KYC is an imperative process of any company’s compliance journey, especially in financial services – which makes it even more important startups invest in it.
Electronic IDentification recently provided some key reasons why a startup should consider implementing a KYC process.
KYC is a process that is performed when a business or entity must know and verify the identity of a person with whom it interacts, and is a mechanism to protect both companies and users should not only be carried out by large businesses, but across the entire company spectrum.
eID said, “Although only regulated companies in the financial sector are required to have a KYC process in place to prevent fraud or identity theft from other users through identity verification, it is also in the interest of startups to implement this process.
“KYC in startups is performed during the onboarding process to verify the identity of users and that a person is who they say they are. In this way, there is a double protection for both the company and the users, by preventing identity theft.”
Other sectors that may be interested in carrying out KYC besides financial services could be in mobility, travel, collaborative economy such as crowdfunding, and also education.
Some startups, apart from those belonging to the financial sector or Fintech, that are particularly interested in carrying out a KYC process may be from these sectors:
Why should a startup consider implementing a KYC process? eID highlighted that first of all, it helps with cost savings.
The company said, “Automating certain processes such as user identity verification through an automatic flow allows for greater efficiency, scalability and cost savings.”
In addition, it helps with digitalisation and user experience. Startups can stand out for offering 100% digital services and being more customer centric. A KYC process in startups accompanies this vision of always having the customer at the centre if it is easy, fast and fluid, which bolsters the user experience and subsequently, conversion.
It also helps with fraud prevention and security. The company said, “Fraud is also a factor that every startup must take into account to avoid losses. A proper KYC process in startups is a tool that, thanks to AI and verification algorithms, can detect forgery or identity theft. For security, it helps for both for the company and the end user.”
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