In the financial year 2023, the Reserve Bank of India (RBI) reported more than 13,000 bank fraud cases across India. This was an increase compared to the previous year and reversed the last decade’s trend. The total value of bank frauds decreased from 1.38 trillion Indian rupees to 302 billion Indian rupees.
The number of accounts opened causes the growing number of bank frauds. According to researchers, as the number of accounts opened initiates these frauds, 1 out of 30 accounts is made to disrupt the economic system. Therefore, banks mandate digital document verification to facilitate the onboarding of new customers.
This article will explore the use of document verification in applicant identification and how it deters bank fraud.
Key Insights of the Article
- Comprehending the concept of the verification of a document?
- How digital document check is processed?
- The crucial document checks
- Verify documents online with fintech apps
- AI document verification with ocr technology
- Deter identity fraud by verifying documents
What is the Verification Of Document?
The verification process compromises on the concepts of identity verification, where it is mandatory for the individual to open a bank account. It is necessary for financial institutions to opt for such initiatives to comply with regulatory requirements. This process ensures the surveillance and security of the funds and the integrity of the organizations.
The verification of the document process is essential as it is an organized way of verifying the credentials of the applicant. It makes sure that the individual has an authentic identity and is not involved in fraudulent activities like money laundering and terrorist financing. For the banks, it can be transpired in two ways:
- Manual or Physical Document Verification
- Online or Digital Document Verification
How Digital Document Check is Processed?
Digital document verification is crucial for ensuring the authenticity and integrity of documents in various sectors, especially banking, legal, and governmental fields. Below are the typical steps involved in a digital document verification process:
Document Submission: The user uploads or scans the document through the website or the app.
Data Extraction: The OCR technology extracts text and data from the document.
Verification of Details: The details are checked against trusted databases for authenticity, to ensure that they are correct and not fabricated.
Fraud Detection: The advanced Algorithms detect tampering, forgery, or counterfeit elements.
Risk Assessment: Based on verification results, a risk score is generated to evaluate the applicant’s intentions and capability.
Decision Making: Then, the automated and human review decides the validity of the document.
Reporting and Logging: The results are logged for audits and compliance.
Implementing a robust digital document verification process helps organizations mitigate the risks of document fraud, ensure regulatory compliance, and enhance customer trust.
The Crucial Document Checks
These are the essential documents that need to be checked when the verification is performed:
- National ID card
- Utility bills
- Bank statements
- Driver’s license
- Rental or lease agreements
- Passport
- Pay stubs
- Employment letter
- Tax returns
- Social Security Number (SSN) card
- Tax Identification Number (TIN) documentation
- Birth certificate
- Voter ID card
- Military ID card
- Health insurance card
Verify Documents Online with Fintech Apps
Digital document verification for bank onboarding transpires via fintech apps. These apps are responsible for online transactions and account openings as they are designed tio develop trust and provide streamlined services. Verify documents online with the fintech apps work closely with the OCR technology and artificial intelligence to annotate data correctly. Then, the annotated data is substantiated with various sources to confirm the accuracy and legitimacy of the provided information.
AI Document Verification With OCR Technology
AI document verification is optimal for document annotations and with optical character recognition (OCR) that extracts the information from the documents. Then, with different sources, the data is verified to authenticate whether the information is accurate. This technology is incorporated with a machine learning algorithm to identify the signs of forgery and fabrication. If it finds out the data is forged and is not accurate, then it alarms the backend systems and denies access for onboarding.
Deter identity Fraud by Verifying Documents
Whether document verification is physical or online, it is prevalent in deterring fraud and ensuring the security of financial institutions. These processes are essential to comply with the KYC and AML regulations in the banks. These are obliged to refrain from hefty fines and preclude identity theft. Digital document verification can detect potential and upcoming threats. It keeps on alarming stage to tell the banks that these threats are initiated with the diversion of accounts and how they are being used.
Final Words
Banks need to integrate robust digital document verification for onboarding new customers to comply with regulations and to protect financial institutions from fraud. By utilizing advanced technologies such as OCR and AI, banks can verify the authenticity of documents, prevent identity theft, and deter money laundering. The increasing number of bank fraud cases highlights the urgent need for these measures. With a streamlined digital verification process, banks can build customer trust, enhance operational efficiency, and uphold the financial system’s integrity. Implementing these measures is crucial for developing a secure and reliable banking environment in today’s digital age.
