Customer-friendly KYC compliance

Make KYC compliance your differentiator

For the most part, the industry (and by that we mean the RegTech sector) will talk about seamless onboarding experiences and frictionless KYC compliance as being the state of nirvana. Basically, the thought behind that is financial institutions don’t want their customers to be aware they are going through a KYC process at all. The dream is that the automated KYC process is so slick, customers don’t even know it’s happening.

Well, sorry to burst the bubble, but customers definitely do know when they are going through KYC compliance journeys. They aren’t silly. Customers know an institution is checking they are who they say they are. Why else would they be asked a series of questions before being given access to a product?

And most customers know about the risks of fraud and financial crime, so they won’t resent a bank or building society completing KYC – they expect it. What they might get annoyed about is having to pop into the local branch to show their ID, rather than being able to share it online.

With this in mind, the questions then become, why try and hide the KYC compliance process? Instead, how do you make the most of it by making it customer-friendly and efficient?

KYC needs to be simple and convenient, of course, but it can also be transparent and awesome – then it becomes a point of difference in a competitive market. Getting KYC (know your customer) right and showing it’s efficiency to customers means you are saying: “Feel how easy we are to work with”; “look how we run things around here”; “we have great tech and that makes things great for you”.

Transaction of trust

KYC compliance processes exist to protect the customer and the institution. It’s a process of assessing risk and of building trust on both sides.

  • Bank says: We’re a trustworthy business. We don’t deal with fraudsters or support money launderers.
  • Customer says: Great, I’m not a fraudster, you can trust me. Check out my credentials.
  • Bank says: Judging by the info you’ve sent and the data I can see about you, you seem trustworthy – let’s do business.

The actual relevant legislation and regulatory requirements that get everyone to this point of trust are a bit more complicated (understatement of the year), but it is essentially what everyone is trying to achieve.

RegTech solutions are about simplifying complex KYC requirements to deliver compliance efficiency and great customer experiences with no compromise on either side. In the sphere of KYC, it’s about stopping financial criminals, but not good customers. (Where have we heard that before?)

Balancing compliance and customer experience

We know that in many cases, customers will live with a degree of inconvenience in return for a new credit card, loan or bank account. They will accept having to wait a few days for a decision from their provider for instance, but it’s not a great customer experience in a digital economy, which moves super-fast.

What customers have low tolerance for is the inconvenience and time it takes to do things manually i.e. having to go to a branch to complete KYC. Making the customer research what identity documents you will accept as proof of ID rather than telling them and making a specific request. Imagine you ask the customer to go into branch with proof of ID, they get there and what they brought isn’t what you wanted. This is a horrible experience, on both sides. To be customer-friendly be specific about what documents you want them to produce. And definitely provide a digital option for submission. If the customer wants to go into branch they can, but if they don’t, you have them covered.

Spending money on RegTech (or KYC compliance more generally) can be regarded as a ‘necessary evil’ by financial institutions. It’s just a ticket to play for firms selling financial products in highly regulated markets. Yes, compliance is a legal requirement and it’s important to avoid regulatory action and negative press, but it’s also an overlooked area of business value and customer success.

Consumer research findings

PassFort recently commissioned a new, independent survey with RegTech Associates. The results of the survey, which interviewed 500+ UK consumers who had recently acquired a new financial product, found just over a quarter (26%) of respondents had received what they considered to be a ‘better than expected’ compliance experience during their onboarding journey.

More interestingly, there was a strong connection between a bank’s ability to exceed the expectations of its customers in this way, and the resulting positive views and behaviours of those same customers.

This all shows KYC compliance processes are not “hidden”, but in fact exert real, tangible influence over customer perceptions and attitudes. And, an unexpectedly positive compliance journey can impact a customer’s likelihood of switching provider, complaining, purchasing more products or recommending a brand.

Excite and delight with KYC

It turns out that far from being unseen to the human eye, quality compliance is a key way to excite and delight customers. This means going beyond the minimum viable solution; it means removing unnecessary stages or delays in the process; and it means delivering the best customer experience possible during compliance processes.

Again, according to the PassFort research report, customers receiving a ‘better than expected’ KYC experience feel more secure, more confident about the risks facing their providers and more positive about the protections offered.

Some 50% of respondents described themselves as less likely to complain about their provider as a result of their compliance experience. This compared with only 14% of those whose experience had been ‘worse than expected’.

Conversely 29% of those who reported a ‘worse than expected’ experience said they were more likely to complain versus just 13% of those whose experience had been ‘better than expected’.

Customer satisfaction in itself is a competitive advantage in a world where advocacy and voice of the customer hold huge sway. Exceeding customer expectations in all areas, including compliance, will drive profit.

In summary

Don’t try to hide the fact KYC compliance processes are happening, because customers know anyway and they won’t resent you for doing it. They might resent you for doing it inefficiently though.

And don’t try to cut corners on how you deliver KYC in order to achieve compliance, because it could be the difference between winning and losing new business in the future.

+ Reduce the time needed to complete compliance checks through automation

+ Make the checks easy and clear for customers to understand

+ Be specific about the ID documents needed and try to reduce the number they are required to submit

+ Provide digital-only journeys or digital options for enhanced due diligence

+ Manage the onboarding process efficiently, but not opaquely i.e. communicate with customers openly

Achieve this and you will win advocates, loyalty and new business.

Get in touch

Investment in RegTech pays off. PassFort’s solutions are hardware-free, affordable, flexible to configure and easy to use, with constant feature innovation and a choice of deployment options. The low to no-code approach makes it perfect for solving compliance challenges at scale, without being too expensive to grow.

You heard it here first…PassFort: Compliance efficiency. Great customer experiences. No compromise. Get in touch to discuss creating friendly KYC compliance experiences for your customers.

Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

Posted in Articles

Leave a Reply

Your email address will not be published. Required fields are marked *