All brands understand how important it is to understand their customers, but when it comes to Know Your Customer, we are talking about something a little bit different. Know Your Customer (known as KYC) is the way in which regulated companies security check customers and verify customers’ identity. Financial services and other regulated industries in the UK need to demonstrate KYC compliance for newly onboarded clients and at regular intervals during the relationship with the customer, particularly if there are concerns about the financial viability of certain customers.
There’s no specific rules for what needs to be checked during a KYC process so it is up to the company’s discretion to decide what would be appropriate. Common pieces of information used to verify identities are names, NI numbers, birthdays, and addresses but would also include PEPs (Politically Exposed Person) and sanctions screening, identification of Beneficial Owners (BO) and directors, monitoring for changes in BO or director in a company, audit trail and secure archive of checks and documents.
Some businesses, for example banks, then make a prediction of what would be considered normal activity for that customer and use that as a guide to identify suspicious behaviour.
There are a myriad of issues with KYC compliance. Mostly stemming from the inefficiency of processes, and the inconsistent, inaccurate information stored across multiple databases. A concerning 54% of professionals in large financial institutions state that there are inefficiencies in their current KYC systems.
The seamless integration of KYC process is extremely important, as 25% of applications are abandoned due to KYC friction and 12% of companies have said they have switched banks due to KYC issues, costing cost the average bank £47M a year. Loss of business also occurs from inaccurate checks leading to false rejections of potential customers.
Getting your KYC in check
One suggested solution is eIDs, such as the government’s GOV.UK Verify, comparing the customer details with a centralised service should decrease the inconsistencies within KYC compliance. Unfortunately, such forms of identification are a few years away from being reliable enough to be implemented, as the technology is still being developed.
Another option is harnessing processes that are already established, for example through the mobile network operators, you can query information, including, first name , last name, date of birth and address. This has the benefit of being as live as a mobile contract. And considering 95% of UK adults have a mobile phone, the UK mobile carriers (Three, O2, Vodafone and EE) have a wide reach across the entirety of the UK. This would work alongside traditional KYC checks, which are perfect for the gaming, banks, insurance and dating companies etc.
With something as important as KYC, smoothing and streamlining the process is not only imperative but inevitable. The companies that adapt the fastest stand the biggest chance in not losing out to the complications that currently exist within KYC compliance as it is now.
KYC is one of those things that a customer will never realise when you’re doing it well but they can certainly tell when you aren’t.
Smooth onboarding and KYC compliance is integral to the customer experience.
Fonix is directly connected to all of the UK mobile network operators — get in touch today to Know Your Customer — hello@fonix.com.