclusion
So there you have it. Video KYC offers a frictionless experience that streamlines the loan application process for you and the borrower. Instead of wasting time gathering paper documents and verifying physical IDs, you can connect with borrowers face-to-face via video and complete identity checks in minutes. By integrating Video KYC into your loan origination system, you’ll reduce fraud risks, cut costs, and improve the customer experience. What are you waiting for? The future of lending is digital, and Video KYC is the key to unlocking faster, smarter, and more secure loan originations. Make the switch to Video KYC today and take your lending operations to the next level.
