How can KYC software help online businesses?

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Every business consists of different elements that together create a whole, and in order for it to be successful all of the elements need to work to their best abilities. No matter how great your marketing department is doing their job and how effectively you are promoting your services,  if you can’t keep employees because the HR department is not pulling their weight, your business will suffer. The same goes for all of the other elements in business operations, if one of them is not in sync with the others the whole business operation will experience issues. 

Implementing KYC into a Business

Even though all of the elements are extremely important, every business leader knows that the customers are the most important element their business depends on. While issues with other elements would significantly damage the business, the truth is that without customers, there would be no business to run. You can have the best product there is on the market, but without any customers that are interested in that product it won’t matter how great it is. They are what makes or breaks the business.

This is why it is imperative for the success of any business to fulfill customers’ requirements and ensure their satisfaction with the service. But, at the same time business leaders need to be mindful that while they are ensuring customer satisfaction, they don’t do it at the expense of the business process. 

You might want to reduce user friction completely and forgo boring or long verification processes customers are always complaining about, but with that you will be risking the safety of your business. Criminals are constantly looking for new ways they can use your business for their malicious purposes and you don’t want to make that easy for them. By implementing KYC principles in your business, you will be able to protect it.  In order to get the best KYC software for your business you need to analyze your needs and make an informed decision.

What is KYC?

KYC or Know Your Customer in today’s world presents a unique opportunity to fight against financial crime, money laundering and fraudulent behavior. While this process, which is a part of a larger category called Customer Due Diligence, was initially created for financial institutions like banks, fintech companies or cryptocurrency platforms, businesses of all kinds are embracing it in their day to day operations. 

Even though KYC as most of the other security principles seems overwhelming, the “Know your customer” principle is actually quite simple as it does exactly what its name says. It is a process of collecting important customer information to learn more about them and to understand who is using your products and services to prevent criminal activities. 

Utilizing KYC for your Online Business

The scope of KYC depends on the type and the needs of the business as not all of them need the same level of protection. While for some businesses it will be enough to know the bare minimum such as users’ full name, data of birth and their address, the other ones need to be more diligent. 

For example, financial services or cryptocurrency exchange platforms like Coinbase need more diligent KYC checks  to comply with law regulations and prevent potential fraudulent activity. KYC allows businesses to verify customers’ identity, determine risk and prevent criminal activities, stay compliant with regulations and ensure a seamless onboarding process. 

Using KYC software helps to make this process faster and more simplified, not only for the businesses but also for their customers. There are various softwares out there that can help your online business from SEON that gives you the most data points which allows you to filter out any junk users before you even get to the KYC stage or Onfido that offers you liveness verification, biometrics analysis and AI system that can automatically accept or reject customers applications to many others. This means each business can find a perfect KYC software for their needs and requirements that will allow them to protect themselves from fraudulent behaviour while staying compliant with regulations. 

Limitations of KYC

Companies must be aware that the verification steps are seen as obstacles by many users. Yes, they may help avoid a swarm of sammers flocking at your website. But for the average user, they just add friction between them and the service they want to use, creating a negative impact on the company’s churn rate.

It is in every online business’ interest to balance out customer accessibility to their services all while not limiting their access. KYC is there to create a balance between user accessibility and security from malicious hackers and fraudsters.

As businesses race to be as frictionless as possible, however, something has to give. For instance, do you offer a loan to anyone who applies, or do you have a more stringent verification method that risks losing you business?

It’s a difficult balancing act that all businesses must perform, and not just loan providers.

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