Role of eKYC in Powerful Fintech– In the dynamic realm of financial technology, Electronic Know Your Customer (eKYC) stands out as a pivotal force, orchestrating a fundamental shift in the onboarding processes within the fintech sphere. This paradigm transformation goes beyond conventional identity verification methods, introducing advanced electronic mechanisms engineered to not only streamline but also expedite the intricate process of customer onboarding. It represents a seismic evolution, redefining how fintech engages with user identity, ensuring a seamless, efficient, and technologically sophisticated onboarding experience that aligns with the fast-paced nature of the financial technology landscape.

eKYC Algorithm – Introduction

Let’s delve into the varied impact of eKYC in fintech, where each aspect enhances a more secure, inclusive, and user-centric financial ecosystem. Constructing an eKYC algorithm is a sequential process that includes data validation, identity verification, and facial feature extraction. The algorithm utilizes a mix of personal information such as the first and last name, first and last name of the father, date of birth, ID/passport number, and potentially three facial features extracted as the fifth parameter of the algorithm.

Benefits and Uses

  1. Streamlining Onboarding Processes:
    • eKYC in fintech simplifies and accelerates customer onboarding processes by replacing traditional manual identity verification with electronic methods. This streamlined approach enhances user experience, reducing the time and effort required for account setup.
  2. Boosting Financial Inclusion:
    • eKYC plays a pivotal role in fostering financial inclusion by enabling individuals, especially in underserved regions, to access financial services remotely. This digital approach eliminates geographical barriers, allowing a broader population to participate in the financial ecosystem without the need for physical presence.
  3. Enabling Remote Account Access:
    • eKYC empowers users to access financial services remotely, promoting a contactless and efficient environment. This is particularly relevant in the context of mobile banking and digital wallets, where users can establish and verify their identities without visiting a physical branch, contributing to a more convenient and user-friendly financial landscape.
  4. Cost Savings for Fintech Providers:
    • Fintech companies benefit from cost savings through eKYC implementation. Automated identity verification processes reduce the need for manual labor, paper documentation, and physical infrastructure, leading to operational efficiencies and lower onboarding costs for fintech service providers.
  5. Adoption of Advanced Technologies:
    • eKYC in fintech often incorporates advanced technologies such as artificial intelligence and machine learning. These technologies enhance the accuracy of identity verification, adapt to evolving fraud patterns, and contribute to continuous improvement in the security and reliability of the eKYC process.

The integration of eKYC in fintech exemplifies a transformative shift towards a more efficient, secure, and inclusive financial ecosystem, where identity verification becomes a seamless part of the digital user experience.


  1. Enhanced Security: Fintech platforms leverage eKYC to enhance security measures and ensure regulatory compliance. By employing advanced encryption and biometric technologies, these systems not only verify identities more effectively but also contribute to robust anti-fraud measures and adherence to regulatory standards
    • Combining traditional identity information with facial features can enhance security by adding a biometric layer, making it more challenging for fraudsters to impersonate someone.
  2. Reduced Fraud: Facial feature extraction helps in reducing the risk of fraud, as it provides a unique and biometric aspect for identity verification.
  3. Data Accuracy and Accuracy: eKYC ensures data accuracy by reducing the risk of manual errors associated with traditional KYC processes. Automated verification processes enhance efficiency, allowing fintech platforms to quickly validate customer information, reducing the likelihood of discrepancies and improving the overall reliability of customer data.
    • Facial recognition technology, when properly implemented, can provide accurate results, making identity verification more reliable.
  4. User-Friendly: The integration of eKYC into fintech services significantly improves the overall customer experience. Users can complete identity verification processes seamlessly through digital channels, eliminating the need for in-person visits and paperwork, thus enhancing convenience and accessibility.
    • In comparison to traditional methods, eKYC with facial features can be more user-friendly, requiring individuals to present themselves visually, which is often seen as convenient.


  1. Privacy Concerns: Collecting and processing facial features raise privacy concerns. It’s crucial to ensure compliance with data protection regulations and obtain informed consent from users.
  2. Security of Facial Data: As facial data is sensitive, there must be robust security measures in place to protect this information from unauthorized access or misuse.
  3. Algorithm Accuracy: The facial recognition algorithm’s accuracy is vital. Inaccurate facial recognition can lead to false positives or negatives, impacting the effectiveness of the eKYC process.
  4. Diverse User Demographics: Facial recognition technology may not perform equally well across all demographics, potentially leading to bias. It’s essential to test the algorithm across diverse populations to ensure fairness.
  5. Backup Processes: Implementing a backup process for situations where facial recognition may fail or not be feasible is important to maintain a smooth onboarding experience.

In summary, if privacy concerns are addressed, and robust security measures are in place, creating an eKYC algorithm with a combination of personal information and facial features can enhance the overall security and user experience of the onboarding process. It’s crucial to stay mindful of ethical considerations and continually assess and improve the algorithm’s accuracy and fairness.

The Core of eKYC System

  1. Regulatory Compliance is Paramount:
    • Ensure thorough understanding and adherence to local and international regulations, such as AML (Anti-Money Laundering) and KYC (Know Your Customer) requirements. Compliance is crucial for building trust, avoiding legal issues, and safeguarding against financial crimes.
  2. Implement Robust Biometric Authentication:
    • Leverage advanced biometric authentication, especially facial recognition, to enhance security. The accuracy and reliability of biometrics contribute significantly to the effectiveness of the eKYC system, reducing the risk of identity fraud.
  3. User-Friendly Design and Mobile Accessibility:
    • Prioritize a user-friendly interface that guides users through the eKYC process seamlessly. Optimize the system for mobile accessibility, considering the increasing reliance on mobile devices for financial transactions. A smooth and intuitive user experience is essential for adoption and satisfaction.
  4. Continuous Monitoring and Security Measures:
    • Implement real-time monitoring of customer activities to detect any unusual behavior promptly. Emphasize robust security measures, including data encryption, secure storage, and regular security audits. A secure eKYC system not only protects sensitive data but also instills confidence in users.
  5. Scalability and Future-Proofing:
    • Design the eKYC system with scalability in mind to accommodate a growing user base and evolving technology. Consider the future integration of emerging technologies and stay informed about industry trends. A scalable and future-proof system ensures longevity and adaptability in the dynamic FinTech landscape.

These pointers underscore the importance of regulatory compliance, advanced technology adoption, user-centric design, security measures, and adaptability for building a successful eKYC system in the FinTech sector.

Best and Modern Technology Stack for eKYC System

  1. Front-End Development:
    • Framework: React.js or Angular
    • Reasoning: These front-end frameworks provide a modular and scalable architecture, facilitating the development of an intuitive and responsive user interface for the eKYC system.
  2. Back-End Development:
    • Language: Golang
    • Database: PostgreSQL or MongoDB
    • Reasoning: Golang is known for its efficiency, performance, and simplicity. It is well-suited for building scalable and concurrent systems. PostgreSQL provides ACID compliance for data integrity, while MongoDB offers flexibility for document-based data storage.
  3. Identity Verification and Biometrics:
    • Biometric Authentication:
      • Facial Recognition: Kairos, Microsoft Azure Face API, or FaceSDK
      • Fingerprint Recognition: VeriFinger, Touch N Go, or Neurotechnology
    • Document Verification: Jumio, Trulioo, or Onfido
    • Reasoning: Utilizing specialized services for biometric authentication and document verification ensures high accuracy and security in identity verification processes.
  4. Blockchain Integration:
    • Platforms: Ethereum or Hyperledger Fabric
    • Reasoning: Blockchain technology ensures a secure and tamper-resistant storage of KYC data. Ethereum provides a public blockchain option, while Hyperledger Fabric offers a permissioned and customizable blockchain suitable for private networks.
  5. Mobile Development:
    • Frameworks: React Native or Flutter
    • Reasoning: These cross-platform frameworks allow for efficient development of mobile applications for both iOS and Android, ensuring a consistent user experience across different devices.
  6. Cloud Computing:
    • Platforms: AWS (Amazon Web Services), Azure (Microsoft), or Google Cloud
    • Reasoning: Cloud platforms provide scalable and secure infrastructure, enabling efficient storage, processing, and deployment of the eKYC system. These platforms also offer various machine learning and AI services.
  7. Machine Learning and AI:
    • Frameworks: TensorFlow or PyTorch
    • Reasoning: Machine learning and AI algorithms can be employed for user behavior analysis, anomaly detection, and continuous monitoring to enhance fraud detection capabilities.
  8. Security and Encryption:
    • Encryption Tools: OpenSSL or Bouncy Castle
    • Authentication: OAuth or OpenID Connect
    • Reasoning: Implementing robust encryption tools and authentication protocols ensures the confidentiality and security of user data during transmission and storage.
  9. Compliance Management:
    • Tools: ComplyAdvantage, Refinitiv World-Check, or Dow Jones Risk & Compliance
    • Reasoning: Integrating compliance management tools helps ensure adherence to AML and KYC regulations, reducing the risk of legal and regulatory issues.
  10. Containerization and Orchestration:
    • Docker and Kubernetes
    • Reasoning: Containerization and orchestration technologies streamline deployment, improve scalability, and enhance system reliability.

Adjusting the technology stack to use Golang for back-end development maintains a focus on performance and simplicity, aligning with Golang’s strengths.

eKYC Architectures

eKYC, or electronic Know Your Customer, refers to the process of verifying the identity of customers electronically. It has become increasingly important in various industries, including finance, telecommunications, and online services, as a way to streamline onboarding processes, enhance security, and comply with regulatory requirements. Here, I’ll provide an overview of eKYC architectures and business models:

  1. Centralized Model:
    • In this model, a central authority or service provider is responsible for collecting, verifying, and storing customer identity information.
    • Organizations connect to this central system to perform KYC checks.
    • Provides a standardized and consistent approach to identity verification.
  2. Decentralized Model:
    • Identity information is distributed across multiple parties or databases.
    • Users have more control over their data and may provide different parts of their identity to different service providers.
    • Blockchain and distributed ledger technologies can be utilized to create a secure and transparent decentralized eKYC system.
  3. Collaborative Model:
    • Several entities collaborate to share and verify customer information.
    • Each participating organization contributes to the overall KYC process.
    • Enhanced data accuracy and reduced redundancy are potential benefits.
  4. Biometric Authentication:
    • Integrates biometric data such as fingerprints, facial recognition, or iris scans for identity verification.
    • Provides a high level of security and is less susceptible to fraud.
  5. Mobile-based Model:
    • Utilizes mobile devices for identity verification.
    • Leverages smartphone capabilities such as cameras for document scanning and biometric sensors for authentication.

eKYC Business Models

  1. Subscription-Based Model:
    • Service providers charge a recurring fee for access to their eKYC platform.
    • Suitable for organizations that require continuous identity verification services.
  2. Transaction-Based Model:
    • Charges are based on the number of identity verification transactions.
    • Ideal for businesses with varying levels of KYC requirements.
  3. Licensing Model:
    • Organizations pay a licensing fee to use a specific eKYC solution.
    • May include additional fees for customization and ongoing support.
  4. API Integration Model:
    • eKYC providers offer APIs that businesses can integrate into their existing systems.
    • Charges may be based on API usage or a subscription model.
  5. Customized Solutions:
    • Tailored eKYC solutions developed for specific industries or regulatory environments.
    • Customization fees and ongoing maintenance charges are part of this model.
  6. Regulatory Compliance as a Service (RCaaS):
    • Focuses on helping organizations comply with changing regulations.
    • Provides updates to eKYC processes to meet evolving compliance standards.

Challenges and Considerations

  1. Security and Privacy:Ensuring the security of sensitive customer information is crucial.
  2. Scalability:The architecture should be scalable to accommodate varying levels of demand.
  3. Interoperability:cIntegration with existing systems and interoperability with other eKYC providers may be necessary.
  4. Regulatory Compliance:cAdapting to changing regulatory environments is a continuous challenge.
  5. User Experience:Balancing security measures with a smooth and user-friendly experience is important for customer satisfaction.
  6. Cost Considerations: Organizations need to evaluate the total cost of ownership, including initial setup costs, integration, and ongoing maintenance.
  7. Data Protection and Governance: Compliance with data protection regulations is essential.

eKYC architectures and business models should be designed to address these challenges while providing a seamless and secure identity verification process for businesses and their customers.

System Models for eKYC

Let’s explore the four types of system models for eKYC, with a focus on delivering eKYC as a service without blockchain, microservices with blockchain, a marketplace model, and mobile SDK-based models:

1. eKYC as a Service Without Blockchain

  • Architecture:
    • Centralized system model where a service provider manages the entire eKYC process.
    • Identity verification is conducted through a single, integrated platform.
    • Traditional databases store and manage customer identity information securely.
  • Business Model:
    • Subscription-based or transaction-based model where businesses pay for the service.
    • Service providers may offer different tiers based on the level of identity verification required.
    • Regular updates to comply with changing regulations.
  • Advantages:
    • Simplicity and ease of implementation.
    • Centralized control over the eKYC process.
    • Well-suited for organizations with straightforward identity verification needs.

2. Microservices with Blockchain

  • Architecture:
    • Utilizes microservices architecture for modular and scalable identity verification.
    • Blockchain is used for decentralized and secure storage of identity data.
    • Each microservice handles a specific aspect of the eKYC process (e.g., document verification, biometric authentication).
  • Business Model:
    • Transaction-based model where organizations pay for the specific microservices they use.
    • Subscription fees for access to the overall eKYC platform.
    • Customization options for businesses with unique requirements.
  • Advantages:
    • Improved security through blockchain’s decentralized and tamper-resistant nature.
    • Scalability and flexibility with a microservices architecture.
    • Enhanced data privacy and user consent management.

3. Marketplace Model:

  • Architecture:
    • An ecosystem where multiple eKYC service providers and consumers interact.
    • Service providers offer specialized components or services.
    • Consumers (businesses) can choose from various providers based on their specific needs.
  • Business Model:
    • Providers charge fees for their specific eKYC services.
    • Consumers pay for the services they require, creating a flexible pricing model.
    • Platform owner may charge a transaction fee for facilitating the marketplace.
  • Advantages:
    • Diverse options for businesses to choose specialized eKYC services.
    • Increased competition may lead to improved service quality and innovation.
    • Flexibility in selecting components based on specific business requirements.

4. Mobile SDK-Based Model

  • Architecture:
    • Relies on mobile software development kits (SDKs) for identity verification.
    • Users capture and submit identity documents or biometric data using their mobile devices.
    • The SDK communicates with a backend server for verification.
  • Business Model:
    • Licensing or subscription-based model for organizations integrating the SDK into their mobile applications.
    • Charges may be based on the number of verifications or a flat fee for access to the SDK.
  • Advantages:
    • Seamless and convenient user experience through mobile devices.
    • Widely accessible, especially for businesses with a mobile app presence.
    • Quick and easy integration for organizations with mobile applications.

Each of these models has its own set of advantages and considerations. The choice depends on factors such as the level of security required, scalability needs, regulatory compliance, and the specific preferences of the businesses implementing eKYC.

In essence, eKYC stands as a key enabler, fostering trust, efficiency, and innovation within the ever-changing landscape of fintech identity verification

Vinod Sharma

Conclusion – The role of eKYC in powerful fintech identity verification is pivotal in shaping a secure and efficient financial landscape. eKYC not only streamlines the onboarding process but also enhances security measures by employing advanced algorithms that validate personal information and facial features. The multifaceted impact of eKYC contributes to a more inclusive and user-centric financial ecosystem, ensuring that identity verification is not only robust but also accessible. As fintech continues to evolve, eKYC emerges as a cornerstone, providing a seamless and reliable solution for identity verification in the digital age. Its integration empowers financial institutions and businesses to navigate regulatory requirements while delivering a frictionless experience for users.

Points to Note:

it’s time to figure out when to use which tech—a tricky decision that can really only be tackled with a combination of experience and the type of problem in hand. So if you think you’ve got the right answer, take a bow and collect your credits! And don’t worry if you don’t get it right.

Feedback & Further Questions

Do you have any burning questions about Big DataAI & MLBlockchainFinTechTheoretical PhysicsPhotography or Fujifilm(SLRs or Lenses)? Please feel free to ask your question either by leaving a comment or by sending me an email. I will do my best to quench your curiosity.

Books & Other Material referred

  • AILabPage (group of self-taught engineers/learners) members’ hands-on field work is being written here.
  • Referred online materiel, live conferences and books (if available)

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Posted by V Sharma

A Technology Specialist boasting 22+ years of exposure to Fintech, Insuretech, and Investtech with proficiency in Data Science, Advanced Analytics, AI (Machine Learning, Neural Networks, Deep Learning), and Blockchain (Trust Assessment, Tokenization, Digital Assets). Demonstrated effectiveness in Mobile Financial Services (Cross Border Remittances, Mobile Money, Mobile Banking, Payments), IT Service Management, Software Engineering, and Mobile Telecom (Mobile Data, Billing, Prepaid Charging Services). Proven success in launching start-ups and new business units - domestically and internationally - with hands-on exposure to engineering and business strategy. "A fervent Physics enthusiast with a self-proclaimed avocation for photography" in my spare time.

One Comment

  1. Felix K at

    Great article for today’s needs “eKYC”. Very well thought out, written, and very helpful.


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