Security is something that everyone around the world should take seriously. Homes have sturdy locks on the doors and windows. Banks have surveillance cameras and armed guards. Even the Pope rides around in his bulletproof popemobile. For their security, businesses and financial institutions rely on KYC providers. KYC stands for “Know Your Customers.” It is a process that places like banks use to confirm the identity of their customers.
What to Know About KYC
There are lots of risks in business. In finance, one of the worst that can happen is illegal transactions. Thus, KYC guidelines exist to protect these financial institutions from criminal activities such as money laundering. The KYC providers allow a financial institution to verify the identity of their customers to know if they are who they say exactly they are. This trait is especially relevant today as transactions transition from face-to-face to online. The applications of the KYC guidelines now extends to other businesses and institutions such as e-commerce, education gaming, telecommunications, and government.
What KYC Entails
To know your customers, you need information from them. KYC guidelines allow the collection of this information. Essential information that the businesses and institutions may get include name, birth date, and address. If the transactions have more risks, then other data may be necessary. Banks, for example, would require documents such as a business license and a financial statement. The information can even go as far as biometrics if there is a risk of corruption or terrorism.
How You Can Know Your Customers
The business then checks the customer through various databases. However, these manual checks are prone to human error. Moreover, how reliable the verification process depends on the technology the business uses. For this reason, several businesses rely on KYC providers. Through these providers, more sophisticated methods, such as artificial intelligence, are at the disposal of the businesses. If you run a bank, you cannot expect your tellers to design and run automated technology to detect fraud. Thus, you, as the business owner, are responsible for not only knowing your customers but also selecting the right KYC provider to let you do so.
What to Look for in a KYC Provider
You ideally want a company that makes use of all the possible technologies for KYC. For example, you can use Optical Character Recognition or OCR to analyze a physical document and turn it into a digital one. There is no need for manual encoding. Moreover, the OCR software can detect inconsistencies in the document, flagging it for possible fraud.
Video KYC is also becoming standard among financial institutions, as it is beneficial for online transactions. For example, a customer can open a bank account through the bank’s website or app. A bank employee can then take a screenshot of the customer’s face via a live video. This screenshot can include metadata such as the time, date, and GPS coordinates. The photo can go through a database, just like how government agencies find matches of wanted criminals. If everything checks out, you get a new customer, but you saved your bank from possible criminal activities.
Whatever your business may be, KYC is something you should adhere to if you are careful with security. Choose the right KYC provider and ensure the safety of your business, your employees, and your customers.
Author Bio: Abdullah hussain is a freelance writer who offers to ghostwrite, copywriting, and blogging services. She works closely with B2C and B2B businesses providing digital marketing content that gains social media attention and increases their search engine visibility.