How to choose a KYC provider. Part 2
So, which dilemma I faced, precisely, you already know from the previous post.
Before jumping to the answers, what I would recommend to those who are also in search of the right KYC provider is to check out some good informational reads on the subject. PWC, for instance, describes in their 2016 report the key cross-country differences in KYC/AML. If you are interested particularly in the UK, you may wish to review the reference guide by Mitek on AML/KYC regulation in the UK. Also of interest, Web Fraud Prevention and Online Authentication Market Guide by The Paypers gives you a general understanding of the landscape of Anti-Fraud and Online Verification.
Key Parameters to Check
The KYC landscape is fairly competitive. Now, as fraudsters become more and more sophisticated, KYC vendors are rushing to respond accordingly with safeguard solutions. So, how to find out that a particular KYC provider would be a perfect shield from fraudsters and bring you more customers — ultimately increasing the bottom line?
All KYC vendors are not made equal. Some have better coverage, for example, while others may have a better manual/automated review ratio. But, bear in mind, if a vendor commits to coverage for a certain number of countries, it doesn’t automatically mean that they can process all types of available documents therein. So yes, the devil is again in the details.
I would emphasize the key following aspects to consider prior to making a decision:
Security: It goes without saying that you must be certain security is provided in a proper and appropriate fashion.
Perfect fit: Depending upon your requirements, you may want to choose separate, individual components like ID verification, or, you may want a more comprehensive end-to-end solution covering KYC, AML, and anti-fraud. The key point is to choose the solution that has the features and functionality which would best fit the needs of your operations.
Easy integration: APIs are the veins of the FinTech (not solely, of course). Make sure your vendor can offer hassle-free back-end and front-end integration which will reduce cost and time significantly.
Reference data connectivity: Check whether the vendor has their own database. Normally, big-market players offer both their own database as well as the option to integrate other resources (e.g., governmental databases, integrated premium datasources, customer-specific datalists).
Technology used: ML, AI, and biometrics.
Verification ability: The simple way to evaluate a vendor’s ability is by testing customers’ data. Test legitimate IDs as well as fake ones, expired, older, or different versions of an ID. Do not forget to test the speed of manual reviews and audit the results.
Risk/conversion dilemma: Obviously, the key question all financial institutions face is how to make the onboarding easier, and for the institution itself to meet compliance requirements. Try to investigate whether your solution can optimally balance between those two. Ask your potential vendor how they would actually improve account and customer onboarding processes, and how it would reduce fraud and false positives.
The companies included in our sampling are exhibited in the table below. What I would like to mention is that every company shined out in its own way. Trulioo, being a «Global Identity verification service» has the most «helpful» blog, meaning it has a whole lot of resources on KYC subject. Mitek, is the leading vendor focussed specifically on digitally verifying a customer via their identity document. Equiniti KYC Solutions is the pioneer in the KYC-as-a-service (both technology & services), which means they can be your compliance department. Know Your Customer which uses “a horizontal approach” to onboarding, impressed me with their creative approach to presenting the solution. IdentityMind Global represents one of the most comprehensive solutions covering KYC, AML and anti-fraud. Fenergo focuses primarily on banks and other financial institutions, enabling them to efficiently manage the end-to-end regulatory onboarding and entity data management processes.
For our benchmarking, we have chosen the key parameters which represent the typical KYC process: onboarding, surveillance, and reporting.
|Company||Customer ID verification||Sanctions screening||CDD/Risk assessment||Risk rating applied||Transactions monitoring||Transactions investigation||Enhanced review||Periodic reports||Ad-hoc reports|
|Identity Mind Global||yes||yes||yes||yes||yes||yes||yes||yes||yes|
|Equiniti KYC Solutions||yes*||yes||yes||yes||x||x||x||yes||yes|
|Know Your Customer||yes||yes||yes||yes||x||x||x||yes||yes|
*but no biometrics capabilities in house
**available through partners
Source: the data obtained directly from the sales representatives or taken from the corresponding websites. The frame is taken from the Quinlan & Associates Report
One of the critical aspects of benchmarking — and probably one carrying a large degree of weight in regard to your decision-making — is pricing, of course. As you might guess, the price correlates with the volume and number of transactions/operations capability on offer. Prices can also, in some cases, be negotiable. You can compare pricing rates by contacting vendors directly.
Being a FinTech vendor, we constantly emphasize the importance of an API-first approach — and metaphorically call it the new ‘electricity’. It is the only means by which to make a fast and cost-efficient integration, managing the solution from one instance. APIs add flexibility to your product development, save tons of time and budget, and enable the creation of the most convenient applications for the end users.
Every vendor displayed in the benchmarking sample has the ability to integrate front & back end as well as partners from the adjoining fields like biometrics, online authentication, etc.
Appendix: Identity Verification Landscape
Appendix source: Web Fraud Prevention and Online Authentication Market Guide by the Paypers