Online solutions to eliminate friction and error

A friction-ridden KYC (Know Your Customer) process that generates erroneous results can cause severe damage to a business. Missing the mark on KYC is as dangerous as not having KYC processes in place at all. Traditional methods of KYC compliance do not offer the accuracy and specificity needed to detect fraudsters before they become customers. In turn, these daunting and dated processes are causing negative experiences for innocent customers.

The answer is to find a solution that supports risk prevention as well as customer-centricity. Emphasis on the former does not have to be to the detriment of the latter. On the contrary, an optimised digital KYC risk management process will enhance customer experiences.

What is KYC?

Knowledge is power, and having sufficient knowledge about your customers, empowers you to trust them. KYC compliance involves the verification of a customer’s identity, and the assessment of the risk that the customer might present in terms of illegal activity and financial crime. A company should perform KYC verification when a customer wants to open an account, sign up to a contract, or apply for credit. KYC procedures set out to answer the following questions:

  1. Is the customer who they claim to be?
  2. Is the customer’s identity records associated with illegal activities?

Determining the latter gives businesses the power to make well-informed decisions when onboarding new customers. It ensures regulatory compliance and protects them from falling victim to economic crime.

Failure to comply with KYC regulations can have serious consequences: Hefty punitive fines, criminal proceedings, and damaged company reputations. It is a serious matter that requires serious vigilance.

The obstacles of traditional KYC

Traditionally, KYC marks a high-effort exercise involving the manual authentication and verification of paper documents such as ID copies, utility bills, and bank statements. These processes leave room for human error, often resulting in false negatives and positives. False verification results end up punishing innocent customers and in turn, allows bad actors to penetrate financial systems.

Additionally, manual KYC brings tension to internal workflows. It causes conflict between risk management teams and sales teams: Whereas the priority of risk management teams is to ensure that low-risk customers are onboarded, sales teams have an imperative to offer customers the best, quickest, and most convenient experiences. The one priority comes at the cost of the other. Time-consuming paper document verifications fuel frustration and frustrated customers end up seeking services elsewhere.

Welcoming digitisation eradicates these points of tension, conflict, and frustration. It’s time to look to technological developments in the Know Your Customer and Identity Verification sphere for improving business operations and onboarding workflows.

eKYC: Introducing digital KYC in an online era

Digital onboarding is becoming the new norm. Online KYC, often referred to as eKYC, is a process where consumer identity and account verification is performed digitally through web-based functionalities – no paperwork required. Consultants can log into an online portal where software applications work through Artificial Intelligence and Machine Learning to confirm a customer’s identity and eligibility to transact. Such applications include:
  • Biometric facial or fingerprint recognition
  • Government-issued document recognition
  • Bank account detail and status validation
  • Watchlist and PEP screenings
The customer’s personal data is automatically compared to data stored at Home Affairs, credit bureau databases, and banks. Within minutes, verification score results are returned to consultants, verifying a multitude of data points such as the customer’s ID details, liveness, demographics, contact details, address, bank account information, etc. Consultants are now in possession of a wealth of verified data with which to make better onboarding decisions. If discrepancies occur, they’ll be able to reject applications. If the data proves accurate, they can continue to onboard in confidence. By bringing the KYC process online, one is given the opportunity to improve the customer onboarding experience by reducing paper document handling, thus speeding up the process and eliminating errors. Digitised methods additionally increase revenue as companies are able to sign up more customers in a day.

KYC, safety and brand reputation

We cannot stop fraudsters from taking their chances, but we can put processes in place to better detect crime. Vigilant Know Your Customer verification creates safe business environments as it leads to better detection of illegal activity. Incorporating online KYC into company workflows does not only serve as protection and optimised onboarding flows – it shows business legitimacy, credibility, trustworthiness, and professionalism. It reflects that a company is serious about protecting its customers. KYC through digital online verification methods are being used by leading businesses of the current day. Businesses that are falling below the bar should act fast in upping their KYC game.

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