In the dynamic realm of banking and financial services, staying competitive hinges on embracing innovative practices. Our report, “Top 10 Global KYC best practices,” offers a comprehensive look at how leading banks worldwide are revolutionizing their Know Your Customer (KYC) processes. From harnessing cutting-edge technologies like artificial intelligence and biometric verification to reimagining customer onboarding experiences, these practices are reshaping the banking landscape. Embark on a journey with us as we explore these best practices, uncovering success stories and valuable insights from banks at the forefront of KYC innovation.
Introduction
KYC, short for Know Your Customer, is a mandatory process of identifying individuals, an entity, and its activity during onboarding for various banking services such as opening an account, applying for a credit card, opening a fixed deposit, and more.
The primary objective of a bank’s KYC process is to prevent money laundering and counterfeit financing. The process verifies customers’ identity and tracks any potential risks by verifying customers’ national identity using biometric data (such as fingerprints or facial recognition), signatures, and national documents.
Innovations in KYC
Innovations in the KYC world is crucial as they help streamline processes, enhance security, and improve the overall customer experience. Technologies like biometric verification, AI, and ML enable faster and more accurate identity verification, reducing the risk of fraud. They also help in meeting regulatory requirements more efficiently. Some of them are:
- Introduction of biometric
- Integration of digital government database
- Intuitive KYC process
- Introduction of AI and ML
Effective KYC drives positive CX
Customer Experience (CX) is a critical consideration in KYC processes due to several key reasons. Firstly, the KYC process often serves as the initial point of contact between a customer and a bank, making it a pivotal moment for forming impressions.
An inefficient onboarding experience can not only deter potential customers but also pose a risk to revenue generation. The KYC onboarding process should be quick and digitally enabled, enhancing the overall KYC customer experience. Failure to meet these expectations can lead to dissatisfaction and potential customer loss.
Customer challenges in KYC process
- Digital KYC process poses difficulties for customers without digital documents, requiring customer for in-person branch visits for completion.
- Complex or confusing user interface during online KYC makes it difficult for customers to navigate the KYC process efficiently, leading to errors in KYC verification, document submission, or entering personal information.
- Customers often experience frustration due to long waiting times when trying to connect with a KYC agent for assistance during the video KYC process, resulting in an overall negative customer experience.
- Customers who are not fluent in the language used by bank agents during the online/offline KYC process face challenges in understanding the KYC requirements and instructions properly.
- Technical glitches or errors in the online KYC process force customers to visit a branch in person, causing inconvenience and wasting time. Long processing times can result in a delay in completing the KYC process.
- Customers frequently encounter the need for multiple calls or attempts to finalize the KYC process, resulting in frustration and time wastage.
- Lack of push notifications or reminders leads to delays and missed deadlines and incomplete KYC.
State of KYC in 2024
Top 10 global KYC best practices
- 1. Video KYC
Stands out with one of the best KYC practices, offering a seamless Video KYC process. Customers can start via email or mobile link, verify with an OTP, and easily schedule KYC from any device. The process ensures quick agent connections, progress tracking, question prompts, and selfie guidance, all aimed at completion in under 5 minutes. Additionally, customers can chat with agents for assistance and choose their language preferences for a personalized experience.
- 2. Two-step KYC documentation
The KYC process is incredibly fast and simple by providing only 2 step document verification. Users verify their identity by uploading one document’s back and front sides and taking a selfie using the mobile app. The process includes an oval-shaped screen for clear selfie guidance and can be completed in just 2 minutes, requiring less than 4 steps.
- 3. Digital document verification
Offers a seamless digital document verification process through its mobile app. Customers can verify their identity by uploading documents like a national ID card or income proof. The app provides information on required documents, ensuring a smooth experience. During a live video call, an agent conducts face-to-face identity verification and takes screenshots of the documents. Customers authenticate their identity by reading a token number and providing a live signature. A customer selfie is taken to complete the KYC process, eliminating the need to visit a bank branch physically.
- 4. Interactive interface
Offers an engaging and user-friendly KYC interface. It provides clear instructions for document upload and selfie capture, with visually appealing themes and colors. The app enhances the process by using document images and supports multiple file formats for upload. Auto-refill from ID cards expedite form completion, while intuitive icons aid navigation and understanding.
- 5. Add-on tools & features
Offers a user-friendly KYC interface with clear instructions and visually appealing themes. Their process includes innovative add-on tools and features, such as supporting multiple file formats for document upload and auto fetching of data from ID cards. Intuitive icons aid navigation, making the KYC process smooth and efficient.
- 6. Selfie-KYC
Simplifies KYC with a selfie process that requires only one document: the national ID (HKID). Their advanced facial recognition ensures accurate verification, completing KYC in under 5 minutes. Customers can retake selfies if needed, guided by an oval-shaped screen. Uploading documents takes less than 2 minutes, with autofill for ID details, saving time.
- 7. Pre-KYC communication
Ensures a smooth KYC process with pre-KYC information available through its website and chatbot. Their 24/7 chatbot on the website clears doubts, and the site provides comprehensive KYC details. Instructions are given before starting KYC on the mobile interface, and assistance is easily accessible on the website. NAB sends timely KYC updates via email and text message, with clear explanations of terms and conditions online.
- 8. Establishing secure KYC
Ensures secure KYC processes with multi-factor authentication. Users must provide login credentials and an OTP for access. KYC initiation requires OTP verification on the registered number, with access granted only to authorized users. The mobile application requires a secure login process for the KYC application, including biometric authentication.
- 9. KYC scheduling process
Allows customers to schedule a video call for KYC verification at their convenience. The user-friendly interface offers easy appointment booking to avoid long wait times. Customers can choose a date and time that suits them, with 30-minute time slots available. A confirmation notification provides reassurance after successful scheduling.
- 10. KYC at kiosks
Offers a top-notch kiosk KYC process, allowing customers to finalize verification after applying online. The bank provides convenient kiosk locations for easy access. At the kiosk, customers insert their ID card for document scanning and scan their index fingers for verification. Clear instructions ensure an easy process, which takes less than 5 minutes. Customers can complete KYC independently at the kiosk, which is equipped with necessary technology.
Conclusion
KYC practices are not just about ticking boxes; they’re a gateway to transforming customer experiences. By simplifying processes, leveraging technology, providing support, and ensuring data security, banks can streamline KYC and create a seamless journey for their customers. By implementing these best practices, banks can elevate the KYC process from a regulatory requirement to a valuable opportunity to enhance the overall customer experience, ultimately fostering loyalty and trust.
To further enhance this experience, consider the following recommendations:
- Offering designated branch visit times to reduce waiting and inconvenience.
- Providing customers with the option to select the gender of the agent during video KYC for a more personalized experience.
- Streamlining the KYC process by minimizing steps and requiring only the National ID card for verification.
- Creating a demonstration video of the KYC process on the bank’s public website to assist customers.