Recently, I was approached by one of our clients, who posed this query: “We would like to integrate a KYC solution provider. Which one would you recommend?” I certainly knew the difference between authentication and verification. But I couldn’t have predicted how answering such a simple-sounding question would turn out to be more of a task than I imagined. So, now let me walk you through my journey of discovery!
Table of contents
Steps to take before choosing a KYC vendor
Answer essential questions
Once you’ve done your due diligence on Google and gained a general understanding of the KYC concept, procedures, and landscape plus compiled a list of KYC providers that look trustworthy, ask yourself a few simple questions before reaching out to their sales.
- What is the expected volume of onboardings per day?
- How big is the compliance department?
- What is the current automation-to-manual review ratio?
When you feel you’ve gained enough information here, embark on the second stage.
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Prepare your requirements
Prior to your first call with KYC vendors, make sure you have the following list prepared:
Do not talk to a prospective supplier without understanding your requirements. This is wasting time, for both sides.
Define key issues to handle via the KYC provider
Determine the particular criteria to help make your choice. How would you measure up and compare different solutions?
A potential KYC vendor should help resolve the following:
- Improve the customer onboarding experience
- Reduce onboarding and transactional fraud
- Diminish manual applications review time
- Decrease KYC costs
- Handle regulatory compliance
So, finding a solution that strikes a perfect balance between customer satisfaction, risk management, and regulatory compliance isn’t the easiest task ever, right?
Luckily, we can help.
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Key features to look for in a KYC software
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.
Here are the key aspects to consider prior to making a decision:
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 data sources, customer-specific data lists).
- Technology used
ML, AI, and biometrics.
- Verification ability
A simple way to evaluate a vendor’s ability is by testing customers’ data. Test the 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.
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Ask your potential vendor how they would actually improve account and customer onboarding processes, and how it would reduce fraud and false positives. Read this article to explore how KYC verifications are transforming into red tape.
Top KYC providers comparison table
The KYC vendors included in our sampling are presented in the table below. 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 the 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
KYC tools pricing
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 the above-mentioned “know your customer” service providers 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 can integrate front & back end as well as partners from adjoining fields like biometrics, online authentication, etc.
If you’re building a banking or payment product, SDK.finance offers a powerful transaction engine to cut down your development time and act as a foundation for further developments. Contact us to learn more about our fintech solutions.
What is KYC?
KYC, or know your customer, is a practice dictated by local regulators to ensure businesses know who they are dealing with and identify potential areas of risk.
What is the best KYC tool?
The following KYC providers can be named: Mitek, Comply Advantage, Trulioo, Fenergo, Opus.