Digital Identity Verification System: Understanding EKYC that Changes the Way Financial Transactions Are Conducted

In an era where technology replaces traditional processes, user identity verification has been modernized and made more convenient. Today, we will explore EKYC (Electronic Know-Your-Customer), an electronic identity verification method that saves time and reduces the hassle of financial transactions.

What is EKYC? Technology that transforms identity verification

EKYC or Electronic Know-Your-Customer is the process of recognizing and verifying a customer’s identity through digital technology, eliminating the need for face-to-face meetings with staff, which can be time-consuming. Users can register themselves from home using their own electronic devices.

The EKYC system has evolved from traditional KYC by streamlining the document filling process, saving travel time, and reducing paper resource usage, resulting in a highly efficient identity verification process.

The three main methods of EKYC identity verification

Biometric Data Scanning (Biometric Authentication)

This is the most popular method, using biometric data to verify identity. It can scan the iris, face, or fingerprint to confirm the owner’s identity. Examples include smartphone login, mobile banking transactions, and access to various financial applications.

Digital Document Data Reading (Optical Character Recognition - OCR)

This method involves scanning and converting data from documents and images into digital formats, such as ID cards, bank statements, or registration certificates. All data are transformed into electronic information, speeding up data entry on paper.

Digital System Verification by the State (National Digital ID - NDID)

This EKYC method uses online systems popular among Thai banks, such as facial scan and ID card verification, connected to relevant agency processing systems to confirm user identity.

Standards and conditions for identity verification

Access to the EKYC system requires clear identity verification to prevent unauthorized access.

For individuals:

• National ID number, full name, date of birth
• Current address, mobile phone number
• Email address and facial scan

For legal entities:

• Company name, registration number
• Office location and management information

In addition to the above, a “verification tool” (Authenticator) must be possessed and controlled by the user, consisting of three types:

• Something You Know - e.g., password or PIN
• Something You Have - e.g., ID card or identification card
• Something You Are - e.g., fingerprint or face

Advantages of the EKYC system that attract users

This digital identity verification system offers many benefits that users should know:

• Convenience: No need to visit branches or offices; registration can be done anytime, anywhere, using personal devices.
• Time and cost savings: Reduces travel expenses, conserves resources, and minimizes paper document usage.
• High security: Data storage systems are highly secure, reducing the risk of document forgery and fraud.
• Accuracy and reliability: Data processed electronically is more precise.
• Wide applicability: Can be used in banking, government, financial services, investment, and insurance sectors.

Disadvantages and challenges of the EKYC system

However, this system still has some drawbacks that need improvement:

• Limited access for the elderly: This group may not be familiar with digital technology, making access difficult.
• Risks of data misuse: If data access is misused, it could cause harm to individuals.
• Energy efficiency needs: Requires sufficient electronic devices and continuous technological development.

How EKYC differs from KYC

EKYC system and traditional KYC differ significantly in several aspects:

Verification Process

• KYC: Customers must meet with staff directly, providing physical documents such as ID cards or passports.
• EKYC: Uses digital technology, such as biometrics and digital signatures, for remote verification.

Documents Used

• KYC: Requires copies of ID and proof of address.
• EKYC: No physical documents needed; everything is digital.

Verification Method

• KYC: Manual verification, which can be time-consuming.
• EKYC: Remote process, offering maximum convenience.

Speed

• KYC: The process may be slow due to multiple checks.
• EKYC: Fast verification, enabling customers to start using services more quickly.

Accuracy

• KYC: Prone to errors from manual processing.
• EKYC: Digital systems provide much higher accuracy.

Security

• KYC: Security measures are limited; physical documents can be forged.
• EKYC: Uses digital encryption and biometric authentication, reducing fraud risk.

User Experience

• KYC: Customers must visit branches in person, which may be inconvenient.
• EKYC: Remote verification offers a smooth and comfortable experience.

In summary, EKYC surpasses traditional methods in all aspects due to reliance on digital technology, convenience, accuracy, and robust security measures.

Conclusion: EKYC is the future of identity verification

From the exploration above, EKYC represents a significant advancement in identity verification processes, especially in the rapidly expanding digital environment. It is currently adopted in banking, government, financial services, investment, and insurance sectors.

Using electronic identity verification not only helps protect users’ personal data from leaks but also maintains data integrity effectively, increasing user confidence and trust in digital financial systems.