A definitive guide to understanding API banking
It’s no more a secret that API banking is the future for banks, payments, and other industries interested in innovative financial technologies that enable agility & scalability. We have gone through in detail about core banking APIs, Lending APIs, card issuance APIs, and acquiring APIs . Here in this chapter, we will cover what is known as Know Your Customer (KYC) APIs.
But first, let us understand what is KYC and why it is so important.
Know Your Customer (KYC) is the process which helps businesses identify & verify the details of their clients. This is one area that APIs are already having a substantial impact. These APIs are used by banks and companies to ensure anti-corruption compliance and to verify the identity of their customers or agents.
In short, it is all about verifying whether you are who you say you are. To help you get a better understanding, let's check out what does it actually mean to 'Know Your Customer' & how this process is carried out with APIs.
How to know your customer with KYC APIs
To keep businesses or banks out of fraud and money laundering, KYC is a regulatory requirement for businesses that provide financial services. Simply put, it is all about verifying the identity of customers either before or during the time they start using financial services.
But how do businesses do that?
The older traditional process involved a lot of sequential steps that have to be followed by an individual or team. Hours and hours of manual work would go into each stage and a client could be off-boarded for any number of risk reasons. The work is mandatory and the labour costs will hit your bottom line, thereby reducing your returns on investment.
Nowadays fintech companies have made it easier for businesses and banks to do KYC without any human intervention. Agencies, like AuthBridge with the support of UIDAI, offer reliable KYC solutions through advanced APIs. A few basic details like your name, date of birth, address, gender, mobile number, Aadhaar number & photo identification is instantly available and reliant through KYC APIs.
Advanced APIs talk to each other and are great time savers while offering KYC in a cost-effective manner. Those APIs integrated with Aadhaar based eKYC can make the background screening process easier and faster. With no time wasted on manual entries and paperwork or attestation, the operations can be streamlined & customer/ user onboarding can be done instantly.
Key benefits of using KYC APIs
There are many benefits for banks & businesses who use KYC APIs.
No human intervention:
KYC APIs help in reducing human intervention happening at each stage. This integration of APIs reduces probable errors at each stage.
KYC APIs bring real-time insights like customer risk analysis, credit score, and many other parameters to the table so that organizations can make the right decisions for each customer.
Zero risks of manual errors:
KYC APIs bring in the right data at the right time in the right place and reduces the risk of clerical errors.
Integrating KYC APIs to your business flow will save you money and time.
Instead of going through a long & time-consuming verification process, businesses can reduce & automate the KYC flow to create a frictionless onboarding process.
This frictionless experience results in a seamless onboarding experience and thus better retention.
Quick entry to new markets:
KYC APIs makes it easy for businesses to enter new markets with ease.
For all these reasons, KYC APIs have been introduced to the market. Traditionally, the process of collecting data, compiling client’s profiles & creating audit trails have been manual thus far, but these time-consuming processes can cost you a lot, including losing many customers during the initial stages of the application process.
So you’d have got a fair idea about KYC APIs and where to find them. And with this chapter, we've come to the end of the discussion of different banking APIs.
By now you would certainly have some idea about banking APIs and their contribution in the evolution of the banking industry. Now once you confirm the APIs to be used, there are certain factors you should consider before you finalise the API provider. Let us jump one last time to our last remaining chapter from the list - how to choose the right API provider.