How fintech can utilize document verification for risk prevention?

How fintech can utilize document verification for risk prevention?

Fintech acclimated a remarkable growth within a few years of its launch and this is all due to the ease that it delivers in performing complex operations. Global fund transfer and forex exchange are becoming household terms due to fintech solutions. fintech is serving in B2B and B2C setups. This growth is equally utilized by legitimate entities and fraudsters. The reason why fintech is now opting for rigid customer due to diligence protocols such as document verification, identity verification, AML screening, etc.

What is the document verification solution?

Document verification solution is a SAAS product designed to verify the authenticity of an identity document used for customer due diligence. These solutions are mostly outsourced by businesses as developing one such solution requires hefty resources and effort.

A document verification solution verifies the authenticity of the document, and the information printed on it. Some document verification solution provider companies also offer biometric authentication to ensure thorough security and highly accurate results. It performs face verification on the person showing the document as an identity proof. The picture on the document is matched with the real-time face image. And the results are delivered in real-time.

Risks that can be eliminated through document verification solution 

Fintech is exposed to an array of risks and threats from internal and external agents. Most of the risk is coming from customers and businesses related to fintech companies through B2C and B2B relationships. Such relationships are developed online and have huge risks.

Risk of onboarding remote customers

Most of the businesses in fintech are related to remote clientele and this is one of the major risks. Being open to a global clientele brings in more opportunities for the businesses but it also causes ambiguity in terms of customer identity. Some times people use fake/stolen ID cards to register on a platform. These ID cards are used as a source to develop the credibility of a customer. And one fake ID card induces an unknown threat to the eco-system of a fintech business.

Using a document verification solution to verify the identity documents of the customers before onboarding them, eliminates the ambiguity in B2C relationships.

Financial risk

 Fintech businesses are exposed to huge financial risk due to the financial services offered by this sector in a digital format. Fintech offers payment solutions, online forex exchanges, cryptocurrencies, etc. All these are used for money laundering and other financial crimes.

Performing document verification on the customers/investors before onboarding them on decentralized platforms will almost completely eliminate this risk.

Risk of developing fake B2B relationships

Fintech businesses develop B2B relationships with global entities. But there is an ambiguity in the relationships when it comes to the credibility of an entity. Performing online document verification on online merchants helps them in developing transparent B2B relationships.

Risk of non-compliance

Fintech also comes under the scenario of KYC and AML regulations. Performing document verification on customers and merchants ensures through risk prevention along with regulatory compliance.

Non-compliance penalties are an unannounced burden on the budget of a business. On the other hand, it also affects the market value and credibility of a business. As for fintech startups, such financial losses could prove to a killing blow to them.

To wrap up, the global clientele of fintech is one of the major risks faced by this industry. Performing in-depth dude diligence on these global entities will transform this risk into an opportunity. A document verification solution is a feasible method to cater to this risk. It is cost-effective and delivers high-quality results in real-time. Making a secure customer onboarding a swift and hassle-free process for business and customers.

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