Organizations need to balance creating a fast, frictionless onboarding experience for customers with robust KYC and AML compliance processes. Thinking about a fuller range of checks on the path to onboarding can help.
The customer onboarding experience is arguably now more important than ever. With an abundance of choice in the financial services market, customer interactions – such as a KYC process – need to be fast, responsive, and seamless. It’s what customers expect.
However, financial institutions offering products and services have key compliance obligations to meet. They need to be satisfied they aren’t enabling money laundering or welcoming fraudulent customers into their business.
This means financial services companies have two competing objectives when processing new applications:
Fraud detection is important to all financial services businesses, and device-based fraud detection can offer a huge advantage to businesses.
Each time a device is used to apply for a product, the ID of the device can be checked against a watchlist to make sure it hasn’t been registered with any type of fraudulent activity in the past.
People don’t use their devices in isolation either, they have profiles, and these can be present on numerous devices. So, if an application is made on a laptop that’s linked to a profile on a smartphone previously involved in fraud, this connection can be established and flagged.
Verifying individual IDs electronically can be an expensive process. Running a device fraud detection check is relatively inexpensive by comparison. Before a due diligence process even begins, a potential fraudster can be caught at the first point of contact, via the device they are using to make their application.
Device checks happen instantly, without holding up the onboarding flow, however if the device being used is suspicious, the application can be prevented from continuing, before more checks are requested, because a flag is raised to compliance teams.
If a flag is raised, highlighting someone is making an application on a device previously associated with fraudulent activity, this gives the organization completing the onboarding process a choice about what to do next. Depending on their risk appetite, the organization can block or decline the application, or they can choose to take a deeper look at the individual, accepting that the device could, for instance, be second hand. If this is the case, the customer can continue with their application, unaware there has been a bump in the road.
Having all due diligence checks managed through a single platform creates a powerful solution for regulated businesses. The right combination of checks can ensure a smooth and seamless onboarding journey that is also stringent in meeting compliance criteria.
Device-based fraud detection is a check to consider, as it’s fast, comprehensive, and unobtrusive - it can be completed before the applicant has even finished entering their name into an online form. For those making genuine applications the process and experience remains frictionless.
Moody’s Analytics helps you understand risk, so you can make decisions with confidence about whom to work with. To talk about the full range of checks that can be combined to create your own unique KYC ecosystem, get in touch.