Understanding Identity Theft
Identity theft occurs when someone steals personal information such as Aadhaar card numbers, PAN details, or credit card information to make online purchases, access financial accounts, open new bank accounts, or commit other types of fraud.
Identity theft is more prevalent than most people realize. According to recent reports, identity theft remains a growing threat. In 2024, A 73-year-old woman was allegedly duped of Rs 2 lakh by cyber fraudsters under the pretext of updating the KYC details of a bank in central Mumbai. Such breaches reinforce the urgent need for financial institutions to reevaluate their KYC processes and adopt secure digital alternatives to mitigate fraud risks.
How Identity Theft Happens
- Unsecure and Public Browsing:
- Public Wi-Fi and unsecured websites expose users to the risk of hackers intercepting sensitive data.
- Data Breaches:
- Unauthorized access to sensitive information remains a significant issue. In 2021, a data breach exposed the personal details of 500,000 Indian police personnel, originating from an examination conducted years earlier. Such incidents underline the long-term risks associated with improper data handling.
- Malware Activity:
- Malicious software can steal, alter, or delete data, hijack systems, or encrypt sensitive files.
- Phishing:
- Fraudulent communications masquerading as trusted sources deceive users into sharing sensitive data, which ends up in the hands of identity thieves.
- Physical Theft:
- Lost credit cards or mobile phones provide easy access to sensitive information for thieves.
- Card Skimming:
- Skimming devices attached to ATMs or point-of-sale machines capture data from payment cards, compromising user security.
According to IBM the global average cost of data breach in 2024 was a staggering ~41 Cr INR.
Digital KYC: A Robust Solution to Combat Identity Theft
What is KYC? KYC (‘Know Your Customer’) is a process where institutions verify customer identities to assess their authenticity and credibility. Banks, insurance companies, and other financial institutions rely on KYC for customer onboarding and fraud prevention.
Challenges with Traditional KYC
While many businesses focus heavily on onboarding verification, some leading research report indicate that 76% of fraud attempts take place after the KYC process. Despite RBI guidelines, forged documents and financial fraud persist. For instance, a 2019 case in Delhi exposed fraudsters who used 22 PAN cards, 9 Aadhaar cards, and 21 voter IDs to deceive multiple top tier banks. These incidents highlight vulnerabilities in manual and vendor-dependent KYC processes, leaving room for fraud by both customers and employees.
How Digital KYC Addresses These Challenges
Kwik.ID offers a cutting-edge solution with its Digital and Video KYC processes, addressing the limitations of traditional KYC systems.
- Compliance and Security:
- Our Video KYC process complies with mandates from regulatory authorities such as RBI, SEBI, IRDAI, and PFRDA. It uses end-to-end encryption and an on-premises setup to maximize data security, eliminating risks of breaches or theft.
- Verification of Official Documents:
- We authenticate PAN, Aadhaar, Driver’s License, and Voter ID cards through Central Government Databases using Optical Character Recognition (OCR) technology for instant and accurate results.
- AI-Enabled Image Processing:
- By comparing user selfies with institutional photographs and IDs, our AI ensures identity consistency. Liveliness detection through live-action commands further minimizes fraudulent attempts.
- Enhanced Customer Identification:
- Security questions and AI-driven processes add additional layers of verification, ensuring robust identity checks.
- Customizable Solutions:
- ID provides modular and adaptable solutions, integrating seamlessly into existing systems to meet specific institutional needs.
- Compliance and Security:
A Forward-Looking Approach
Digital KYC is not just about compliance; it is a necessary step in protecting sensitive data and ensuring trust in financial transactions. With incidents of identity theft on the rise, adopting advanced digital KYC solutions is essential for institutions to stay ahead of evolving threats.
For more questions and commercial quotes, write to sales@think360.ai or dial +91 8779798844.
