Essential in the fight against fraud, money laundering and terrorist financing, Know your customer (KYC) and Know your business (KYB) procedures can unfortunately quickly degrade the quality of the user experience when they are not optimised.
An identity document that is not centred when scanned, a proof of address that is more than 3 months old, an incomplete bank statement that does not show the account balance... There are many small accidents that can occur during theonboarding phase, and the frustrations generated during this phase can quickly discourage your customers or partners.
Although there are several technological solutions on the market to remove this obstacle to the development of business activity, only one is currently capable of giving KYC and KYB procedures the fluidity they deserve: the Blockchain.
A radical innovation
Just as image recognition technologies have in the past made time-consuming and costly manual compliance control operations obsolete, Blockchain technology is now replacing Optical Character Recognition (OCR) technology solutions with new, faster, more reliable and more cost-effective processes.
Far from offering only a marginal improvement in the authentication and verification of documents, Blockchain takes KYC/KYB procedures into a new dimension by making it possible to trace the source of the data directly. All this without sacrificing the confidentiality of information and in full compliance with the General Data Protection Regulation (GDPR).
Concrete benefits for the company and its customers
The use of a new technology is of little use if it does not result in tangible and significant benefits for its users. In the context of KYC/KYB procedures, the use of blockchain technology makes all the difference.
Accelerated onboarding, a smoother user experience
Because no company will ever get a second chance to make a good first impression, theonboarding phase is of considerable importance in optimising the process of acquiring and retaining new customers.
In 2021, a company can no longer afford to keep its customers waiting, let alone offer them a bumpy and laborious user experience. Even more so when its direct competitors offer a perfectly optimised alternative.
In a traditional bank, the average duration of a customer onboarding can sometimes reach 30 days... An aberration in a digital world where every tenth of a second of superfluous loading time is enough to drastically reduce a conversion rate!
Thanks to Blockchain technology, a document is verified in an average of only five tenths of a second. This is light years faster than manual verification, but also much faster than the standard OCR solutions.
Reliability in the face of all odds
For a long time, the optimisation of processing speed has been at the expense of the level of reliability of verification. Every company had to choose between speed and security, and favour one over the other.
Thanks to the new model made possible by the Blockchain, not only does the acceleration of processing speed no longer deteriorate the quality of the verification process, but its reliability is also significantly enhanced.
How is this possible?
Simply because it is no longer a question of simply checking the conformity of a document (on the basis of cross-checking partial information), but of going directly to the source to verify the authenticity of the document in question.
Blockchain technology uses cryptography as a means to protect the identity of users and to ensure that transactions are conducted confidentially.
KYC requires the collection of highly confidential documents and information about individuals and companies. In addition to providing identification or proof of address, this may include sensitive information such as income or medical records. This personal information can be at risk if it falls into the wrong hands.
Today, many actors - especially financial actors - collect these documents physically or online to verify them. They have a legal obligation to keep them in case of audit or remediation. Storage is usually centralised on a secure server, exposing them to particularly compromising data leaks.
The blockchain provides a layer of trust and traceability that makes the prospect of a cyber attack almost impossible. Hash functions, which encrypt and encode information transfers between two systems in the form of fingerprints or signatures, guarantee the security and reliability of the information to the actors in the chain, preventing any attempt to modify it after the initial entry. In addition, this distributed registry allows for absolute resilience in case of failure.
One of the most competitive costs
On top of this, although the adoption of new technology to improve the user experience often results in increased costs, the new solutions enabled by the Blockchain can significantly reduce costs.
Indeed, the level of trust and optimisation provided by the blockchain allows for cost optimisation. It is no longer necessary to carry out a second check on a doubtful customer file by cross-checking information to verify compliance. The authenticity guaranteed by the blockchain makes it possible to quickly identify cases of fraud and easily protect against them.
While financial institutions alone spend 50 million dollars per year on managing KYC/KYB procedures, and the number of control operations carried out online continues to grow, cost rationalisation is now one of the keys to enabling any company to fully scale in the digital age.
Far from being a superficial innovation, the Blockchain is now delivering all its promises when applied to concrete cases such as KYC/KYB procedures. To find out more about the solutions available to your company, make an appointment with our team of experts!