Easy as KYC

13 February 2017

Why KYC?

No, KYC is not just another acronym that doesn’t deserve a mention. Yes, KYC is the ofttimes painstaking process that you go through when signing on for a new account or financial service. More importantly though, KYC (Know Your Customer) refers to the due-diligence processes of any regulated business to do exactly that - know us and our businesses - their customers, so that they can transact with us in a safer way. KYC is an especially important cog in the financial services machine, as it assists in the prevention of:

  • Financial Fraud
  • Identity Theft
  • Terrorist Funding
  • Money Laundering


Simply put, without KYC, we’d be living in the equivalent of a financial services wild west. Gangsters would be able to get away with money laundering, terrorists would have far easier access to capital and countless more cases of identity theft and financial fraud would be prevalent.

The KYC processes also allow our financial services providers (FSPs) to know us as customers better, which translates into them being able to provide more relevant services and solutions, as well as mitigate risks - for both parties.

KYC, What?

The KYC process can be broken up into two parts and covers both individuals and businesses. For the sake of simplicity, I’ll refer to the process used for individuals throughout this article.

  • Customer Identification - This is where you’re asked for identifying information, generally in the form of your identity document (e.g passport) your proof of address (e.g your telephone bill) and a recent photograph.

Customer Due-Diligence - This is where your risk profile gets assessed via various levels of questioning and requests for supporting information and documentation - which may include your source of funds, the purpose of your account, your occupation, your financial statements, banking references etc. The institution and type of account/transaction involved will determine the type and amount of information that needs to be provided. The due-diligence process is an ongoing one, with regular monitoring to ensure that your risk profile is maintained to a satisfactory level. This ultimately allows your financial services provider to offer you best fit, risk mitigated solutions.

Can It Be Less Painful?

The Customer’s Pain

For the customer onboarding process alone, the spiel of waiting in long lines to get the correct documentation - then waiting in another line to hand in the documentation is painful enough. Once the docs have been handed in, there’s the risk that:

  • You don’t meet the criteria and the painful process continues.
  • You’ve actually handed your private information into a fraudster.
  • Your private information is poorly handled and gets leaked or hacked

As melodramatic as this may sound, the above scenarios play out more regularly than we care to admit.

The Business’ Pain

For businesses, ensuring a compliant KYC process has traditionally been expensive, labour intensive and has many moving parts rendering it vulnerable to non-compliance or worse - fraud. The costs to run these admin intensive compliance exercises are growing annually both in terms of hard costs and lost opportunities to gain new customers.

Image ref: Financial Services Global Economic Crime Survey 2016, PWC

Easy as KYC

Enter the world of Regtech solutions where technology is being leveraged to make regulatory compliance more efficient and cost effective for both the suppliers and the customers of financial services. I’m sure you’ve already heard ‘techie terms’ such as Machine Learning, Biometrics and Distributed Ledger Technology (aka Blockchain) but perhaps haven’t seen or understood a relevant use-case for these technologies yet. These (and other) technologies are being used by companies such as ThisIsMe, to make the KYC process a lot faster, more efficient and ultimately less painful for us (and our financial services providers) in a few key ways:

1. Machine Learning (ML) - We’re able to benefit in a multitude of ways from ML programs that can help the FSP vet us almost instantly and recommend relevant services once we’ve been onboarded.

2. Biometrics - As cliche as this may sound, the future of KYC is already here when it comes to Biometric Identity Verification technology. There are a myriad of mature biometric solutions available to ensure that multi-factor identity verification can be made possible, across almost every use case imaginable.

3. Distributed Ledger Technology (DLT) - Immutable, secure, privacy protected identity management whereby the user has control over their identity is now a possibility with the various Distributed Ledgers that are around. Still in its nascence, DLT has applications that have yet to be discovered, let alone tested. One thing is certain though, FSPs will be clamoring to use this new tech to keep costs down and to improve the security, efficiency and speed of their KYC solutions.

The Generation being born today will laugh at the stories we tell them of waiting in lines and filling out long handwritten forms. They’ll find it strange that onboarding ‘was a thing’. The successes we’re achieving in KYC with Regtech today offers us a glimmer of hope for an admin free, safer future. Keep an eye open (literally) for the latest in KYC technology at your next FSP.

Brennan Wright

Head of Marketing, ThisIsMe

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