Why eKYC matters more than ever
Among many crucial and mundane aspects of our lives, one thing that has changed with the reappearance of global pandemics is the need for an unprecedented pace of digitization.
While in 2019 we could already do most everything via our phones & laptops, and the number of businesses moving their operations online was fast expanding…
the pandemic has brought new levels into what we have to or desire to be able to do online.
Thus, a new pace of digitisation has surfaced.
Unsurprisingly the more aspects of our lives move partly or altogether online, the more connected activities we have to be able to cover online as well.
To bring up a simple example: once you could order goods online, there had to be an easy way to pay for them.
Sure at 1st, most businesses could handle that via an in-person cash exchange, but as numbers started to ramp up online payment options had to be developed and perfected to avoid friction for the buyers.
As a part of this process – i.e. businesses moving online – businesses have to make sure that their users and their services are safe.
Meaning that just as there are cameras in brick-and-mortar stores, and as you have to show proof of identification upon entering certain establishments…
Some businesses are now either required to or suggested to run certain security measures online as well.
One such measure is KYC.
KYC stands for Know Your Customer. It is the umbrella term for any measure which intends to identify and verify customers.
When you go into a bank and are asked for your ID and proof of address, when you have to identify yourself via a set of security questions, or when you are asked for your social security number at the hospital etc. those are all KYC measures.
Now as you can see, none of these are measures that have been introduced as an element of digitization.
Moreover, some of these can be applied to online dealings.
You can (and likely do) walk into an institution in person to have your records taken…
and can also be called by an operator to have those records then checked later.
You can also have video calls, scanned documents, in-person meetups etc. to cover everything that a business may need to run you through their KYC processes.
The question is, would you?
Furthermore, would you do it multiple times?
Now the good news is that even if you are one of the few who would (you might not enjoy spending your time doing fun things), you don’t have to.
eKYC is the solution that lets you avoid all the horrors detailed above.
You’ve likely been exposed to eKYC before.
Whether you’ve traded stocks or coins online, opened an electronic money account or created a dating profile, you were more than likely asked to take a picture of yourself (a selfie) and both sides of your ID(s).
As per the above list, you can see that while fintech companies are at the forefront of the spread of eKYC, more and more businesses from a variety of industries opt-in to use these services to make their customers and platforms safer.
The great thing about eKYC then is that you can do it remotely and much more quickly.
That is when it works as it is supposed to.
Let’s put it this way: the great thing about a good eKYC service is that it is frictionless, familiar and fast.
The bad thing about eKYC on the other hand is that it is often neither of the above.
Just as with everything, the more widespread it is, the more bad versions appear on the market.
Usually, after a while, standards form and businesses below those standards slowly but surely fade into oblivion.
Sadly, however, we are not at that point yet.
Now it is completely understandable that there are businesses to whom eKYC is such a newfound solution (perhaps they have only recently been required to implement it), that they are unsure how to make it as user-friendly as possible.
What is a bit less understandable is how there are KYC providers who thrive on this information gap and sell their services by introducing smoke and mirrors in the process.
More on that in another episode.
Let us now focus on what eKYC is and how it should be viewed by successful business leaders.
Allow me to elaborate on that via another example:
Let’s say you want to get to town B from town A.
To do so, you have to take a flight.
Part of that is that you have to identify yourself online when you buy the tickets, you have to go through security at the airport and you also have to show your ID(s) (and plane tickets) a few times before you get on the plane.
Once you touch down (unless it’s a short flight or the airport decides not to expose you to it) you’ll have to show your ID again and in some cases, you might even have to go through security once more.
All of this before you even get to your final destination, town B.
You see your goal is to:
- get on the flight
- ultimately get to town B
but you are exposed to a number of steps that you have to take to do so.
If those steps are horrible, you’ll at best have a bad initial impression of the service providers (the airport, the airline etc.), at worst have a bad feeling about the town.
The same idea applies to your service.
The initial experience your buyers will have with your service is the onboarding sequence.
Part of that will be the identification process.
If that sucks, they will have a bad taste in their mouth.
Even if your service then is amazing, the ones that do end up using it (yes some will not even get to that point), will still have a worse overall experience.
In that sense then, eKYC is truly a gateway to happy customers.
The more familiar, less friction-prone process they have to go through to use your amazing service, the happier they will be with it.
So the next time you think about improving your service, start from the 1st step.