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:
- Is the customer who they claim to be?
- 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 eraDigital 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.
- Learn more about online KYC, FICA and RICA
- Biometric facial or fingerprint recognition
- Government-issued document recognition
- Bank account detail and status validation
- Watchlist and PEP screenings