Financial institutions are legally required to verify customers’ identities while onboarding them and frequently after that to prevent money laundering and reduce fraud. The financial institution is responsible for ensuring that its customers reveal their true identity and do not use its services for any illegal activities. However, handling KYC is not the main-core business of a financial institution. After all, they have their finance-related operations to perform. So, they outsource KYC processes to professionals who have the required expertise and tools to handle KYC services.
When a financial institution decides to outsource its KYC processes, it’s essential to know what to look for. Here are the six valuable tips for finding the right KYC solution for a company.
- Look at the Service Coverage
The first and the most obvious thing to notice is the solution provider’s service coverage. It must provide all the KYC services a financial institution requires to perform. At the same time, it must use appropriate methods to perform KYC processes and interact with customers in a secure yet positive manner.
- Confirm the Document Coverage
The KYC service provider must offer complete document coverage in different languages. Since different customers may use information and documentation in varied languages, the system must collect and analyze data efficiently, irrespective of the language. Multi-lingual document coverage becomes even more important if the financial institution offers global service.
- Ensure Compliance
The KYC solutions should adhere to the applicable regulations in the financial institution’s country. A KYC service provider that violates the rules and compliance standards may get the company into serious legal trouble. For instance, if a bank is operating in India, it must adhere to RBI regulations at each step.
- Consider Technology and Data Storage
Before hiring a KYC service provider, it’s essential to look at the technology they use and how they handle data storage. Depending on the KYC service required, the solution provider must deliver it professionally, securely, and efficiently.
The financial institution is also responsible for keeping its customers’ data protected. So, it’s crucial to check how the solution provider stores the data gathered from the customers. Whether they hold data offsite or onsite, it must be secure and meet data processing regulations applicable in the country. A firm that uses advanced technology is the best choice in these aspects.
- Enquire About the False Positives Rate
False positives occur when a KYC process inaccurately flags a genuine customer as illegitimate or high-risk. When that happens, the customer’s account gets blocked until the issue is clear and the flag is removed. Although it’s impossible to remove false positives altogether, select a KYC service provider with a low false positives rate.
- Check the Price and Integration
A financial institution needs a KYC service provider that works with it and satisfies its customers’ requirements. Their KYC services must integrate with the company’s needs seamlessly. Besides that, the institution must examine its budget and consider its financial restrictions while choosing. However, paying a little more for a reliable KYC system is worth it.
When looking for the right KYC solution, the most significant thing to consider before anything else is the regulations. Even the best solution provider will become redundant if it does not follow the rules. The best system is the one that fulfils all needs while complying with compliance and safety regulations.
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