Sumsub Expert Roundtable: The Top KYC Trends Coming in 2024

A study from Juniper Research predicts that digital identity verification checks will surpass 70 billion in 2024, growing 16% over the previous year. This is being driven by businesses adopting stronger biometric verification methods to combat digital fraud. Indeed, according to Sumsub’s most recent Identity Fraud Report, account takeovers alone increased by 155% globally in 2023.

In 2023, the top fraud trends included AI-powered fraud, money muling networks, account takeovers, fake IDs, and forced verification. Notably, online media, professional services, healthcare, transportation, and video gaming emerged as industries experiencing the most substantial surge in identity fraud, meaning both regulated and unregulated industries appear equally vulnerable. All of these trends are likely to persist in 2024, in addition to a range of new challenges and opportunities. 

To help us navigate fraud in the incoming year, we’ve gathered a panel of Sumsub’s leading experts: 

• Vyacheslav Zholudev, Chief Technology Officer
• Andrew Novoselsky, Chief Product Officer
• Pavel Goldman-Kalaydin, Head of ML/AI
• Tony Petrov, Chief Legal Officer

Together, they’ll cover the continuing emergence of deepfakes and AI, changes in regulation, document-free verification, as well as the convergence of transaction monitoring and KYC. 

Fraud has evolved as onboarding goes remote. In financial services, travel, and transportation, there is no contact with a live person anymore, which has attracted fraudsters. It also has become easier to create new identities. Now one person can have 100 or 1000 different identities online.

Andrew Novoselsky

Chief Product Officer

Before we dive into the details, here’s a brief snapshot of what Sumsub’s experts predict for 2024:

• Increased prevalence of document-free verification solutions, making customer onboarding easier
• Greater orchestration of the KYC process, allowing companies to adjust their KYC to different types of customers based on their characteristics
• Emergence of all-in-one solutions—specifically combining KYC and transaction monitoring—in response to increased identity fraud cases
• Liveness detection replacing the use of selfies with documents
• More businesses develop in-house verification technologies, rather than relying on vendors
• Penetration of digital identity in day-to-day services—especially in areas where users have grown accustomed to anonymity, such as dating apps and YouTube comments
• Spread of passive biometry resulting in a shift from one-time face recognition checks to an “always on” mode of confirmed identity
• Further developments in Web 3.0 and related verification solutions 
• Ownership of identity information moving from worldwide to local storage; this change aims to improve data security, privacy, and local control over sensitive personal information

AI-generated fraud and deepfakes to grow

AI-generated fraud, specifically deepfakes, will continue to grow. According to Sumsub’s internal statistics, last year saw a 10x increase in the number of deepfakes detected globally across all industries, with crypto being the main target sector (88% of all deepfake cases detected in 2023) followed by fintech (8%).

There is also a notable regional difference in the increase of deepfake fraud:

• 1740%  in North America
• 1530% in APAC 
• 780% in Europe 
• 450% in MEA 
• 410% in Latin America.

For this reason, businesses will need to adopt comprehensive anti-fraud strategies that extend beyond traditional deepfake detection methods. This will include multi-layered approaches, which encompass behavioral anti-fraud measures and transaction monitoring. This holistic strategy not only fortifies defense mechanisms against deceptive content, but also fortifies the overall security posture, ensuring more robust protection against emerging risks in the digital landscape.

Suggested read: Machine Learning and its Role in Fraud Detection and Anti-Money Laundering Compliance

We’ve seen deepfakes become more and more convincing in recent years and this will only continue and branch out into new types of fraud, as seen with voice deepfakes. Both consumers and companies need to remain hyper-vigilant to synthetic fraud and look to multi-layered anti-fraud solutions, not only deepfake detection. This could be behavioral anti-fraud and transaction monitoring to pick up what the human eye may not be able to detect.

Pavel Goldman-Kalaydin

Head of AI/ML at Sumsub

Therefore Sumsub: 

• Combats deepfakes and improves its in-house deepfake detection technology
• Offers an in-house set of four distinct machine learning-driven models for deepfake and synthetic fraud detection, called For Fake’s Sake. It’s available for everyone to download and use for free, and Sumsub seeks feedback from the AI-research community to further improve the models’ capabilities.

Regulations to tighten

In 2024, regulations are likely to tighten and spread to previously unregulated industries (like online media, where we saw the biggest number of identity fraud cases in 2023).

Document-free verification

In the upcoming year, expect wider adoption of document-free verification, enabling quicker and easier customer onboarding. More users will be able to confirm their identity by using databases, or going through a quick face authentication check without the need to scan documents. This is especially relevant when a person needs to urgently access a service and doesn’t have the physical ID at hand.

Previously, people in less developed countries or those speaking lesser-known languages were restricted access to certain technology because of their IDs and documentation, and therefore their payments couldn’t be verified. This impacted businesses themselves from expanding geographically because they didn’t have technology solutions capable of verifying these new users. This will change in 2024 as we see non-document verification everywhere and more signals apart from KYC to trust end-users, alongside new applications of large language models. This newer technology will help make verification solutions, and therefore life, easier for customers and end users, especially in emerging markets.

Vyacheslav Zholudev

Co-founder and CTO

Suggested read: The Future of Verification is Here: Doc-Free Methods and Their Benefits

Many countries have developed document-free verification procedures, with India already implementing such an approach to its financial institutions and banks.

Sumsub has two solutions for companies that want to implement document-free verification procedures: Non-Doc Verification and Global Database Verification.

Doc-free methods can make the onboarding process easier for both companies and their customers. 

1. Global Database Verification is meant to authenticate users (including identity, address, and age) using secure government databases
2. Non-Doc Verification can authenticate users with just an ID document number and a Liveness Check through databases—or via bank account logins in the Netherlands and UK.

This new technology is designed for businesses in the fintech, crypto, trading, marketplace, and transportation industries, as well as for global online businesses that onboard customers in emerging markets. 

Sumsub’s document-free verification solutions are currently available for user onboarding in the UK, Argentina, Bangladesh, Brazil, Ghana, India, Indonesia, Kenya, Nigeria, and the Netherlands, with South Africa and Ghana coming soon.

Orchestrating the KYC process

Orchestration allows companies to tailor their KYC process to different types of customers based on their characteristics. Customers, meanwhile, stand to benefit, as orchestration involves reducing the number of checks, thereby improving the user experience. It also contributes to a more effective onboarding process with fewer drop-offs.

There’s an infinite number of combinations of checks, depending on the customer’s jurisdiction, the company’s internal policies, and much more. Companies can get higher pass rates with custom verification procedures based on these specifics, which is made possible by orchestration. Ultimately, this leads to a more personalized user experience.  

Sumsub’s Workflow Builder solution  enables businesses to create user verification workflows tailored to specific risk scenarios, with the ability to set up particular triggers for the onboarding process. These can include age, gender, country, previous KYC experience, and many more factors, which can all be automated. The Workflow Builder itself can be implemented code-free. 

With the Workflow Builder, companies can automate onboarding decision making with flexible rules and actions. This will have a positive effect on the user experience, making for a more personal approach to each customer. The solution is designed for global online businesses in the fintech, crypto, trading, marketplace, gaming, and shared mobility industries. 

The emergence of all-in-one solutions

Another trend we predict is the rise of ‘all-in-one’ platforms. These don’t just handle initial KYC checks; they cover the entire customer lifecycle, particularly transaction monitoring. Such solutions are increasingly critical, since most fraud happens beyond the KYC stage.

Transaction monitoring in particular helps businesses stay AML/CFT compliant while preventing fraud. The need of transaction monitoring is increasing with a corresponding rise in digital transactions Therefore, companies now offer automated transaction monitoring solutions, making it possible to check large volumes of transactions for suspicious patterns. 

In 2023 Sumsub launched its own all-in-one solution.

Last year Sumsub developed into a s full-cycle verification platform that secures the whole user lifecycle, providing:

• User Verification
• Business Verification
• Transaction Monitoring
• Fraud Prevention—a set of measures which enable identifying malicious user activity throughout the whole user journey
• Case Management—collecting, monitoring and assessing information to detect suspicious user behavior and prevent financial crime. 

Conclusion

2023 saw AI and deepfakes rise to the forefront of the fraud landscape. 

• From 2022 to 2023, there was a tenfold increase in deepfakes across various industries. The primary target sector was cryptocurrency, accounting for 88% of all identified deepfake cases in 2023, followed by fintech at 8%. 
• Both regulated and unregulated industries were vulnerable to deepfake fraud, with online media emerging as the most affected sector.
• Online media is likely to implement stricter rules with mandatory identification, thus transforming the dynamics of online interactions.
• Criminals will keep developing new ways to steal people’s identities, commit fraud, and abuse businesses. To confront this, companies will need multi-layered anti-fraud solutions that detect advanced fraudulent signals, including based on behavioral anti-fraud measures and transaction monitoring.
• 70% of fraud occurs after the onboarding stage, which means KYC alone is not sufficient anymore. This leads to another global trend in verification—the use of all-in-one solutions which combine KYC and transaction monitoring.
• Document-free verification methods will keep spreading to more jurisdictions, allowing quicker verification for customers and higher pass-rates.
• Companies should also prepare for tightening regulations; first and foremost, regulators’ attention will focus on artificial intelligence.

FAQ

• What is the future of the KYC process?

  The future of the KYC (Know Your Customer) process will likely involve all-in-one solutions, which combine KYC with transaction monitoring, biometrics, blockchain, artificial intelligence, and  document-free verification methods.

• Will AI replace KYC?

  AI will significantly influence and improve KYC processes, however, it’s unlikely to completely replace human oversight—as a balanced approach incorporating both is crucial for effective and trustworthy customer verification.

• Will KYC be automated in 2024?

  Yes, the future of KYC is likely to involve increased automation, utilizing advanced technologies to streamline and enhance the efficiency of customer verification processes.