Understanding KYC
KYC stands for Know Your Customer. It is the process of identifying your customers and verifying their details to comply with national and global regulations, including anti-money laundering and counter-terrorism financing laws. Organisations and institutions across various industries will require electronic identity verification to know who they are dealing with to ensure they comply with their national and global regulations. The institutions required to comply with KYC regulations verify their customers and their provided documents to avoid money laundering, identity theft, financial fraud, and criminal organisations’ financing. More organisations are adopting electronic identity verification as an integral step for dealing with customers.
2020 has been defined by the pandemic where the world was not allowed any physical contact, catapulting digital transformation of many businesses to continue operations. For the FinTech industry, digital transformation has paved the way for a 360-degree digital verification solution bringing along new payment competitors and digital banking solutions, disrupting the traditional banking sector. However, alongside the advances in digital technology, criminals are becoming more clever in exploiting the digital space; in response to this government’s and institutions are implementing more robust regulations and compliance requirements.
What is digital transformation?
Digital transformation is the adoption of digital technology, changing how you operate and deliver value to customers. The use of digital transformation across the business and organisational operations, processes, competencies, and business models leverages the changes and opportunities of a mix of digital technologies and their impact on society. Digital transformation helps organisations improve their customer experience, optimize their workforce, enhance their operational activities, and transform their products and services of the organisation. According to reports, the global digital transformation market size expected to grow from USD 469.80 billion in 2020 to USD 10009.8 billion in a span of 5 years, a 16.5% growth rate forecast.
Rise of fraud with the growth of the digital world
The expected fraudulent digital transactions rose by 5% compared to previous trends. TransUnion reports identified over 100 million suspected fraudulent transactions from 11th March 2020 to 28th April 2020, with a further increase of 9% in fraudulent activities over the rest of 2020. The consumers, especially the Gen Z, were highly targeted with digital scams. Phishing was the number one reported digital scam impacting 27% of consumers.
Need for KYC
Frictionless Onboarding
The initial onboarding process of your new customers is a critical stage in their customer journey. To reduce customer drop-off and increase retention, you want to ensure that your onboarding processes are frictionless. Around 39% of your customers will drop off due to the process taking too long. Any minor inconvenience or delay during this period such as slow response times, false negative verifications, or requiring too many details, will deter your customers and result in high customer drop off.
Risk Management
Reduce risk and mitigate fraud through the correct KYC applications. With fraud rising each year, organisations are being forced to become more vigilant and take the right precautions to protect their business and reputation. Implementing a robust CDD (customer due-diligence) process, will help you identify any risky customers and ensure you meet any regulatory requirements.
Save time and money
By eliminating the manual processing of paper documentation and the need for in-person verification, you will save your company time and money. Integrating your CDD into the onboarding process means that your customers can verify their identity in seconds while also reducing any errors.
Conclusion
The increased growth of digital transformation highlights the need for better digital identity solutions to combat any illegal activities through 2021. Data Zoo’s expert team can conduct KYC within seconds for various APAC countries. The documents required for KYC are the national identity card, proof of address or proof of income of an individual.