What are the advantages of KYC (Know Your Customer)?

The benefits of KYC are more important than ever in today's world of online business. The rapid rise in online business transactions has made Know Your Customer (KYC) a very vital aspect of accessing important services. From opening a bank account to simply placing an order online, there is always a KYC form to complete in order for businesses to identify clients and expose fraud. One major advantage of KYC processes is that it goes a long way in preventing criminal activities like bribery, fraud, money laundering and identity theft. In a nutshell, it ensures that all monetary transactions remain transparent and legitimate. 

This article details the benefits of kyc , not just in banking, but also in different businesses.

What is KYC and its Benefits in Banking?

The major benefit of KYC is for a business to be able to identify its customers and assess the risks associated with carrying out transactions during the business-customer relationship. This prevents criminal elements from using banks (or specific businesses) intentionally or intentionally for money laundering activities. KYC is an integral part of conducting customer due diligence.

The idea is that businesses are able to spot individuals on fraud watchlists or with a history of fraudulent activities during the onboarding process. Depending on the organisation and nature of the transaction, some KYC processes are stricter than others. For example, a delivery business KYC standard would not be as strict as that of a bank. This is because it faces lower associated risks when transacting with customers.

You can read more about what is KYC here.

Why is KYC important in business?

Wondering why is KYC important in banking and business? For starters, it is mandated by law to verify the legitimacy of a customer’s identity and also identity and assess risk factors surrounding the transaction. In a nutshell, KYC in business helps prevent financial fraud, terrorism financing, money laundering, identity theft and any other malicious intent or financial crimes that an individual might want to perpetuate. What are the features of KYC? The 4 pillars of KYC

There are certain features required for a KYC procedure to meet standards. These include: 

1. Customer acceptance policy
2. Customer identification procedures
3. Risk management
4. Monitoring customer transactions for suspicious activities

These features make up a robust KYC process when a customer is coming on board and across the duration of doing business with the organisation. 

What are the importance and benefits of KYC?

Know Your Customer has the following important and benefits in the business world today: 

• Prevents/limits frauds resulting from false identity or online schemes
• Prevents money laundering
• It helps lenders carry out an adequate risk assessment on customers by identifying their financial history and owned assets
• It builds trust between customers and organisations, therefore, attracting more investments to a country. 
• It protects customer accounts from unauthorised third-party access
• Less financial crimes lead to overall business growth
   

Why do we need KYC documents?

The importance of KYC in banking cannot be over emphasised. It is the key to other processes. Financial institutions are mandated to complete KYC processes before being able to legally allow a customer to access all their services. However, to fulfil this mandate, they need to request certain KYC documents from customers. This is used to verify their identity as a precaution against criminal activities like bribery, corruption, money laundering and identity fraud. 
 

How to achieve KYC with Youverify

Achieving KYC onboarding is easy when using Youverify’s operating system or YV OS. This innovative software is Youverify’s flagship product that simplifies the whole Know Your Customer process for you. You can create automated forms that perform a preset action based on the KYC needs of your business after verifying the identity and credentials of potential customers.

Here is a video description of how it works:

You can onboard customers and complete KYC using just their mobile phone numbers. Keep in mind that it has to be the phone number linked to their bank account and NIN. By collecting their phone numbers, our “Advanced Search” can help you retrieve other relevant information like their NIN, BVN and full data.

The implication is that businesses and organisations can now onboard customers with just their phone numbers and complete KYC with full compliance. This greatly transcends the current use of customers' phone numbers for only user authentication like OTP.  

Advanced Search is available on our flagship product, YV OS, and only available to customers in compliance with Nigeria Data Protection Regulation (NDPR).

Book a demo today to see how youverify can help automate your business’s KYC Due Diligence! 

Bottom line

KYC boasts several advantages in the world today and it has gone a long way in curbing online fraud. As a business owner, it is important that you carry out adequate KYC checks to protect your business and customers from criminals.