APIs are enabling agile and scalable services for banking, payments and other industries that require identity verification for Anti-Money Laundering (AML) and Know Your Customer (KYC) compliance.
AML and KYC compliance are legally required for certain organizations in most countries. When those organizations verify their customers, APIs can offer a quicker, easier and less costly path to compliance while meeting expectations for speed, security and privacy. There are more than 2,000 financial services APIs and more on the way as advancements in big data, artificial intelligence, blockchain, machine learning and other areas accelerate.
Improving regulatory compliance
Technology and regulatory compliance are two key drivers in the growth of open APIs. Compliance costs can be a burden. Celent estimated the financial industry worldwide would spend $37.1 billion on IT and operations for AML and KYC compliance in 2021, a 13.4% increase over 2020.
APIs can help financial institutions control increasing compliance costs and satisfy requirements while securing a competitive edge.
Using APIs for identity verification and AML and KYC compliance
There are numerous reasons to use an API for onboarding identity verification:
- Provides a cost-effective solution
- Speeds implementation by connecting to the existing infrastructure
- Integrates easily with other applications
- Reduces clerical errors
- Improves staff members’ efficiency by allowing them to focus on problem cases
- Improves staff morale by reducing manual paperwork
- Delivers strong reporting and information flow
- Eases the burden of record-keeping because the process is digitized
- Aligns procedures across units, divisions and operating companies
- Enables quicker entry into new markets
- Provides a smooth, speedy customer onboarding experience and decreases churn
Deploying an identity verification API
A normalized API for compliance can enable financial institutions to grow faster, smoother and more efficiently.
One API integration can connect a financial institution’s system to multiple identity data sources and services such as identity verification, ID document verification, global watchlists and business verification. Country-agnostic APIs can provide access to hundreds of vetted data sources and enable verification of billions of people and millions of businesses worldwide.
Built for scalability and flexibility, the normalized API can meet future needs for functionality and expansion, covering additional countries and accessing new data sources. The API’s built-in intelligence can reduce the number of fields people must fill out during verification, reducing onboarding friction.
Onboarding customers faster and easier with speedy identity verification, robust API documentation, trusted and vetted data sources, normalized data fields and easy integration can help financial institutions achieve AML and KYC compliance without sacrificing the customer experience.
Learn more about integrating a normalized API.
This post was originally published on Feb. 1, 2017, and updated to reflect the latest industry news, trends and insights.