AI-powered identity verification could reduce KYC and AML costs significantly

 

It has been revealed in recently published whitepaper, that among the many aspects of implementing AI, there are some significant cost reductions when dealing with lenders.

The report shows, that the implementation of AI-powered identity verification could reduce Know Your Customer (KYC) and Anti-money Laundering (AML) costs by up to 70%. We must also mention that the verification speed is notably improved, with up to 80%.

The whitepaper, which looked into the state of the digital lending market in Europe, was released today by Mitek, authored by Fintech research practice Autonomous NEXT, and points one of the key benefits of investing in digitization.

The title of the study is ‘European Digital Lenders: How operating efficiency is helping digital lenders attack a $150 billion annual origination market across the Eurozone in 2018’, and the researchers found that while European digital lenders are growing at a rapid pace, digital share is still low relative to the addressable market opportunity.

Lex Sokolin, Global Director Fintech Strategy at Autonomous NEXT, said: “The digital lending sector has grown dramatically in the last few years and is a great example of how technology can democratize access to financial services. But banks still dominate lending, and digital-first lenders are struggling to provide loans on better terms than their traditional rivals given high cost of capital. Our report found that venture capital investment is still flowing into the space and is set to hit $800m in Europe. The UK alone has originations of over $6bn, and Europe-wide, the addressable market is $150bn – with current digital lender revenues estimated at $400m. Moreover, the market shows impressive originations growth, with a 60% CAGR since 2013.

An interesting aspect that has been pointed out in the report, is that onboarding times have been drastically reduced in the digital world, however the acquisition costs still remain high.

Additionally to these finds, the cost of their capital is preventing digital lenders from competing with incumbent banks on price.

As a result, digital lenders should harness their lower operating costs to their advantage and by reducing costs they could start offering a real alternative to traditional banking providers. Next to the lower cost and speed, digital lenders must also improve on security and use digital identity verification processes as a tool to catch up with the competition.

Rene Hendrikse, EMEA MD at Mitek, said: “The solution is investing in digital identity verification, powered by AI technologies, which provides an opportunity to massively enhance the efficiency of the onboarding process in terms of both speed and cost reduction. In fact, the report found that digital IDV solutions can help reduce KYC and AML costs by up to 70% – and could potentially improve the speed of these checks by 80%.

We are eagerly looking forward to an AI powered future that could drastically reduce costs and the speed of processing for many industries. This is just the beginning, we will surely look back on these reports a few years from now and see what could have happened if we have invested more into technology.

Zoltán is a self-taught publisher and events organizer who has developed several brands and services that have increased the notoriety of his company within multi-billion dollar industries. In 2018, he has become a TEDx speaker and talked about reputation management in the digital era. As Co-Founder of HIPTHER Agency, Zoltan has helped develop highly respected online news portals, virtual and in-person conferences that cater to multiple industries on 5 continents. Among the developed brands and services you can find online news portals that cover several tech industries, gaming, blockchain, fintech, artificial intelligence, and more. In parallel, the company has built a portfolio of annually organized boutique-style conferences in Europe and North America. All the events organized by his company focus on bringing a wealth of information about the latest innovation in several industries such as Entertainment, Technology, Gaming and Gambling, Blockchain, Artificial Intelligence, Fintech, Quantum Technology, Legal Cannabis, Health and Lifestyle, VR/AR, eSports and many more. Zoltan enjoys writing articles on all portals owned by the HIPTHER Agency, talking at conferences, hosting the weekly HIPTHER Talks Podcast, and loves spending time with his family. Zoltan is a duathlete who enjoys training for different international competitions which include running and cycling.