KYC Episode 2: Accelerate your business with identity

In the previous episode

KYC, or Know Your Customer, is a crucial process for verifying the digital identity of an individual or company in the context of business activities. As human beings, trust in our identity, that is, who we are, is at the heart of our social interactions: whether it’s renting or buying real estate, receiving our salary, shopping at the supermarket, opening a bank account, or even for the reimbursement of medical expenses.

KYC is not a new concept, but the rapid digitization of our societies requires it to be adapted to new uses. At Memority, we are convinced that properly equipped digital identity processes are growth drivers for businesses.

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Security is still too often seen only as a last resort that generates costs for the company and friction for the user. At Memority, we are convinced that properly equipped security processes will not only be painless for users, but also accelerate your business and generate trust and value. Thus, beyond the now common uses of KYC for financial institutions, which mainly serve to reduce risk, let’s look at some use cases that KYCaaS can democratize.

Online merchants: lower your insurance premium

Trust is earned and grows over time: a market vendor will not hesitate to give credit to a regular customer who has forgotten his wallet. But would he be as open with a stranger? Probably not. The same goes for an online retailer.

In the event of non-payment, the online retailer has the choice between sitting on his loss or triggering his insurance, if he has any. In both cases, this has a cost for his company, which often exceeds the simple amount of the stolen item: bank fees, fraud costs, loss of reputation, loss of time, etc. Subscribing to a KYCaaS will allow him to significantly reduce the risk, he will be assured that each buyer will be the person he says he is: hence a reduction in risk that will positively impact his insurance premium.

Similarly, an e-retailer offering a restricted product for sale, according to the age or nationality of the buyer, will be able to prove to government agencies that he has carried out the required checks.

However, for an e-retailer, everyone knows how much the slightest hitch can cause a sale to be missed. The triggering of a KYC request must therefore be precisely defined according to criteria specific to the context: purchase amount, buyer’s geographic location, purchase history, frequency of fraud on the online store, etc.

Sensitive sites

An industrial site is not open to the four winds, if only because it contains dangerous machines. Some sensitive sites such as nuclear power plants or SEVESO sites require visitors to submit a copy of their identity document several days before the visit for a police check. KYCaaS avoids this document transfer, reducing the risk of leaks, and speeds up the verification process (some services are linked to state organizations).

As a consultant, I have had the opportunity to work with a large number of clients, some of whom requested a copy of an identity document and the signing of a charter before any access to the information system was opened. I still fear today that my identity card will be lying around on a server open to all, ready to be used to open a credit in my name…

Registering a new supplier

Some KYCaaS allow you to check documents of legal entities. The step of checking a new supplier can thus be accelerated, its representative being able to prove the identity of its structure using documents such as the Kbis.

Human resources: VSEs

In 2022, a person without the required diplomas was hired as a replacement teacher in a primary school. She had usurped the identity of another teacher and presented a false diploma. She taught for several weeks before being unmasked by a colleague, informed by chance in the press of the previous fraud carried out by this same person.

Who would agree to entrust their children to a fraudster? The impacts here are not financial, but above all a disaster in terms of image for the director. Not to mention that they could have been devastating for the children. A KYC check would have made it possible to detect, before the first interviews, that this person is not who they claim to be. And even go all the way through the process by automatically validating that the criminal record is clean. Since the process is initiated by the teacher, it is no riskier than the historical procedure requiring requesting that the record be sent by mail.

However, VSEs do not necessarily have sufficient resources to offer this type of service. This is why chambers or unions are starting to offer these tools to their members, in order to strengthen the bond of trust with their customers.

Human Resources from SMEs to very large companies: speeding up onboarding processes

Let’s look at another example concerning human resources, more suited to SMEs, mid-cap companies and other large companies. The hiring process, or welcoming a temporary worker, often begins with sending information by email that HR will then manually re-enter into their HRIS tool. This information will then be used to create accounts in the company’s multiple IT tools, on the pay slip, etc. Errors are common. The richness of our cosmopolitan environment means that we regularly discover names whose spelling can sometimes be a challenge. Or more simply, last names are also first names, such as our Managing Director who is as often called “Francis” as “Grégoire”! What a waste of time to correct. Suggest that the new arrival enters their information themselves, ideally via a KYCaaS. This way you will be sure not to make a mistake, and that this person is who they say they are.

To reduce friction and optimize costs, KYC can be triggered only after certain steps, for example just before signing the contract.

Travel agency: smoothing and simplifying take-off

During a family trip abroad, two women had entered their preferred names on the online agency’s website, while their identity papers only mentioned their birth names. The tickets had to be urgently changed at the airport, which resulted in unforeseen costs and unnecessary stress. If the agency had offered a KYC process, this discrepancy could have been detected as soon as the tickets were ordered and thus smoothed boarding.

Here we see that KYCaaS not only allows security checks, but also facilitates and prepares for subsequent physical checks. The amount of travel insurance could be calculated based on whether or not a KYC is carried out.

Travel agency: what security for personal data?

The recent hacking of a travel agency also revealed the lack of consideration of managers for our identity documents. Tens of thousands of copies of identity documents were stolen and will now be used as tokens to the detriment of their owners.

We see here another advantage to using KYCaaS: identity documents are not kept by the recipient. He only knows the Only the necessary and sufficient information is obtained known: name, first name, date of birth, address, gender, etc. This data is considered reliable and its protection is facilitated because it is handled by the KYCaaS provider.

Marketplace and connection services: reducing the risk of fraud

An acquaintance recently lost €22,000 on a well-known peer-to-peer resale site. He wanted to buy a car and thought he was protected by the secure messaging service of this service, except when the seller gave him a document that made him leave the service. Instead of entering his bank details in the secure area, he entered them on a falsified site. Obviously, all the documents previously communicated by the scammer, from his identity card to the registration document, had been stolen from another victim. So yes, the buyer was not vigilant and should not have paid such a sum without being in front of the car; but if KYC was imposed by the peer-to-peer resale service, would this type of fraud still be possible?

Between the seller whose identity has been validated and the one who is not, which one will you choose? Between the carpooler who has proven who he is, and the stranger?

Health

In France, the Vitale card allows you to obtain access rights to healthcare. However, it does not contain sufficient information to ensure the identity of its holder, which can lengthen verification and hospitalization times, among other things.

Conclusion

Real estate agents, doctors and landlords can also secure and streamline their processes thanks to KYCaaS. While many other uses have yet to be invented, choosing a service that increases trust between the different parties in a transaction is not only a financial issue, but is becoming a convenience. Memority, through its positioning at the heart of organizations’ identity and access processes, facilitates its integration. The question remains of the trust that can be placed in these services: are they reliable, what about progress in generative AI, etc. Our opinion in the next article!

-> To discover the first episode of our KYC series, click here