Background Verification in the Banking Industry: Why is it needed and how it’s done

Because banking occupations require access to financial and sensitive personal information, background verification in the banking industry is rigorous. The banking business in India has been steadily expanding over the last several years.  Rising rural penetration, strict regulatory control, rising disposable incomes, and the spread of internet and mobile banking services are all contributing factors. 

The value of public sector bank assets climbed from USD 1.52 trillion in FY17 to USD 1.56 trillion in FY18, according to an IBEF analysis. Because of India’s liberal regulatory regulations, the insurance market is predicted to reach USD 280 billion by 2020. When it comes to NBFCs (Non-Banking Financial Companies), their lending capacity have increased by as much as 18 percent in the previous five years. The causes for this include leaner cost structures, improved risk management skills, and improved product lines, among others. 


However, not everything in our country’s financial industry is perfect. The banking industry is synonymous with cases of identity theft, accounting fraud, asset appropriation, and money laundering. What may surprise you is that insiders are responsible for 50% of all frauds! 

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In 2018, the sector’s disparity rate was 10.13 percent. In other words, the BFSI sector has the greatest rate of persons misrepresenting their qualifications or lying on resumes. 

That is why background verification is vital.

While background verification is becoming common in most industries, banks and financial institutions use them at all levels of their workforce. 


Pre-employment background checks are essential in the banking business, where employees manage sensitive financial and personal data on clients, stakeholders, and insurers. Customers’ bank records, passwords required for cash transfers, and business protocol are among the sensitive data. The importance of an ethical workforce in the BFSI sector cannot be overstated. 


Naturally, efforts should be made to safeguard the financial facility’s security and repute. Preventative measures, such as personnel background verification, can help to address the trust deficit in this business. 

The Reason:

To guarantee that consumer information is kept safe

A banking facility has access to cash, accounts, and a variety of sensitive papers. They must guarantee that consumer information is kept safeguarded in a world when cyber intrusions and data breaches are common. 

They may double-check the potential recruits’ work history, how compliant they are with banking sector rules, and if they have done the task, they claim to have done by doing a background check. Banking institutions need assurance; otherwise, their reputations and clients are at risk of being defrauded. 

To adhere to the industry's best practices when it comes to money transfer permits

The requirements for acquiring a money transmitter license are stringent. If a financial institution goes through the time-consuming process of obtaining money transfer permits, new employees must be thoroughly scrutinized. 

Failure to do so may result in legal action against the business facility, as well as the loss of their money transfer license. It is simple to guarantee that the candidate has the requisite professional license and clean work history by doing relevant background checks.

To provide an exceptional client experience

Customers place a high value on banking services to meet their financial demands. That’s why it’s critical to recruit people that are naturally smart, pleasant, and problem-solvers. A thorough employee background verification can assist in determining whether a candidate will fulfill not just the company’s but also the customers’ expectations.

How to Do It

The purpose of bank background checks is to ensure that candidates are being truthful about their previous job, educational qualifications, and professional credentials. Some banks examine a customer’s credit history to learn more about their spending habits and tendencies. 


The banks must adhere to the Fair Credit Reporting Act (FCRA) and the Equal Employment Opportunity Commission’s requirements at all times (EEOC). Banks in the United States are required to conduct criminal background checks in accordance with Section 19. Before performing a background check for the banking business, the employer (banking or financial institute) must provide the applicant with a disclosure document detailing the consumer report that the employer would get in order to hire them. 


The applicant must sign a document acknowledging their permission to a pre-employment background check. 

The majority of firms in the BFSI sector have a background verification policy. It outlines the actions, processes, and deliverables that the applicant will face. 


In banking, where organizations rely on safe and responsible procedures to prosper, hiring trustworthy and competent personnel is critical. Regardless of whether the information gathered from the verification is favorable or negative, the bank should treat the candidate’s data with care and responsibility as an employer. This information has the potential to affect a wide range of individuals, including the candidate’s professional life and the reputation of the company. This component in the talent management process necessitates careful consideration at all stages of the lifecycle. 

Fortunately, technological solutions are always improving to make this process easier, more dependable, and less prone to mistakes.

How can MIMO help?

By partnering with a third-party background screening company, you will be able to receive all the information you need quickly. Working with a reputable background check firm will save you time and money while also ensuring that you remain compliant in the customer screening process. 


The simple truth is that recruiting the best personnel is a rigorous competition, and you must be at the top of your game to attract and keep the best. Making the right hiring decisions will have a significant influence on your business, resulting in higher productivity and decreased turnover. MIMO offers all-inclusive background verification services with a focus on protection to provide you with the most reliable and up-to-date details. 

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