What are some KYC requirements banks often have?
Some of the most common KYC requirements are proof of identity, bank account statement, credit card statement, house purchase deed, lease agreement and rental receipts, letter from recognized public authority. Sometimes the processes may include background checks and ongoing monitoring of the customer’s activities.
KYC requirements change based on the customer type, the risk assessment needs of the institution, the regulations it needs to abide by, the technology available and the desired customer experience.
Customer type: The level of KYC required can vary depending on the type of customer. For example, individuals may require less stringent KYC compared to corporate entities or politically exposed persons (PEPs).
Risk assessment: KYC processes are often based on risk assessment, which takes into account factors such as the customer's country of origin, occupation, source of funds, and transaction history.
Regulations: KYC requirements can vary depending on the jurisdiction in which the digital banking institution operates. Different countries have different regulations and guidelines for KYC, and these can change over time.
Technology: Digital banking institutions can use various technologies to improve the KYC process, such as biometric authentication, identity verification software, and artificial intelligence.
Customer experience: The KYC process can be lengthy and complex, which can impact the customer experience. Digital banking institutions may try to balance the need for thorough KYC with the need to provide a seamless and convenient customer experience.
Are there differences between the requirements that incumbent banks have versus challenger banks?
Of course. Challenger banks are turning to digital identity verification options to verify identities and at the same time comply with regulatory requirements. Incumbent banks have been also toying with these solutions, yet they also need to incorporate their already existing processes of KYC. As a result, we see multiple differences in processes across the board of digital banking offerings.
Challenger banks often implement creative ways to inform their customers of the length of the KYC journey, or receive helpful information about the purpose of the account the customers want to open. You may find some of the best KYCs of challenger banks here.
How can a designer identify the KYC requirements for banks easily?
Identifying various KYC requirements could be time consuming and tedious. Designers often rely on outdated reports or internal guidance, that may often appear to be myopic.
FinTech Insights is the digital banking research platform that offers a quick look into the various KYC requirements that banks, challengers, fintechs and credit unions need to abide by through the process.
A FinTech Insights user has access to a step-by-step implementation of the KYC process for more than 100 banks.
In a matter of seconds, the user could see a video of the implementation and a video recording of the complete user journey.
The Importance of Customer-Centricity in the KYC Process
Designers and digital banking institutions must ensure that the KYC process they implement is not only compliant but also customer-centric. The KYC process should not be overly complicated, and it should not take up too much time for the customer. Otherwise, it may result in a high dropout rate, and customers may abandon the process altogether. A well-designed KYC process is one that is simple, easy to understand, and intuitive, which helps build trust with customers and provides a positive customer experience. A customer-centric KYC process also includes clear communication with customers about the data being collected and how it will be used.
In addition, digital banking institutions must also ensure that their KYC process is scalable and adaptable to future changes. As regulations change and evolve, the KYC process must also adapt to comply with new requirements.
Digital banking institutions must have a system in place that allows for quick and easy changes to the KYC process, without disrupting the customer experience.
They must also ensure that the KYC process is scalable, meaning it can handle a high volume of customers and is not affected by fluctuations in demand.
By implementing a scalable and adaptable KYC process, digital banking institutions can ensure they are compliant with regulations and maintain a positive customer experience, while also ensuring the process can handle future growth and changes.
We have analyzed and UX evaluated thousands of KYC journeys on FinTech Insights.
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