Fraud is on the rise with so many products and services online. This is backed up by Juniper Research which predicts that global online payment fraud is set to increase from $41 billion in 2022, to $48 billion in 2023.
For those serious about preventing fraud it’s vital to know your customers (KYC) and know your businesses (KYB), business customers and suppliers - that they are who they say they are.
Along with reducing the opportunity for fraud, the good news is that there are many other benefits to undertaking KYC and KYB due to the insight they provide. These include the ability to personalise communications, improve the delivery of services and the overall customer experience, to deliver a competitive advantage. KYC is also able to provide operational efficiencies. During a period of high inflation and economic uncertainty, these are all important reasons to implement KYC and KYB practices.
It is important to recognise that it’s clean data that powers KYC and KYB. This requires having data cleansing processes in place to clean and standardise user data held in batch, as well as when new data is collected at the customer onboarding stage.
Address autocomplete technology
For those serious about undertaking KYC, it is technology that’s playing a central role in cleaning data, alongside ID verification.
One of the most important tools is an address autocomplete or lookup service. These are vital in gathering accurate address data in real-time at the customer onboarding stage, by providing a properly formatted, correct address when the user starts to input theirs. Along with collecting accurate addresses in the appropriate format, this technology can also improve the user experience by reducing the number of keystrokes required when typing an address by up to 81 per cent.
There is also technology that undertakes first point-of-contact verification with phone and email, so these can be verified in real-time.
Deduplication
Undertaking data deduplication is critical to deliver data quality, with the average database containing 8-10 per cent duplicate records.
Duplicate records are a significant issue and often arise when errors are made in contact data collection at different touchpoints, or when two departments or businesses merge their data. It’s essential to recognise that duplicate communications, particularly of more expensive to produce printed material, is not only a waste of time and money, but can damage the reputation of the sender in the eyes of the recipients.
Advanced fuzzy matching technology is ideal for deduplicating data. And with this tool ensuring there’s a unified record for each customer the potential for fraud is reduced.
Data Suppression Tools
Data suppression, or cleaning, is a critical part of the KYC process. Technology in this area highlights customers who have moved or are no longer at the address on file. In addition to removing bad addresses these services can include deceased flagging to prevent the sending of mail and other communications to those who have passed away. This helps to avoid potentially upsetting friends and relatives of the deceased and impacting negatively on your reputation.
SaaS and data quality
For those serious about delivering data quality, and KYC, evolving technology has made it possible to source a scalable data cleansing SaaS platform that requires no code, integration or training. This technology is able to immediately cleanse and correct names, addresses, email addresses, and telephone numbers worldwide. The matching of records in real-time ensures there is no duplication, and data profiling is delivered to help identify issues for further action. Such a platform provides a single, intuitive interface along with tools for data standardisation, validation and enrichment, resulting in high-quality contact information across multiple databases.
SaaS and ID verification
In addition to data quality, SaaS technology is leading the way in delivering electronic identity verification (eIDV). These platforms are popular due to the fact they are easy to deploy, scalable and support cross-checks against an individual's contact data in real-time as they complete a sale online, thereby ensuring the customer experience isn’t negatively impacted.
To be effective these tools require access to reputable global data streams, such as government agency, credit agency and utility records, to match the name, address, date of birth, email or phone number against. Mortality screening checks should also be offered to effectively confirm the ID of an individual, along with the ability to highlight any errors in the data, such as a typo in the address, which can easily be corrected.
Furthermore, it is advisable that the platform sourced offers access to worldwide sanctions, politically exposed person (PEP) data, and is able to offer adverse media checks to provide a full ID verification service. It’s the best way to prevent losses caused fraudulent activity, while also supporting best practice KYC.
Finally, it’s important that the service is able to deliver KYB checks, alongside KYC, to enable organisations to fully understand the risks posed by new and existing business customers and suppliers. Fraud is frequently committed by those using shell companies or umbrella structures that just don’t exist in reality, so undertaking KYB to validate an organisation can greatly diminish that type of fraud from occurring. Also, delivering KYB will help to prevent financial crime, such as money laundering and terror financing, which could result in significant reputational damage.
In summary
While it’s only a legal requirement for those in the financial services sector to undertake KYC and KYB checks, there are huge benefits for businesses across all industries that do so. By obtaining and using technology that supports the delivery of contact data quality and ID verification, and therefore KYC and KYB, organisations will not only take a best practice approach to effectively prevent fraud, but acquire insight that will help them to drive sales, ensure a better experience for their customers, and improve efficiencies during these challenging times.