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AI in KYC: What’s in Store for the Digital Insurer and Customer

2 minutes, 4 seconds read

Know Your Customer or KYC is a crucial step towards ensuring that any financial malpractice, money laundering scams, terrorism financing, and other illegal corruption schemes are cut at their source, thus becoming a primary aspect for customer identification. It is also the first step in the client onboarding process. 

KYC procedures include ID card verification, face verification, document verification such as utility bills as proof of address, and biometric verification.

Banking institutions must strictly comply with KYC regulations and anti-money laundering regulations to curb fraudulent activities. KYC compliance responsibility rests with the banks, failing which they might also be heavily penalized. 

International regulations such as The Financial Action Task Force (FATF) are also now implemented in national laws encompassing strong directives namely, AML-4 and 5, and preventive measures such as KYC for accurate client identification.

Artificial Intelligence takes KYC and AML compliance to a new level by combining related technologies that offer the potential to automate workflows and analyze large volumes of varied data. 

The AI Future: 

AI ensures intelligent decision-making and overall monitoring that helps to battle risks and frauds associated with financial institutions. It’s programmed to comb through large mounds of data, process and thereafter verify client profiles, as well as, enhances due diligence in an organization. Machine Learning (ML) clubbed with AI augments the smooth running of operations, particularly in labor-intensive areas. 

With its innovative technological revolution, AI-based technologies are changing industries worldwide through automation and machine learning. Banks and other financial institutions have so far benefitted in terms of Workflow Automation, Link Analysis, Maintaining Compliance, and Regulatory Changes, among other processes. 

Image credit: www.infosysconsultinginsights.com

KYC Automation, Benefits, and How It’s Better Than Manual KYC: 

KYC automation leverages advanced AI and machine learning technologies to ensure that all regulatory standards are met without a high dependency on internal resources. 

Even though end-to-end KYC processing still requires humans to make high-level decisions, a majority of the processes can be taken care of using automation, or Intelligent Process Automation. 

Intelligent Process Automation (IPA) includes Robotic Process Automation (RPA), Intelligent Document Processing (IDP), Intelligent Character Recognition (ICR), and Artificial Intelligence (AI). This collection of technologies combine the entire management, automation, and integration of digital processes. These are also now being used to automate workflows, extract data from documents and reduce the time taken for screening, identification, and verification. 

Why choose automation? 

From cost reduction, more efficiency, minimized risk, and more, KYC automation is more helpful than manual processes used in the past. Here’s a detailed look: 

Cost Reduction: Automated solutions enhance KYC processes and reduce onboarding costs by over 70%. By substantially eliminating data entry errors and any required rectification, hefty non-compliance fines, thereby delaying the onboarding cycle, banks and financial institutions can significantly reduce costs.

Increased Efficiency: A fully automated identity verification process enables customers to create a verified digital identity instantly. Automated solutions also have the added benefit of running round-the-clock with no downtime.

Low risk: Automation helps to minimize the risk of errors caused by any unfortunate data entry mistakes or oversights. The reduced manual intervention also significantly reduces security threats and data breaches, thereby keeping customers’ data safe and banks compliant.

Improved Customer Experience: A great customer experience is the key to a business’ success. Automated KYC provides clients with a smooth experience by eliminating any back-and-forth between customers and banks when new information may be required. 

According to a 2019 study by Forbes, a total of 302 senior executives were surveyed, out of which 92% said that employee satisfaction had risen as a result of intelligent automation initiatives. 

In the new normal, the customer experience landscape is being substantially redefined across industries. A number of companies have put ML-based chatbots to better use when it comes to reducing bot-to-human interaction rate, leading to increased operational efficiency and better workforce productivity.

With the recent nod from RBI and IRDAI to Video-based Customer Identification Process (V-CIP) for Banks and FIs, Video KYC solutions too are gaining fast traction amongst businesses.

State Bank of India (SBI), via its mobile banking app YONO, has introduced a Video KYC-based account opening feature. This will allow customers to open an account with SBI without having to visit a bank branch. 

“This digital initiative powered by Artificial Intelligence (AI) and Facial Recognition Technology is a contactless and paperless process,” said SBI. 

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NPS in Insurance Claims: What Insurance Leaders Are Doing Differently

Claims are the moment of truth. Are you turning them into moments of loyalty?

In insurance, your app interface might win you downloads. Your pricing might drive conversions.
But it’s the claims experience that decides whether a customer stays—or leaves for good.

According to a survey by NPS Prism, promoters are 2.3 times more likely to renew their insurance policies than passives or detractors—highlighting the strong link between customer advocacy and retention.

NPS in insurance industry is a strong predictor of customer retention. Many insurers are now prioritizing NPS to improve their claims experience.

So, what are today’s high-NPS insurers doing differently? Spoiler: it’s not just about faster payouts.

We’ve worked with claims teams that had best-in-class automation—but still had low NPS. Why? Because the process felt like a black box.
Customers didn’t know where their claim stood. They weren’t sure what to do next. And when money was at stake, silence created anxiety and dissatisfaction.

Great customer experience (CX) in claims isn’t just about speed—it’s about giving customers a sense of control through clear communication and clarity.

The Traditional Claims Journey

  • Forms → Uploads → Phone calls → Waiting
  • No real-time updates
  • No guidance after claim initiation
  • Paper documents and email ping-pong

The result? Frustrated customers and overwhelmed call centers.

The CX Gap: It’s Not Just Speed—It’s Transparency

Customers don’t always expect instant decisions. What they want:

  • To know what’s happening with their claim
  • To understand what’s expected of them
  • To feel heard and supported during the process

How NPS Leaders Are Winning Loyalty with CX-Driven Claims and High NPS

Image Source: NPS Prism

1. Real-Time Status Updates

Transparency to the customer via mobile app, email, or WhatsApp—keeping them in the loop with clear milestones. 

2. Proactive Nudges

Auto-reminders, such as “upload your medical bill” or “submit police report,” help close matters much faster and avoid back-and-forth.

3. AI-Powered Document Uploads

Single-click scans with OCR + AI pull data instantly—no typing, no errors.

4. In-the-Moment Feedback Loops

Simple post-resolution surveys collect sentiment and alert on issues in real time.

For e.g., Lemonade uses emotional AI to detect customer sentiment during the claims process, enabling empathetic responses that boost satisfaction and trust.

Smart Nudges from Real-Time Journey Tracking

For a leading insurance firm, we mapped the entire in-app user journey—from buying or renewing a policy to initiating a claim or checking discounts. This helped identify exactly where users dropped off. Based on real-time activity, we triggered personalized notifications and offers—driving better engagement and claim completion rates.

Tech Enablement

  • Claims Orchestration Layer: Incorporates legacy systems, third-party tools, and front-end apps for a unified experience.
  • AI & ML Models: For document validation, fraud detection, and claim routing, sentiment analysis is used. Businesses utilizing emotional AI report a 25% increase in customer satisfaction and a 30% decrease in complaints, resulting in more personalized and empathetic interactions.
  • Self-Service Portals: Customers can check their status, update documents, and track payouts—all without making a phone call.

Business Impact

What do insurers gain from investing in CX?

A faster claim is good. But a fair, clear, and human one wins loyalty.

And companies that consistently track and act on CX metrics are better positioned to retain customers and build long-term loyalty.

At Mantra Labs, we help insurers build end-to-end, tech-enabled claims journeys that delight customers and drive operational efficiency.
From intelligent document processing to AI-led nudges, we design for empathy at scale.

Want a faster and more transparent claims experience?

Let’s design it together.
Talk to our insurance transformation team today.

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