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The power of Business and Entity Verification and Corporate Digital Identity

By Clare Puplett | Mon 22 April, 2024
Business and entity verification

Establishing trust and credibility is paramount. Central to this effort is the rigorous know your customer/business process, which banks undertake to verify the identities of corporate entities they engage with.

Traditionally, this has involved cumbersome paperwork and manual verification procedures. However, with the advent of digital technologies, the landscape has shifted towards Corporate Digital Identity (CDI), which encapsulates the essence of Business and Entity Verification (BEV) in the banking sector.

Enhancing compliance and risk management

Know Your Business (KYB) is designed to fulfill Know Your Customer (KYC) obligations with a focus on businesses rather than individuals. It encompasses essential practices like BEV, which confirms the legitimacy and identity of corporate clients. The process involves comprehensive data collection on a company’s structure, ownership, financial health, and adherence to regulations.

Traditionally, banks have relied on manual methods to verify this information, which has often led to delays and inefficiencies in the onboarding process. Furthermore, increasing exposure to human error and regulatory risk.

With 96% of financial institutions and fintech buyers placing a strong emphasis on accuracy, and 88% prioritizing regulatory compliance, transformation is key.

The evolution to Corporate Digital Identity

With digital transformation sweeping across banking, the verification process has undergone a significant evolution. CDI has emerged as a technology driven method for uniquely identifying and authenticating a company’s precise identity. It integrates crucial corporate data and information attributes necessary for thorough due diligence. These attributes and information are from approved sources, via processes which are compliant with both regulatory and business requirements.

More importantly it generates a golden source or digital profile. Using normalization, entity resolution, corporate hierarchy mapping, Ultimate Beneficial Owner (UBO) identification and integration with other systems such as Client Lifecycle Management (CLM), these processes collectively contribute to the delivery and maintenance of a comprehensive CDI profile.

Reuseable identities

CDI offers a reusable identity solution within the bank, streamlining secure and efficient onboarding processes, along with Corporate Customer Due Diligence (CDD) procedures.

With the ability to break down tech silos by providing a unified platform that seamlessly integrates data from various sources, CDI enables efficient and comprehensive verification processes across departments and systems. Once onboarded, the same trusted information can be effortlessly accessed throughout the bank in accordance with data protection restrictions. This means any subsequent account openings or additional services requiring verification can be expedited.

Are business and entity verification and corporate digital identity the same thing?

While BEV and CDI may seem like distinct concepts, they are inherently interconnected and, in many ways, synonymous. Here is why:

  • Verification foundation: Both concepts share the common goal of establishing the authenticity and legitimacy of a corporate entity. Whether through traditional methods or digital means, the fundamental purpose remains the same – to verify the identity of the business.
  • Digital transformation: BEV has transitioned into the digital realm, giving rise to CDI. The shift towards digital identities streamlines the verification process, enhances security, and enables seamless integration with digital ecosystems.
  • Regulatory compliance: In today’s regulatory landscape, compliance requirements are stringent and non-negotiable. Both concepts play a crucial role in ensuring compliance with regulatory standards, whether it is KYC regulations or Anti-Money Laundering (AML) directives.

The impact for commercial and corporate banks

The convergence of BEV and CDI holds profound implications for banks:

  • Enhanced trust: By leveraging digital identities, businesses can enhance trust and credibility among stakeholders, including customers, partners, and regulatory authorities.
  • Streamlined operations: Digital identities streamline the verification process, reducing administrative overheads and accelerating business operations.
  • Risk mitigation: Robust verification mechanisms help businesses mitigate risks associated with fraud, identity theft, and regulatory non-compliance.
  • Catalyst for innovation: Digital identities serve as a catalyst for innovation, enabling businesses to explore new opportunities in areas such as blockchain, Internet of Things (IoT), and digital marketplaces.

In essence, business and entity verification and corporate digital identity are two sides of the same coin, both striving to establish trust and credibility in the digital age. As banks navigate the complexities of a rapidly evolving landscape, embracing technology is no longer a choice but a necessity. By harnessing the power of digital technologies, businesses can unlock new avenues for growth, innovation, and collaboration while safeguarding their integrity and reputation in an interconnected world.

 

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