Businesses should not just think about making money! They need to know who they are doing and be able to identify their customers. These days, identifying customers has become an important issue in business, and most companies and organizations, from banks to retailers, must consider it as an important principle. In this article, we are going to discuss what KYC or customer identity identify and how to use it in business.
What is KYC or Customer identity Identification?
KYC or customer identity stands for the word Know Your Customer and means “Know Your Customers”.
“KYC” or customer authentication to the steps carried out by a financial institution or business to determine customer identity, understanding the nature of customer activities and monitoring their activities to assess money laundering risk and prevent other criminal activities in accordance with anti -money laundering laws (AML) Governments are said. KyC, like a catalyst, increases the growth and progress of businesses! In fact, it doesn’t matter what industry and field you work in is the first step to achieving sustainable business growth is customer recognition.
History
Before we look at what KYC is, it is better to write a little about its history. The history and root of the KYC dates back years. When banks and financial institutions sought a way to prevent money laundering, fraud, financing terrorism and financial corruption. These follow -up continued to combat financial corruption until the September 9 incident made the United States more sensitive to financing terrorism and passed laws that all banks and financial institutions were required to make their customers more accurately. Identify and verify. In this post we are going to discuss the reasons for the importance of KYC for businesses, and then introduce E-KyC with digital authentication as well as the process of customer identification for banks, which are one of the most important and sensitive organizations in any country. .
What are the benefits of KYC?
KyC helps you know the specifications and needs of your customers.
If businesses know their customers correctly, they can provide them with better solutions and services. The process of finding reality in KYC helps businesses to obtain useful information such as age, employment status and purchasing power of their users.
These data can be used by businesses to provide customers with proprietary solutions and better meet their needs. This will get customer satisfaction and this will be very effective for business growth.
KYC helps the legitimacy of businesses.
Doing a legitimate business is important because it prevents businesses from responding to the laws of anti -money laundering or the fight against corruption that is happening in the financial world today.
In other words, if you know that your customer business with you using immoral methods, it is best to cut interactions with that customer than you want to violate the law.
Legitimacy means that:
“You are working safely and securely”
And this makes your business achieve good name and reputation and potential customers.
KYC prevents crimes.
KYC provides the main details of customer information such as their names, authorized signatures, the real or legal status of individuals and business owners.
These controls are carried out in KYC to identify theft, prevent terrorism, money laundering and financial fraud. The impact of this is more visible where illegal businesses are removed from afar, and legal businesses can continue to grow in an appropriate environment.
KYC creates trust.
Using KYC means that your company’s business is legal.
This not only creates trust among existing customers, but also for future and future customers.
KYC process in banks
In order to reduce the risks related to money laundering, banks need to be careful about customers and confirm their identity.
Today, banks do this at different levels based on the type of customer and the potential of the risks.
Banks are obliged to implement the KYC requirements according to the Central Bank’s request or a supervisory unit! However, there may be differences in how banks work together, but they usually include the following requirements:
- Collecting documents and proving identity and address.
- Review and verify customer identity.
- Customer Information List Politically Politically.
- Obtaining information about the nature of customer activity to ensure that customer financial resources are not illegal.
- Evaluation of the possibility of risks and risks that a customer may have.
- Monitor the transactions carried out by the customer.
What are the KYC criteria in banking?
Banks and financial organizations are one of the most important and organized institutions. But given the sex of their activity, these institutions not only have high potential for fraud, but also have high potential for work such as money laundering and tax evasion and illegal financial activities. For this reason, the central bank usually forces banks and financial institutions to apply KYC processes and customer identification. KyC criteria may vary for any country, but generally have the following:
KYC requirements in banks for ordinary customers:
- Getting the identity documents of individuals and proving the correct address and photo.
- Verifying the identity and documents provided by the customer.
- Investigating the details of the financial and social status, the source of income, the value and the amount of expected transactions, and so on.
KYC requirements in the bank for business customers or businesses:
- Collecting documents such as business registration certificates, financial statements, balance sheets and…
The identity of the persons who run the business - Understanding the nature of business business, reviewing financial resources and revenue sources, information
- about their position and customers, the purpose of that business of opening accounts, monthly harvesting and other details of that business
What is e-touchc or digital authentication?
Today, the development of cyberspace and the increase in the tendency of the public to reference has led jobs and economic brokers, especially financial institutions and banks to approve the customer’s identity without the need for physical presence and online. The digital authentication service (non -prestigious authentication) is more important in certain circumstances such as the Corona crisis where the absence of people in public places such as the Bank Branch is more important. In the E-KYC system or digital authentication, the biometric features of the user are compared to existing identity information. Due to the high precision of artificial intelligence to implement this process, it closes the ways of fraud and prevents criminals from achieving their illegal goals. Among the benefits of digital authentication are the following:
- Non -essential validation
- Increase processing speed
- Increase the spectrum of bank customers, especially VIP customers, older, disabled and overseas customers
- Improved user experience and increased customer satisfaction
- Save money
- Reduce the use of paper and physical archive
- Increased customer loyalty rate
Customer Identification (Paper-Based KyC)
One of the most obvious and most used methods of customer identification is the use of paper documents.
Customers should provide various versions of the documents, for example, to provide their address and confirm their address.
In this case, the service provider must ensure the accuracy of the documents provided and ensure that these documents are registered and documented in accordance with existing bylaws.
In addition, this method also requires customer visit to confirm the accuracy of the documents.
What is the digital kyc?
In this way, computer systems are used to maintain all the information of individuals to make the KYC process easily and without hassle.
Digital KYC helps businesses and industries to maintain and protect accurate customer information and other regulatory requirements in a central system.
Thereafter, for customer identification, they just have to receive information including a code or contact number and match the information in the system.
One of the most important challenges of this method is that people with the information of others can forge their identity.
New Customer Identification Methods
Nowadays, other new methods have been used using machine learning and data analysis that companies can use to digitize the KYC process! Using these methods, in addition to reducing the amount of fraud, the customer experience also improves.
Kyc based on movie recordings
This method is widely used by joint venture funds to identify their customers.
In this way, customers can record a movie from their own and send it to the service provider.
After that, the film is observed by a manual and approved manually.
This method reduces the costs associated with the traditional paper method.
KYC -based video ID using machine learning
This is a advanced form of film -based solutions that use machine learning.
Machine learning helps customers submitted to customers, with other documents and videos in the system, and automatically exchanged or approved or approved without the identity of individuals.
In addition to reducing the costs of traditional method, this method also reduces time related to human identity confirmation and speeds up the customer identification process.
What is a biometric kyc?
Using biometric methods to identify users is one of the easiest and safest methods.
No one can use the biometric characteristics of others to authenticate! As a result, identity forgery in this method is almost impossible.
To do this, a fingerprint scanning system, iris or face recognition can be configured to be used for KYC customers! The biometric scanner must be connected to a biometric database containing the identities of different individuals by software.
For example, the scanner scans the fingerprint. This fingerprint is matched with the same fingerprint in the biometric database and the details related to the name, date of birth, address, and so on are extracted. It is then reviewed whether the information in the database matches what the customer claimed.
This method eliminates challenges related to information compliance, scanning documents, and integrating data records.
There are various reasons that prove that biometric methods can be the best way to manage KYC effectively in the banking industry.
Here are the benefits of using this method:
1. Accurate identification
The main purpose of the KYC process is to prevent illegal activities, fraud and money laundering.
Since biometric identification is the most reliable way to confirm one’s identity, it eliminates problems related to errors and thereby reducing identity and fraud.
2. Quick confirmation
Other customer identification methods spend more time on biometric identification because they need to match information or data in the system.
The biometric process confirms one’s identity in less than a second and eliminates the challenges of re -authentication.
3. Favorable security
Protecting customer identity and preventing theft of customer identity information in biometric methods reduces the risk of transactions in the banking industry significantly.
Biometric KYC is one of the most advanced customer identification systems and systems! This method reduces the likelihood of identity forgery to zero.
Finally we have to say;
It depends entirely on which method you want to use to identify and identify your customers.
Traditional methods, digital or biometric methods?
But it seems that the best way to identify customers, which is less risky and accepted around the world, is to use biometric methods.