What are some of the biggest obstacles to growth that traditional or document-based identity verification in the KYC process poses to financial institutions? In this blog, we identify six of those and, more importantly, also hear from Sergey Fedorov, Head of Onboarding at Anna Money, about how they are overcoming the challenges using OneID®.
The financial services sector continues to carry a heavy responsibility when it comes to preventing fraud, money laundering, and financial crime. But many banks still rely on internal, manual, document-based KYC checks — processes that were built for a different era of customer behaviour, regulatory complexity, and digital expectation.
These legacy methods increase cost, create operational strain, and introduce unnecessary friction for customers. Below, we break down the five biggest challenges financial institutions encounter when verifying identity in-house — and explore how more modern approaches can drive efficiency, accuracy and better customer experiences.
Rising operational costs and shrinking margins
High customer drop-off caused by slow, document-heavy journeys
Being dragged down by manual verification processes
Fragmented systems and weak integrations across KYC / AML / fraud
Inability to scale operations and burdensome re-KYC
A significant share of the population remains out of reach
Manual KYC isn’t just time-consuming — it’s expensive. Staff must inspect documents, re-key customer data, chase missing proofs and maintain case files. That creates a steady headcount cost and overheads that grow as volumes rise. The cost for UK businesses has increased by 7.25%
Financial institutions in the UK also face resource pressures from regulatory reporting and AML obligations; when checks are manual, compliance teams quickly become cost centres rather than strategic enablers. In fact, Compliance costs rose by 19% in the last two years. Modern, automated or hybrid identity verification reduces repetitive work and helps protect margins.
2. High customer drop-off caused by slow, document-heavy journeys
Document-based ID verification often creates lengthy onboarding journeys. Customers may need to scan or photograph documents, wait for manual review, or resubmit information if something is unclear. This leads to frustration, disengagement and — crucially — drop-offs. A Signicat survey found that 68% of customers abandon financial services onboarding due to complex KYC processes.
Where digital onboarding is expected to be instant, manual processing introduces bottlenecks. Each extra step is an opportunity for customers to give up, especially during mobile onboarding, where attention spans are shorter.
A major factor slowing down KYC processes is the sheer amount of manual effort still involved. An estimated 31–60% of KYC review activities continue to rely on human processing, which is why verification cycles can stretch anywhere from 1 to 50 days.
This dependence on manual document checks leaves customers waiting — often uncertain about whether to proceed — which can translate into lost business and reduced revenue. More critically, it pulls skilled teams away from higher-value, strategic work, slowing down innovation and operational efficiency.
4. Fragmented systems and weak integrations across KYC/ AML/ fraud
Many banks stitch together onboarding with legacy CRM, AML screening, sanctions lists, and manual folders of scanned IDs. That fragmentation creates silos, slows case resolution, and makes audits more difficult — especially when evidence must be produced quickly for regulators such as the FCA or for internal audit. Consolidating identity, AML and fraud data into a single, searchable client due diligence (CDD) record reduces duplication and improves control.
Growth — whether through new products, digital channels or cross-border expansion — amplifies manual KYC pain. Regular re-KYC cycles add recurring workload: each periodic review means more manual checks and more cost. For financial services organisations, this is an ongoing loop of complications.
Around 11 million people in the UK lack any form of document-based ID. For KYC providers relying solely on traditional, document-led verification, this entire segment becomes inaccessible. In a crowded, highly competitive market, being unable to serve even a small share of potential users puts providers at a distinct disadvantage — limiting growth, reducing conversion opportunities, and weakening overall market relevance.
Digital identity solutions like OneID® are transforming the way financial services approach KYC. By removing the need for document uploads, photos, or manual review, OneID® helps providers move customers past the very steps that normally cause drop-offs, abandonments, and delays. The result? Faster completions, happier users, and stronger commercial outcomes.
Here’s how OneID’s bank-based, document-free identity verification can support your KYC journey:
OneID®'s digital identity verification offers a fast, low-friction way to reduce operational and identity verification costs while increasing margins. A 100% digital process, that comes at a fraction of the cost of traditional checks, OneID® helps minimise spending on ID verification and unlocks higher profit margins when packaged into your wider KYC offering.
Adding a zero-document identity verification option immediately differentiates your platform. OneID® allows you to offer a genuinely digital, speed-led, easy-to-use experience. It strengthens your workflow, sharpens your value proposition, and sets you apart in a crowded market.
Removing manual processes accelerates the entire KYC workflow and frees analysts to focus on complex, high-value tasks. OneID’s bank-verified digital identity solution uses the open banking framework to complete checks in just a few clicks—with zero human intervention.
With OneID®, one streamlined digital journey can perform multiple checks—PEPs and Sanctions, Amberhill, and more. Because everything is verified through bank-based identity, the entire process takes only a few seconds, making ongoing monitoring and re-KYC frictionless for both customers and teams.
Bank-verified digital identity draws on the robust KYC already completed when a customer opens a bank account. This means anyone with an online bank account—including the 8% of the UK population without a passport or driving licence—can now be identity-checked. A wider, more inclusive user base becomes instantly accessible to KYC providers.
A UK-based farming charity needed a faster, more secure way to distribute grants and relief payments. Th...
The Online Safety Act (OSA) marks a new chapter in how we think about digital responsibility. 60 days af...
Turnkey, a leading provider of insolvency software solutions, has announced a new partnership with OneID...
