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Monday, July 22, 2024

Preclude Fraud With Document Verification In Banking Sector

In 2018, 107,020 UK bank account fraud cases were reported to CIFAS. Among these, bank account fraud due to misusage of facilities witnessed the highest growth, rising by 13 percent from 37,732 cases in 2016 to 51,106 cases in 2018. On the other hand, fraud involving identity theft against bank accounts reduced from 64,174 cases in 2015 to 45,528 cases in 2018.

Thus, document verification in banking is essential to ensure security and surveillance so that banks can uphold the integrity of their financial institutions. It is also optimal for deterring identity fraud and preventing money laundering with other threats. 

This article will discover the benefits of document verification and how it works in banks to enhance security.

Key Insights of the Article 

  • What is document verification?
  • How do banks verify documents? 
  • The type of document verification in the bank
  • Manual verification of documents in banking spaces
  • AI document verification with digital apps
  • The requirements for bank kyc documents
  • The benefits of bank document verification

What is Document Verification?

It is a process of verifying the personal credentials of the applicant who wants to attain the services of the banks. Thus, banks have a regulatory process called KYC to perform the customer’s due diligence, and document verification is a part of it. It diversifies the individual from the fraudsters and the money launder smugglers. 

The procedure only protects the monetary system from economic fraud like identity theft, and money laundering. Document verification in banking sector and other financial industries provides optimal security and protection against these potential threats. It also makes sure that customers’ data and funds are safe and sound. 

How Banks Verify Documents To Ensure KYC?

Verifying documents for Know Your Customer (KYC) processes in banks typically involves several steps to ensure the authenticity and validity of the papers customers provide. Here’s a general step of the process:

  • Document Collection: The bank collects all the required documents from the applicant or source to start the verification process.
  • Initial Screening: The system starts the initial screening and checks for the applicant’s authenticity and genuineness. 
  • Data Extraction: The document is then placed in annotation software, where the data is extracted, and the critical information from the forms is pulled out.
  • Originality Check: It demonstrates the originality of the documents by placing them under different scans and corresponding them with official databases to ensure their genuineness.
  • Cross-Verification: Then, it contains the extracted data with other sources or databases for consistency with the annotated data. 
  • Fraud Detection: This induces the instruments and strategies to notice the signs of imitation or intrigue of the documents that are fabricated. 
  • Compliance Review: It also provides that all documents complete the legal and regulatory requirements that banks must meet. 
  • Quality Assurance: It ensures the exactness and trustworthiness of the validation process that is humanized or performed with the help of automated QA software. 
  • Final Decision: Ultimately, based on the verification results, it gives decisions of approval and rejection. 
  • Database Recording: It keeps thorough documentation of the validation procedure and results for later use and archives them in the company’s database.

Types of Documents Verification In Bank

There are typically two types through which the documents verification in bank transpired. These are the following:

  • Manual Verification of Documents
  • Digital AI Document Verification

Manual Verification Of Documents in Banking Spaces 

Manual verification of documents in banking is still practiced in developing countries, as the process has yet to be digitized in conventional methods. The process requires the applicant to take their documents with them to the banking spaces and get them verified manually. 

AI Document Verification With Digital Apps

The other type of document verification in banking occurs digitally and remotely with the help of online apps. This procedure is powered by cutting-edge artificial intelligence (AI) and optical character recognition (OCR) technology that extracts data. With the help of data annotations, the information included can be verified to authenticate its genuineness. 

The Requirements for Bank KYC Documents

The bank KYC documents are the ones that are required by subsequent organizations to verify the identity of the user. These are the following documents that are needed for the banks: 

  1. Proof of Address
  2. Proof of Identity
  3. Passport-sized Photograph
  4. PAN Card 
  5. Proof of Date of Birth
  6. Signature Verification
  7. Employment/Income Proof 
  8. Utility Bill 
  9. Bank Statement

The Benefits of Bank Document Verification

Bank document verification proffers several benefits that improve security and operational efficiency. By ensuring the authenticity of documents, banks can significantly reduce the risk of fraud and protect the institution and its customers from financial losses. This verification process also obliges compliance with regulatory requirements, which helps banks avoid hefty fines and legal issues. Additionally, it streamlines account opening and loan approval processes, leading to faster service delivery and improved customer satisfaction. Robust document verification builds trust, promotes financial stability, and enhances the bank’s reputation.

Wrapping It Up

The banking sector must implement a stringent document verification process to protect against fraudulent activities and ensure the integrity of financial transactions. By carefully verifying documents using both manual and AI-driven methods, banks can effectively prevent identity theft, money laundering, and other financial crimes. This not only protects customer data and funds but also helps banks comply with regulatory requirements, thereby avoiding legal repercussions. Ultimately, robust document verification enhances customer trust, promotes financial stability, and strengthens the overall reputation of banking institutions.

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