Are you set up for Knowing Your Customer in the digital world? For the US financial sector, it’s the law. KYC became law under the Patriot Act as a step to combat fraud and money laundering, particularly concerning terrorist organizations. Of course the government calls it Customer Identification Program, but we all just call it KYC.
Financial institutions are required to collect a minimum amount of information to identify that a customer is legitimate. For individuals, it’s not much: name, address, tax identifier (SSN, for example), and date of birth. I could write an entire post on why we should do KYC beyond the law – it’s just good practice regarding financial dealings.
Considering KYC in the modern, digital world of near-instant decisions information, we must also be careful to fulfill the KYC requirements with minimal impact to the customer. The Manifest performed a study and found that more than 80% of people have abandoned an online form once they started filling it out with 27% citing form length as the reason that they ended the session. Is it possible to balance customer patience and still meet the government requirements? In a word – yes. It’s about building solutions that support both.
Contact Vetter to learn more about our 90-second customer identification platform!
Digitization of banking presents both opportunities as risks, as we consumers become numbers and statistics on a computer screen, and it’s increasingly difficult to get to know them in a traditional sense, but we do have access to a lot of data that can paint a pretty clear picture. Part of the beauty of the digital space is that credit unions and banks don’t have to go it alone. Outsourcing to experts on identification technologies often makes sense.
Ernst and Young published some high-level advice regarding using third-party providers
Building from these basics, financial institutions can get to know your customer just as well with fewer forms, greater accuracy and with accelerated speed. For example, a prospective customer or borrower can snap a photo of their driver’s license within an app. Using optical character recognition software, you can collect their name, address, and usually date of birth. They may only have to manually enter a few fields or make slight corrections. This information can be verified electronically using multiple data sources simultaneously. Not only does this streamline the process for the customer, it streamlines the process for you as well.
Ready to read more about how Vetter’s products all work in harmony to streamline operations? Click here to learn more.
These are only a portion of the KYC requirements, but they’re the lynchpin of the entire system. Not only will you get the data required to start the process of shoring up your KYC compliance, but consumers are less likely to give up on filling out an overly burdensome form on their smartphones. Together, we can get them going along in their financial journey with your institution.