KYC: The Latest Trends and Tech You Need to Know

kyc know your customer trends for banks and financial institutions

Know Your Customer (KYC) compliance is a critical component of banks’ and financial institutions’ defense against money laundering and other financial crimes.

Since KYC standards were introduced with the 1970 Bank Secrecy Act in the United States, they have continued to expand and evolve to adapt to emerging threats, new technologies, and operational requirements.

Thus, in 2025 and beyond, organizations must rethink how they approach customer identity verifications to keep up with changing regulatory requirements while ensuring a frictionless experience that supports customer satisfaction. Continue reading below for a look at some of the ongoing and emerging trends in KYC.

An Overview of KYC Standards

First, let’s quickly review the current KYC requirements for banks and financial institutions. At a basic level, KYC procedures are a series of steps organizations must take to verify the identity of new customers.

In support of high-level anti-money laundering (AML) initiatives, organizations must ensure that customers are who they claim to be and use their services for legitimate activities. KYC standards generally apply to banks, financial institutions, and other organizations at risk of money laundering and other financial crimes.

The process typically consists of five stages:

  1. Customer identification
  2. Customer due diligence (CDD)
  3. Enhanced due diligence (EDD)
  4. Ongoing monitoring
  5. Compliance and reporting

While there tends to be a large emphasis on the initial verification of user identities, it’s important to understand that effective KYC procedures extend beyond customer onboarding, helping to detect suspicious activity and behaviors that might indicate criminal activity is underway.

4 Important KYC Trends and Methods

Thanks to ongoing tech innovations, financial institutions are finding better, more efficient ways to execute KYC processes without detracting from their thoroughness and accuracy. These are the top KYC trends that are re-shaping this critical compliance practice: 

1.    eKYC

Gone are the days when customers needed to visit a physical branch or office in person to open a new account. In today’s hyper-connected world, consumers can enjoy the convenience of signing up for a variety of financial services in a matter of minutes from the comfort of their homes.

However, this shift to digital sign-ups doesn’t mean institutions are off the hook for ensuring KYC compliance. Rather than requiring new customers to visit a branch to verify their identity after signing up online, the advent of electronic KYC solutions, or eKYC, enables organizations to do so digitally.

Customers can be onboarded through a dedicated online platform that the bank or financial institution has adopted. There, the user will complete a series of file uploads and biometric scans to verify their identity before gaining access to the desired service.

By some estimates, the global eKYC market is set to expand at a compound annual growth rate (CAGR) of 19.71% from 2024 to 2032, underscoring the large shift to digital identity verification methods over the coming years.

2.    Biometric Verification

The rise of eKYC solutions has been made possible by the emergence of biometric verification technology. It helps prevent cases where someone uses a stolen identity to open a new account without the person’s knowledge.

Anyone online can upload a copy of a legitimate ID document, even if they’re not the rightful identity holder. However, biometric verification solutions help to squash this risk and uphold KYC compliance during online sign-ups. 

For example, during the onboarding process, customers may be prompted to upload a passport or driver’s license and then scan their face using the camera on their device. The system will then match the person’s live image to their uploaded document. If there’s a match, their identity can be verified, and they can proceed with their new account. 

Verifying customer identities using unique biometric traits like their faces, retinas, and fingerprints offers greater security, as they’re nearly impossible to replicate accurately. So, as generative AI and other advanced technologies make it easier for fraudsters to produce compelling fake ID documents, biometric verification offers a crucial line of defense against this emerging vulnerability.

3.    Predictive Analytics

Again, KYC isn’t just a one-time check to verify a new customer’s identity. It also consists of continued monitoring to watch for suspicious activity. Given today’s complex risk environment, organizations can leverage advanced technology like predictive analytics to become more proactive against potential fraud and criminal activity.

Predictive analytics models monitor historical and real-time datasets to determine what normal behavior patterns are. When trained properly, these models can detect subtle nuances and anomalous behaviors that might trigger enhanced due diligence for customers or transactions that they deem to be high-risk.

This technology can help organizations enhance existing KYC practices, helping them identify potential risks early on that would have otherwise gone unnoticed.

4.    Blockchain Technology

Blockchain technology, though not a new advancement in 2024, has the potential to reshape future KYC procedures.

One of the foundational traits of the blockchain is that it’s an immutable, decentralized repository of records. These details cannot be tampered with, allowing organizations to create a reliable database for storing and sharing KYC data.

Blockchain technology is also extremely secure, meaning that customer data can remain private and safe from breaches or hacks. This is a highly favorable characteristic for collecting and storing personally identifiable information (PII) that’s used in the KYC process and is a frequent target for hackers.

Final Thoughts: Evolving KYC Procedures with AuthenticID

KYC best practices will continue to evolve as new technologies emerge and regulatory requirements change.

Luckily, relying on a trusted partner, like AuthenticID, that leverages patented machine learning and AI technology makes it easier for you to detect and prevent fraud while providing a seamless user experience and meeting KYC compliance. From 100% automated ID checks to watchlist monitoring and more, there’s a reason why we’re trusted by the largest U.S. banks, federal agencies, and credit bureaus.

Request a demo today to see how AuthenticID can streamline customer verification and onboarding.

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