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The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Onfido Identify Verification Brings RegTech Innovation to KYC

For most banks, Know Your Customer (KYC) and Anti-Money Laundering (AML) regulation is broad, challenging and time consuming. Compliance that provides a satisfactory and competitive customer experience is difficult to achieve and non-compliance can result in huge monetary fines and reputational damage.

RegTech providers are answering the call for a better approach to KYC and AML with emerging technologies that can deliver far more efficient, accurate and timely compliance. Ahead of A-Team Group’s London RegTech Summit for Capital Markets, we talked to James Baston-Pitt, head of KYC at Onfido, a RegTech innovator that will present at the summit.

Q: What does RegTech mean to you?

A: RegTech helps automate compliance processes and improve the user experience. We’re all familiar with FinTech. RegTech is the next innovative technology that’s helping to revolutionise things. It automates compliance processes such as Know Your Customer (KYC) for regulated businesses. The broad benefits of RegTech are that it takes the burden off manual teams that are fallible, inexpert and prone to human error. Compliance requirements are met with more consistency and accuracy, which removes a lot of the friction that is often borne by the end user and creates a smoother user experience.

Q: What problem does the financial institution have that you believe you can solve?

A: The regulatory burden facing financial services firms has risen steadily since the financial crash of 2008, and it doesn’t show signs of slowing any time soon. But as financial services continue to migrate online, the processes for addressing regulatory requirements are struggling to keep up. Current KYC and Anti-Money Laundering (AML) regulation and solutions were built for an offline world, where, for instance, customers being onboarded by a bank would need to have their documents and identities verified in person. Now that most customers interact with financial services online, that process is getting much harder to manage, driving up manual overheads and causing in-house compliance teams to balloon – in the case of one large bank, to a staggering 30,000 staff.

Q: What regulations are of primary concern to you and your customers?

A: KYC and AML regulation.

Q: How do you solve it?

Onfido builds trust in an online world by helping businesses digitally verify people’s identities to comply with KYC and AML regulation. Using machine learning technology, Onfido validates a user’s identity document and compares it with their facial biometrics. The identity can then be cross-referenced against international credit and watchlist databases.

RegTech like Onfido’s Identity Verification technology translates regulation into applications programming interface (API) code in order to streamline compliance. New tech, such as machine learning and biometrics, can help ensure compliance with fewer resources, so that instead of only onboarding ~70% of ‘good customers’ (i.e. with a credit history), regulated companies can onboard ~95% automatically and put their more limited human resources to better reviewing the ~5% that require human judgement.

Q: What technology do you use?

A: Onfido’s RegTech makes document capture as easy as holding a passport up to a smartphone camera and taking a selfie, dramatically reducing the friction for users being onboarded. This improvement to user experience has seen uplift increased by 42% for Onfido customers, adding to the platform’s profits in new and existing territories, slashing the costs of manual review and bringing more customers onboard.

Unlike other solutions, Onfido’s proprietary RegTech solution is based on machine learning, meaning it is capable of scaling alongside businesses as they grow, and will continue to improve over time. It also offers a far more robust level of fraud detection than other, manual solutions. We are integrated with a range of databases to offer fast turnaround times, global coverage and high match rates.

Q: How do you fit into a financial institution’s architecture and data flows?

A: Financial institutions can easily integrate with Onfido via web or mobile, API or software development kit.

Q: What other cool RegTech companies have you seen out there?

A: ComplyAdvantage and FeatureSpace are interesting.

Q: Why are you taking part in the A-Team’s RegTech Summit for Capital Markets event?

A: At Onfido, we believe RegTech can bridge the gap between regulators and business while protecting the best interests of consumers. RegTech enables regulators to successfully implement and audit their compliance requirements and offers businesses a cost-effective way of meeting regulation. Most importantly, it makes these services available to those that, until now, have been excluded from our economy.

Q: What type of people are you hoping to meet at the Summit?

A: We’d like to meet other RegTechs, regulators and regulated businesses who have the same vision for building an inclusive financial ecosystem.

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