The Origin and Use Cases of the Digital KYC (Know Your Customer)

Digital KYC

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Customer identification, verification, and monitoring are crucial for the prosperity of the organization; digital KYC aids in providing these services to the companies.

 The digital shift has simplified the activities of companies and clients but also has a dark side. As it has attracted the attention of cyber crimes, commiting online crime is more accessible than in person. Because scammers are now more advanced, they use the latest techniques to hack the accounts of people. Arresting digital hackers is also challenging because they commit crimes through fake identities. 

They steal the client’s status and use it for illicit purposes; sometimes, individuals do not even know their account is being hacked and used by another person. In 2022, Japan lost 1.5 billion Japanese yen due to cyber crimes. This is where digital KYC comes to resume companies and individuals, and this blog contains complete guidelines about online verification.

What is Digital KYC?

The online verification process allows the clients to verify that they are the same as they claim to be. Digital KYC is a paperless procedure; no physical presence is required, and every task is digital. They can even know about their partner before getting into any legal commitment; in the same way, another person can also get better information about the products and services of the company. This process is also done to ensure that the customer later does not get involved in any illegal activity.

Use Case of Digital KYC Verification Solution

Digital KYC has solved many problems of individuals by assisting them in their daily activities; this process is done in various ways, and here will discuss the most common forms of authentication:

  1. Video Verification

This identification technique detects the liveness of the client, and hackers can not bypass this verification because the client’s digital presence is essential in this verification. The live video of the client is compared with the previously stored documents or images of the user with the help of eidv. This verification is very secure as hackers can not present fake pictures of the account holder to decode the algorithms.

  1. Document Verification

The legal papers of the clients are verified; for this process, clients are asked to upload scanned copies of their identity cards, residential addresses, and bank statements. 

  1. Client Due diligence

Digital KYC performs due diligence to check the livelihood of their clients; in this way, companies lighten their risk rate. By conducting risk assessment, if a business comes to know that the client they are dealing with is a high-risk customer, then the company makes a strategy to deal with him accordingly, to preserve themselves from any expected future loss.

  1. Fraud Detection

Most frauds are done when the business does not have proper information about the person they are dealing with. Continuous monitoring helps the company to check the activities of their clients and ensure that they are earning money through safe means.

Origin of Digital KYC Solutions

These scanners were first used in the banking system but are now essential to every industry. This term was used primarily by AML (Anti Money Laundering) regulations by the US Treasury Department. So here are the components of Digital KYC onboarding:

  • Customer Identification Programme (CIP)

The client’s identity is checked to ensure they are the same person claiming to be; this can be done to prevent fraud.

  • Client Due Diligence (CDD)

The due diligence risk rate is measured; the company must classify high-risk and low-risk clients.

  • Customer Ongoing Monitoring

This process is to get the clients’ updated information so the company can connect better to their users.


Digital KYC verification has soothed the chances of expected scams; companies can safeguard their credentials and clients’ privacy by following the digital KYC. Otherwise, businesses have to face heavy penalties. Brand image is also affected when a company does not prioritize the security of clients’ data. Clients are not associated with such a business in a company with a high cybercrime ratio. Therefore, companies must install digital KYC because they do not consider themselves safe.

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