3 Points to Consider When Choosing A Right KYC Provider - Fintech Series (II)
According to AML regulations, financial services providers such as forex brokerages need to verify the identity of their clients. The process has important implications as far as brokerages are concerned, especially at such a time when the forex trading market is growing exponentially, with more and more traders from all over the world and new brokers joining the area.
Verifying the identity of a customer that is signing up for a forex account helps determine whether the customer is indeed who they say they are, this helps companies prevent fraud by surfacing bad actors before they can potentially start misusing a forex service.
However, the time-consuming identity verification process may make the onboarding process for customers less convenient and then lower your customer conversion rate. Partnering with a professional KYC provider can solve this problem and enable you to enjoy quick and easy KYC that converts the users as quickly as possible.
If you have made the decision to outsource your KYC processes, you now need to know what to look for when deciding what service to use.
Choose a KYC provider with the most advanced recognition technology
Data breaches and cyberattacks have become common, risking the personal information of millions of people and posing security threats to financial companies. The chart below sums up the Identity theft reported by number of complaints in the United States from 2015 to 2020, showing that cybercrime and cyberattacks rapidly increased during COVID-19 pandemic.
(Source: Federal Trade Commission)
One of the main changes brought by the COVID-19 pandemic is the rapid implementation of biometric security measures which can authenticate individuals remotely and quickly. Over 75% of Americans have used biometric technology, which includes anything from fingerprint scanning to facial identification to signature dynamics and hand geometry.
According to the data from statista, a professional statistics portal, the market for biometric technologies will steadily grow over the next few years to reach $55.42 billion by 2027. Businesses are increasingly realizing the benefits of biometric technologies in terms of security and ease of use for their operations.
So, it goes without saying that you must be certain that the KYC partner you pick up have the most advanced technology and provide all the authentication methods you may need in your business.
“It’s worth noting that if a platform employs several recognition methods at once, it can bring down conversion rates and create unnecessary verification steps. I'd say that facial biometrics alone is enough for most cases. It's the most popular and secure option for proving that a live person is present,”said Andrey Sever, the Co-founder and CEO at Sumsub, a leading tech company providing KYC/AML solutions.
Choose a KYC provider with a wide document and language coverage
As your customers may come from all over the world and there are thousands of national identity documents worldwide, this means that your KYC provider need to be able to verify any national identity or local government document in their corresponding language and format, in order to be truly global. Of course, you also need to find out if potential providers have direct access to local business registers and their equivalents.
In addition, linguistic differences and especially different alphabets create many inaccuracies in customer verification and make it difficult to serve foreign customers. The ability to transliterate is very important in the KYC process.
Choose a cost-effective KYC provider
Both the cost and labour required to fulfill increasingly stringent regulations are spiraling out of control. In such an environment, many KYC processes are highly expensive, but businesses are caught between a rock and a hard place.
Look for a cost-effective KYC solution and never settle for a solution you deem too expensive. Besides the obvious cost of onboarding a client in a compliant manner, a hidden but much more substantial cost regards the hours of work done by your compliance staff.
When researching KYC providers, make sure to find out how long it typically takes for a staff member to process one application. Saving money on a cheap KYC solution is poorly spent, if dealing with applications becomes a time-intensive task.
External providers help save time and resources for brokerages, and work on streamlining onboardings while mitigating threats. You should consider a KYC provider that includes the elements listed above, to ensure greater business growth as well as compliance with relevant regulations in play or forthcoming.
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