Case Study: How to Optimize Your KYC & AML Workflow
As growth advisor Casey Winters explained in his speech during the Slush conference in Helsinki, onboarding is the most important part of your growth strategy. He insists that it is crucial to spend enough resources to make onboarding seamless and exciting. Most of the users stop using your service after they have tried it once.
The financial industry is in the tightest spot. On the one hand, there’s a desire to provide a smooth and engaging experience for your users. On the other hand, regulators keep coming up with new and more rigorous KYC & AML requirements. Hence, in most cases, your new users can only use a limited pool of your features or cannot use your service altogether before they complete the KYC. Whether you have a cryptocurrency exchange, trading platform, neobank, loan platform, or other FinTech, you have likely faced this issue.
You probably already have a KYC service provider, which handles the identity verification. However, FinTechs and traditional banks often face severe issues and bottlenecks with their AML compliance programs. Most KYC software solutions are pre-built, while every organization is unique. This makes it extremely difficult to have a perfect identity verification software, which optimizes your customer onboarding and KYC data management.
Companies who have built KYC software in-house also face similar problems. Often onboarding teams find weak spots in ID verification software that might cost millions of pounds. For instance, manual KYC checks cost an average UK bank 47 million pounds.
There’s no need to compromise your onboarding. There’s always a way to optimize identity verification. Let’s take a look at some cases when BASIS ID has mitigated the bottlenecks of various companies.
Reducing the churn rate
One of our clients is a relatively young yet quite famous cryptocurrency exchange platform that enables you to buy, sell, and trade dozens of cryptocurrencies. Their goal is to provide the best possible experience for their users.
However, they have realized that despite having a well-built identity verification software, many of the users were not able to sign up. When they started investigating the issue, they found that existing KYC software had rejected many users due to weaknesses in biometric verification and identity document check. Especially vulnerable were users from the APAC and European regions.
BASIS ID offered them a microservice that focused on the rejected users. This optimization of the KYC workflow raised the conversion and allowed to penetrate APAC and European markets confidently.
Similarly, many companies struggle to identify documents containing hieroglyphs. Therefore, it’s crucial to classify this bottleneck early and seek a service that can help you. Optimizing OCR for non-Latin characters significantly broadens the company’s opportunities, allowing you to work with more countries while also following local regulations.
If you are noticing suspiciously low conversion rates in your KYC software solution, consider checking if rejected users:
- ✔ are from the same region,
- ✔ have false-positive matches against blacklists, sanction lists or adverse media lists,
- ✔ use a non-Latin alphabet,
- ✔ are of a particular demographic category (gender, race, age, etc.).
When you have identified a pattern, ask your KYC service provider to mitigate the issue or seek an additional microservice to optimize the onboarding process.
Optimizing AML data management & reporting
Another BASIS ID’s client is a corporate secretarial service that provides a whole range of services from incorporation to compliance and reporting. They have clients from all over the world and it can incorporate a company with the ACRA registrar within 24 hours.
A corporate service provider taking care of your incorporation, accounting, taxes, payroll and compliance needs in Singapore at affordable rates.
In addition to automating and optimizing the onboarding process, Sprout’s challenge was AML data management. The compliance team didn’t have an easy-to-use dashboard or access to the KYC data. The lack of the KYC data management platform made the work of the compliance team extraordinarily tedious and expensive.
Finally, users in Singapore wanted to be able to complete the KYC workflow via MyInfo instead of going through a long identity verification process.
BASIS ID helped the above-named corporate service provider to optimize their user onboarding (both for natural and legal entities) and streamlined the work of the compliance team by setting up a KYC data management platform with a user-friendly dashboard.
If your compliance team can’t keep up with the workload, and it’s too expensive to stay compliant, consider the following questions:
- ✔ Which processes can be automated?
- ✔ Can compliance officers view verification data and history?
- ✔ How long does reporting take?
- ✔ How does the team deal with rejected users?
- ✔ How long does the verification process take?
When you have identified the weak spots, consider talking to your KYC service provider about possible solutions or seeking 3rd party solutions that can be integrated with an existing KYC software solution to streamline the work of the compliance team. It is also important to note that many of the issues can be solved without integrating new tech. BASIS ID also offers training programs for compliance officers that can help you optimize the onboarding process.
The two most common issues of the AML compliance program and the KYC workflow are high churn rates and poorly organized work of the compliance team. The first step to mitigating these problems is to find the bottleneck. Next, you have to find a way to resolve the bottleneck and optimize the onboarding process. Such optimizations can greatly decrease the cost of compliance and increase the number of users on your platform.
If you’d like to streamline your KYC process, BASIS ID will be happy to conduct a free consultation to optimize your onboarding and simplify the work of the compliance team.