Reducing Risk Through Know your Members (KYM)

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The past 18 months has been a period of significant change and challenge for credit unions. The relationship between a customer and business is now personal, custom, and nuanced across all channels and devices – and more important than ever.

Today digital onboarding and being digital-first is ‘business as usual’. This new business context has allowed credit unions to supercharge their digital transformation programmes to ensure a seamless digital onboarding experience while reducing the risk in their AML and KYC framework.

Digital identity verification solutions that provide secure, compliant remote capabilities are a crucial ingredient for the success of any regulated business. The importance of an easy digital experience right from the beginning of a customer’s or client’s journey cannot be underestimated. In fact, HID Global reported that:

“European financial institutions are losing almost 40% of applicants during digital onboarding.”

In 2020 the Financial Action Task Force (FAFT) found that not only do digital identity systems improve security, trust, and convenience for customers but:

”Non-face-to-face customer-identification and transactions that rely on reliable, independent digital ID systems with appropriate risk mitigation measures in place, may present a standard level of risk, and may even be lower-risk.”

User Experience

Concerns persist for many consumers about sharing private documents and personal data online. GDPR is top of mind regarding how their data is stored, used, and transferred and how secure is the provider they choose to engage with. In their 2021 Global Identity and Fraud Report, Experian reported that 60% of consumers have a higher expectation for their online experience than pre-pandemic, while 55% still say security is a top priority.

Embracing a secure digital onboarding experience and identifying the advantages offers a cost-effective competitive advantage to satisfy customer needs and allay these concerns.

The Regulatory Burden

Given the growing role of compliance and regulation in delivering secure digital experiences, collaboration between regulators, market-leaders and new solution providers will allow customers and clients to receive a premium experience and for a regulated business to remain compliant.

Digital solutions that help credit unions meet their AML and KYC requirements whilst reducing risk provide operational and strategic benefits for credit unions such as:

Acquisition and Retention

Your customers can securely submit or update their personal data anytime, anywhere via any device. No longer constrained by location or to using a paperless process, your potential customer base can be broader. Regulated businesses that can onboard customers across any channel or jurisdiction simply, securely, and conveniently have less compliance friction when expanding into new markets.

Real-time Decision-making

Solutions that accelerate digital transformation can maximise customer conversion rate by digitally capturing customer information in-person, online or via a contact centre. By automating your AML and KYC process using bio-metric and data-driven technology, it enables real-time decision making for your business and a better understanding of their journey with you.

The ID-Pal identity verification solution is a good example of how to use a unique blend of technologies:

  • Document checks to verify that the identity document itself has not been tampered with or forged.
  • Biometric checks to ensure that the individual submitting an identity document is its rightful owner.
  • Database checks to cross-reference the individual’s information against relevant databases.

Operational Efficiencies

Change management consultants Charles David Churchill Associates Limited (CDCA) found companies take on average 26 days to complete KYC checks and corporate clients take on average 32 days to complete KYC compliance. Combined with the processes to onboard members, produce audit trails and maintain backbooks, it can be a time-consuming process to remain compliant and to keep client’s personal data safe.

Technologies, packaged with a friction-free user experience, can deliver the best outcomes by classifying in real-time. This removes the need for your business to follow up, chase documents and reduces your AML and KYC process to minutes.

The importance of digital ID&V solutions to satisfy AML and KYC requirements and reduce risk is clear but implementation is also where challenges rise. Manage the complexity, cost, timelines, and risk associated with regulatory compliance by sourcing solutions that are customised to your business and scalable.

In Conclusion

ID-Pal understands the operational efficiencies to be gained from identity verification and the benefits that can lend to a long-term sustainable growth for any business as well as reducing risk.

Using best-in-class technologies as part of your strategy leads to better quality outcomes, and a higher conversion rate for a larger volume of customers while preventing fraud at source. Ultimately obliging compliance and regulation can be the key innovation drivers of digital transformation.

Contact us today for a live demo of how the ID-Pal service can be easily integrated with your business.

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