According to the Global Economic Crime and Fraud Survey 2022, document fraud remains a substantial challenge for banks. It contributes to the high incidence of economic crimes reported by 40% of organizations in the past two years. Financial institutions like banks are particularly affected and face substantial fraud-related losses.

Document forgery is emerging as one of the most disruptive types of economic crime, and banks are always on the edge of these threats. Thus, document verification in banking is essential and critical for dissuading identity fraud, money laundering, and terrorist financing.

This article will delve into the essentials of document verification and its purpose in the digital realm of modern banking.

Key Insights of the Article 

• Comprehending the concept of document verification
• How is the document verification process?
• The conventional physical document checking 
• Online documents verification through Fintech apps
• The essentials for online document verification
• Advantages of bank document verification

What is Document Verification?

The document verification is the advanced process of ascertaining the credentials of the applicants who have applied for the account opening in the bank or any other financial institute. The process is an exhaustive subset of the customer due diligence (CDD). Document verification in banking ensures that only genuine and authentic persons attain the facilities of the financial system. 

It also ensures that the system remains secure from unauthorized access and whether a document, for instance, a bank statement, employment record, or business document, is authentic. Among financial institutions, many businesses also employ document verification as part of their customer identification program,

The Robust Document Verification Process

The document verification process can transpire in two ways, either it can be physical or online. However, the processes for both ways are almost alike and function the same. Here are the simple steps by which documents can be verified, that are: 

Document Collection: The bank or the authorities gather all required documents from the applicant or source.

Initial Screening: Then, the authorities perform a preliminary check for absoluteness and legibility of the applicant. 

Data Extraction: The data is then extracted critical information from the documents using manual or automated methods.

Authenticity Check: It verifies the authenticity of documents through official databases or issuing authorities to ensure their genuineness.

Cross-Verification: Then, it cross-checks the extracted data with other sources or databases for consistency with the annotated data. 

Fraud Detection: It also employs the tools and techniques to detect signs of forgery or manipulation and if the documents are fabricated. 

Compliance Review: Further, it ensures that all documents meet legal and regulatory standards that are obligatory for the banks. 

Quality Assurance: Moreover, it conducts a thorough review to ensure the accuracy and reliability of the verification process manually or with the help of QA software. 

Approval/Rejection Decision: Finally, it is decided based on the verification outcomes and is provided to the user and the bank. 

Record Keeping: Finally, it maintains detailed records of the verification process and outcomes for future reference and stores them in the organization’s database. 

Physical Document Checking In the Banks 

Conventional document verification in banking is likely the old-fashioned way of verifying documents. The customers are required to physically present their documents at the bank branch. The documents are then verified by the bank officer, who has data matching the information mentioned in the papers. They also run the documents under the following scans to ensure the originality of the records by determining the holograms and paper quality, etc.

Fintech Apps and Online Documents Verification

The online document verification in fintech apps is more reliable and faster than physical verifications at banks. It ensures the documents are not forged and the information is not fabricated using modern document annotation technology. Online documents require users to scan their documents via a mobile phone camera or scanner. Then, the data is extracted, and the information is confirmed from the different sources. It indicates the user was not previously involved in any fraudulent activity and has no intention to harm the integrity of the financial institutions. 

Types of Required Online Document Verification 

Banks are likely to ask the customer to submit their credentials in order to obtain the maximum information from them. They are obliged to perform the KYC process so that they can prevent potential threats. There are the  following types of documents that are required by the banks:

• Proof of Identity
• Proof of Address
• Proof of Income/Employment
• Credit History
• Collateral Documents
• Business Registration Documents
• Tax Identification Number
• Proof of Business Address
• Financial Statements

Advantages Bank Document Verification

Document verification in banking has several advantages that ensure regulatory compliance and prevent identity theft, money laundering, and other potential risks. Here are a few benefits: 

Meet Regulatory Requirements: Document verification helps fulfill legal identity verification mandates.

Mitigate Fraud: Verifying user identity reduces identity theft and account creation fraud.

Build Customer Trust: Verification during onboarding enhances customer confidence by deterring bad actors.

Onboard New Customers Faster: Automated document verification speeds up the process, often completed in seconds.

Wrapping It Up 

Robust document verification in banking systems is crucial for optimal security and preventing financial fraud and identity forgery. This process ensures that banks capitulate with regulatory requirements and mitigate the potential threats of cybercrime and financial losses. With advanced KYC document verification, financial institutions can build trust with their customers. They can also enhance their working efficiency and maintain the integrity of their services by opting for an optimal solution. As financial crimes are evolving on a daily basis, banks must stay ahead and adopt robust document verification strategies that protect their funds and customers’ trust.