Intersekt, 2022 Ekata Roundtable
In the days of brick-and-mortar locales, Know-Your-Customer (KYC) was a simple process; the customer was standing in front of you. You could even hold their hand as they opened an account, if you so wished. No one was frustrated by multiple captcha codes and biometric scanning requirements, abandoning the checkout process. Those days are over.
In a world driven by the digital-first economy, how can you tell if your customers are who they say they are? How can you be sure you don’t lose good customers in your attempts to verify an identity?
On day two of Intersekt 2022 we asked this question to a roundtable of fintech professionals. Identity verification and fraud prevention are top of mind as we discuss the latest in KYC technology. Everyone holds titles – or wears multiple hats – in payments, operations, fraud management, regulations and compliance, and more.
The room appreciates the need to adapt and innovate KYC and onboarding processes. We must all meet customer expectations for a seamless account opening experience, while maintaining a tolerable level of risk.
Ekata’s Director of Business Development, James Sibbick leads the roundtable. He acknowledges that traditional KYC tools are not made to perform digital identity verification, making it near impossible to combat stolen identities. Importantly, they also fail to serve the unbanked or under-banked applicants professionals in the industry are now encountering. This means time consuming, high-friction processes that lose consumers before they become customers.
Alternative sources of data are a must – especially to serve this under-25 demographic. This is where the benefits of a probabilistic approach comes in, especially when it comes to fraud prevention. For example, for synthetic identity scammers today, it has never been so easy to replicate an “email-to-name” match. It takes patience to sit on that email before using it in a cyber attack. Therefore, the signal you really want is “email-first-seen-days.” And, the question we should all be asking to verify this signal is: “Can I trust this email?” The answer is probabilistic; an email address younger than 30 days is 100 times more likely to be fraudulent than those older than 30 days.
This talk on probabilistic approaches to identity verification and KYC is prudent. That’s because, regardless of organisation, everyone present at this roundtable wants to know what cost-effective strategies there are to perform KYC without unnecessary friction. While the issue of regulators enforcing costly biometrics does present itself on occasion for us all, a probabilistic approach allows us to build up our risk profile. This means a layered approach; a step up process.
“Get your customer on board. And incrementally step up the verification process according to their risk profile,” explains Sibbick.
This multi-layered approach to identity verification means combining rules-based decisioning and machine learning for your fraud prevention efforts. It is also prudent to also combine internal and third-party, global data.
It all comes down to data. How much do you have and how can you leverage it? Remember, even if data is available, it isn’t always high-quality. There are multiple providers in the room. For those who have joined the roundtable for best practice advice on implementing seamless KYC processes whilst mitigating fraud, it doesn’t matter how big their company (or how start-up their app) is. Everybody agrees. A good data partner is necessary for accuracy and sustainability in an ever-competitive marketplace.
The human element is equally important. This is where setting expectations is so important. The advice? Work with your sales team to educate customers on what your KYC process might look like to set expectations early in the customer journey.
Finally, if you are doing KYC well, there is no single correct workflow, no one boarding path. In fact, when hoping to provide a seamless customer experience for your end user, you require multiple “journeys” at the backend.
Reducing abandonment, minimising unnecessary manual reviews, and fraud prevention are all topics that are front of mind – in this room and across the fintech industry. It was a pleasure to host this interactive roundtable, and Ekata looks forward to meeting with our peers again soon.
