Institutions worldwide, especially organizations in the finance and banking sector, must ensure that customers are whom they claim to be. Customer identities are verified to rule out the risk of money laundering, drug trafficking, and terrorism. Otherwise, criminal activities would continue unchecked, threaten global peace, and destabilize economies.
The passing of the Patriot Act in 2001 by the US Government and the US Treasury’s Financial Crimes Enforcement Network (FinCEN) regulations in 2016 made it mandatory to introduce standardized Know Your Customer or KYC norms and Customer Due Diligence (CDD) codes.
To strengthen the global crackdown on criminal activity, the European Union (EU) passed the General Data Protection Regulation, also known as GDPR, effective May 2018. GDPR aims to monitor and control how institutions in the real world and online sites acquire and protect customer data.
The third level of protection is provided by the EU’s Second Payment Service Directive or PSD2, which is even more focused on anti-money laundering and CDD protocols that complement existing KYC norms.
The ultimate aim of the regulatory framework is to ensure that the customer's identity is verifiable. Law enforcement authorities can identify and penalize delinquent individuals and institutions where malfeasance is detected.
Although KYC has been mandated for financial institutions, for all other businesses, it is voluntary. Still, KYC compliance is indicative of the trust that a company commands.
A marketing campaign can succeed if the potential customer has faith in the company offering the service. Experts handling the KYC identity verification solution by Passbase insist it is paramount that the customer feels reassured that the brand, the product, and the transaction are safeguarded.
In the past, brands making offers required consumers to show physical ID proof like social security cards, student ID cards, or military IDs for manual verification. Consumers enter essential particulars online in a short format in the digital era, and identity confirmation is instant.
A smooth verification of customer identity is beneficial to the brand promoting the product or service and satisfies the consumer.
The business invests money in creating the brand, marketing the product, and rolling out campaigns to attract consumers. It follows that companies should be equally concerned about network security importance. Digital verification effectively curbs identity theft and ensures that the benefit is availed only by the target audience. Discount abuse is minimized.
Insisting on consumers’ presence is hugely inconvenient because all necessary documents may not be readily available. The process of manually identifying the consumer at the site may compromise privacy. And the company wastes time and money hiring a workforce to verify the client onsite.
Digital verification saves time, cuts wasteful expenses, and frees resources that can focus on personalized service.
Consumers avoid doing business with entities they can't trust. The customer must feel reassured that the company is trustworthy, personal privacy will be respected, and all financial transactions protected from third-party fraud.
Consumers will dump the product and avoid the brand if the company’s onboarding process is slow and cumbersome. Fast customer verification protocols help accelerate paid and organic sales campaigns, grow traffic, and boost revenue.
In a market bristling with aggressive competitors, the way forward is to personalize the company’s products and services to fulfill the target audience’s needs.
But even the most successfully marketed products need to reach the target audience with minimum delay. If the product rollout slows down, consumers lose interest and search for alternatives.
Digital customer verification onboards consumers faster and reduces customer support calls. As consumer loyalty increases, conversion rates improve and generate higher demand.
Customer verification protocols mandated by Governments and regulatory bodies have to be followed unflinchingly. But digital verification also creates a win-win situation for businesses and consumers because the brand, the product, the transactional data, and the customer’s privacy are significantly protected.
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