A wealth management customer onboarding process is the first point of contact between wealth management service providers and their future customers. It is made up of the first serious interactions between advisors and investors and lays the groundwork for the long-term customer relationship.

Automated digital onboarding can help wealth management firms quickly gather and verify the information needed about customers or potential customers – including helping them to meet Know Your Customer requirements. 

KYC is the process of verifying a customer’s identity and financial activities, including where their money comes from and their risk profile. This helps ensure that customers are genuine and compliant with relevant regulations – preventing money laundering and other crimes. Digital onboarding reduces time and effort for the firm and account opener when it comes to KYC. 

2.   How does KYC enhance security in the wealth management customer onboarding process?

KYC plays a significant part in today’s fight against financial crime and money laundering. 

It is the mandatory process of identifying and verifying a customer’s identity – both when opening an account as well as periodically over time. In other words, wealth managers must ensure that their customers are genuinely who they claim to be. They can also refuse to open an account or halt a relationship if the customer fails to meet minimum KYC requirements. 

The following steps, which form part of the digital onboarding process, are part of KYC: 

-Establishing the customer’s identity 

-Understanding the nature of the customer’s activities (i.e. being satisfied that the source of the customer’s funds is legitimate) 

-And assessing money laundering risks associated with that customer 

Become and stay KYC compliant

Know Your Customer (KYC) procedures are essential to any business that wants to accurately assess customer risk. KYC processes ensure that you know the identity of your customers and the risks they could pose to your organization. Veriff’s solutions help businesses meet regulatory requirements and beyond.

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3.  How can businesses improve the effectiveness of KYC by prioritizing the wealth management customer onboarding process?

The core pain point of KYC is user friction. No customer wants to encounter this, and no wealth manager wants the onboarding process to be a sticky one. 

Traditionally, customer onboarding processes were both manual and time-consuming for everyone involved. They required a great deal of resource, and errors and discrepancies were commonplace. This left businesses vulnerable to fraud and non-compliance as well as at risk of negative customer experiences and high abandonment rates – which could impact their growth and reputation. 

But by leaning on savvy anti-fraud mechanisms and digital onboarding solutions, such as AI-powered anomaly detection, multifactor authentication, and encryption, wealth managers can not only keep fraudsters and other criminals at bay – ensuring that they remain on the right side of the law – but they will also improve the effectiveness of KYC.

4. What are the main types of wealth management customer onboarding processes in KYC compliance?

Due diligence

The wealth manager’s first judgment is whether to trust a potential customer —and due diligence is a critical part of this. 

Carrying out due diligence will include the following: 

• Finding out the location and identity of the potential customer
• Gaining an understanding of their business activities
• Classifying their risk category
• Carry out a sanctions and PEP check
• And storing all of this information, as well as any additional documentation. 

Risk assessment

Risk assessments are a fundamental part of a risk-based approach and help identify potential issues, understand the risk of dealing with a customer, and determine what measures are necessary to counter the threat.

Customers tend to be divided into four buckets, which will indicate how financial institutions should deal with them. These are: 

Low: Someone who is easily identifiable and verifiable, meaning that they are of little risk of unwanted or illegal activity.  

Medium: A higher than average risk compared to most – meaning that this customer will require further checks and monitoring. 

High: These customers will require a great deal of due diligence and monitoring. 

Prohibited: Suspicious behavior is strongly suspected and risky transactions may have occurred in the past. Companies would be advised to avoid these customers in order to protect themselves.  

Regulatory compliance

As a wealth manager, your digital customer onboarding process will involve collecting sensitive information from your customers. As such, it’s imperative that you are correctly protecting their data and remaining compliant. So, before you start building your digital customer onboarding process, be sure to keep up with evolving local and global regulations.

Account setup

Account set-up is of course part of the customer onboarding experience – and customers will get here once they have made it past the likes of due diligence. This is another touchpoint where user experience is key. This is in a sense the first ‘real’ interaction that a customer will have with an organization – beyond onboarding – and will give them a good indication of what is to come. 

The necessary steps should be clearly communicated to customers, potentially via a list of tasks required of them in order to set up their account. As they complete each of these tasks, they should be able to mark them off to show progress towards being ready to freely use the services. This gives them a sense of accomplishment, which is a good feeling to be associated with your offering.

Self-service onboarding

People often refer to two different types of onboarding within financial services sector: white-glove—hand-held, high-touch processes—and self-service. Self-service relies on automated, online services that take place in-app and without help from an employee. 

Today, people tend to be time-poor and impatient and, in general, prefer onboarding and KYC processes that are slick, friction-free, and avoid unnecessary human-to-human interactions. As such, self-service onboarding can prove to be an extremely useful tool, allowing potential customers to act on their own accord, in real time, and on their own devices. 

5. How does integrating the wealth management customer onboarding process with KYC impact the effectiveness of fraud prevention and risk management?

Smart wealth managers combine customer onboarding and KYC. This can be done by applying KYC guidelines to customer onboarding processes. When done properly, businesses not only gain the information that they need as part of the KYC checklist, they also acquire some of the information needed for the customers to open an account with them. 

Efficiencies such as these not only streamline an organization’s touchpoints and improve overall customer experience, they also put less pressure on the potential customer and lower the likelihood of them abandoning the process altogether. 

6. How does Veriff’s customer verification enhance the efficiency and accuracy of the onboarding/KYC process?

Comprehensive identity verification

Veriff’s Identity and Document Verification solution combines AI-powered automation with reinforced learning from human feedback and, if required, manual validation. This means that ID verification takes place efficiently and comprehensively. 

With support for more than 12,000 document specimens from more than 230 countries and territories, Veriff offers speed, convenience, and reduced friction to convert more users, mitigate fraud, and comply with regulations.

Speedy onboarding

Today, onboarding systems and software are available that are fast and accurate and ensure customer satisfaction. Further results include happy regulators and more successfully onboarded users owing to a speedy and reliable service. Veriff’s verification happens in the blink of an eye — or 6 seconds on average. This keeps users moving through the process and allows them to interact with your business faster.

Compliance with regulations

Complying with KYC regulations doesn’t mean compromising the user experience. With Veriff, automated AML screening and ongoing monitoring solutions help keep your business compliant, mitigate risk, and keep out fraudsters while still creating a seamless experience for your genuine users.

Enhanced security

IDV covers two bases: it verifies that a potential customer who wants to use a service is who they say they are, not a robot or synthetic identity, and it requires them to prove their validity before they can access data or systems. These basic processes alone can prevent fraud by preventing people from using false or stolen personal information to access goods, services, or products.

Improved customer experience

By delivering a safe but speedy process, companies can boost their customer experience, increase conversions, lower abandonment rates – and build their brand. Veriff guides the user through the entire process with real-time feedback and can even automatically identify the document type. This automates any data entry, creating a quicker process, and minimizing typing errors.

Intelligent data capture

With the right partner, manual data inputting can be minimized, and the risk of errors lessened with the likes of pre-filled forms and automatic document recognition.

Veriff’s intelligence data capture automatically identifies which document is being presented and guides the user through the capture process therefore the user doesn’t need to select which document they are using. 

Veriff assesses the user session in real-time to guide users during the selfie and document capture. Clear and actionable user feedback due to poor lighting, glare, cropped ID, and obstructed facial images are just a few examples of how Assisted Image Capture pre-validate and boosts first-time pass rates.

FAQ´s

1. Why is KYC important in the wealth management customer onboarding process? 

The KYC process is a crucial aspect when it comes to ensuring compliance with AML regulations. Within wealth management, the process takes place before someone becomes a customer for the first time. It ensures that the business has verified the identity of that customer and has acknowledged the level of risk the customer poses. 

2. How can digital technology enhance the efficiency of the wealth management customer onboarding process while ensuring KYC compliance? 

Today, digital AML and KYC compliance solutions exist to help companies fight financial crime. As well as supporting your KYC onboarding process, these solutions also help provide end-to-end AML compliance.

They can help you verify the identity of your customer, screen them against PEP and sanctions watchlists, check for adverse information and media, and provide ongoing monitoring.

The post Enhancing security and trust in the wealth management customer onboarding process through KYC appeared first on Veriff.

Customer onboarding is critical to creating great customer experiences. It’s about showing customers how to get the most out of your products and services, and if it is poorly handled can leave a negative impression. Research shows that acquiring a new customer is anywhere between five and 25 times more expensive than retaining an existing one, which is why user onboarding should be a priority for any business. 

Properly managed, customer onboarding will result in happy customers. Beyond that, there are other benefits to getting the onboarding process right. Happy customers are much more likely to become repeat buyers who come back to you repeatedly for the same experience. In addition, satisfied customers are more likely to tell their friends about your service – what is commonly termed word-of-mouth marketing. Consumers are also more likely to pay a premium for a service if they perceive the onboarding process to be smooth and efficient. The requirement to discover the beneficial ownership of business customers, partners, suppliers and other business relationships is growing. 

Evidence appears to back up these findings. Customers who have a positive impression of the onboarding process have much less drop-off after 21 days of being a customer compared to those who have a negative experience. In terms of revenue generation, companies that put more effort into their user onboarding were able to increase their prices by 10 percent. 

However, the customer onboarding process can expose companies to financial service risks. Many businesses are required by law to prevent financial crimes such as money laundering and tax evasion. Failure to comply can result in significant financial penalties, and, in the worst case, loss of license. So, companies are also obliged to use the user onboarding process as a means of verifying the identity of individuals and establishing their identities. 

To tackle this challenge, businesses usually follow the Know Your Customer (KYC) onboarding process. This involves establishing a customer identification program (CIP).  Although the process varies geographically, this is a 4 step workflow that involves verification processes for collecting the full name, date of birth, and address of the person. Once a company has this information, they must verify that the person providing the information is the person the information belongs to. To do this, the individual will often be asked to provide a government-issued ID and a selfie. 

Establishing the correct KYC onboarding processes is a vital part of ensuring that your business meets its regulatory requirements. However, if your KYC verification processes are too burdensome or inefficient, you’ll find that your conversion rates drop sharply. For this reason, you should consider how your KYC onboarding process can be streamlined and automated, without sacrificing anything that is a regulatory requirement.

2. What role do the key components of a KYC checklist play in enhancing user trust during onboarding?

Customers want a frictionless onboarding experience – more than three out of five users (63%) consider the process when deciding whether to purchase a service or a product. When it comes to completing the KYC process, consumers want to know that it will be quick and effective and that their data will be protected. 

To maintain user trust throughout the process, companies need to bear in mind these factors:

Verification Accuracy

An important step in the KYC process is identity verification. To prove a person is who they claim to be, they will be asked to provide proof of identity and address. Companies can expedite the process and onboard customers within a day or even hours by using an automated solution. When it comes to this step, time is of the essence – customers will give up and go elsewhere if they must go through a long and convoluted verification process.

Transparency

It is also vital that the KYC process is transparent. Let’s take the insurance industry as an example. Potential policyholders must be thoroughly screened before a policy is issued. Their identity should be established, and their risk level assessed to prevent fraudulent activities. But for the customer to have trust in the process, it must be fully transparent – they need to understand what the insurer’s requirements are and why they are being asked to share personal information.

Data Security

KYC involves the sharing of highly personal data. All this collected data – whether it involves documentation or biometric authentication information must be protected. To maintain user trust, companies should ensure that they are compliant with the General Data Protection Regulation (GDPR) and make the customer aware of this fact. The regulation obliges companies to protect the personal data that they handle and the privacy of their customers.

Efficiency

Lengthy KYC processes can frustrate customers and result in increased abandonment rates, especially in industries where fast onboarding is essential. That’s why many organizations are now moving away from manual KYC processes. Manual processing tends to be time-consuming and labor-intensive. It is easy for errors to creep into the process, which can substantially lengthen it. KYC automation, on the other hand, can have a positive impact on the customer. Automating KYC processes can significantly reduce the time to verify customer identity and assess risk. This can result in faster onboarding, improved customer satisfaction, and increased customer loyalty and retention.

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3. How do businesses ensure the effectiveness of user identity verification by focusing on the key components of a KYC checklist?

Fraud is a growing problem for businesses and consumers. According to the Federal Trade Commission in the US, consumer losses related to fraud increased by 70% in 2021 to more than $5.8 billion. Increasingly, fraudsters are stealing peoples’ identities and using them for criminal purposes, a process known as identity theft. One way in which organizations can prevent this practice is through identity verification. But for identity verification to be effective, it must be incorporated into a KYC process and handled in a particular way. So, let us look at the different components of a KYC checklist and how they inform user identity verification.

Document Verification

Identity verification involves the submission of KYC documents such as passports and driving licenses. Document verification involves checking the originality of submitted documents. Often this process involves checking document fonts, watermarks, holograms, and other security features. To save time and effort, this process is often done through automation.

Data Validation

Accurate identity verification is dependent upon the data that customers provide. That’s when data validation comes into play. Within a KYC context, data validation is the process of verifying the identity and validating data customer data before it is used. It may be tempting to skip the validation process, but it is a vital step in ensuring that accurate results are generated by identity verification.

Identity Authentication

Establishing a person’s identity can be difficult, particularly online. Identity verification helps to ensure that somebody who claims to be someone is that person. Authentication is often carried out using items that a person already has. It might involve tokens, ID badges, or key cards. Alternatively, authentication may be based on what someone is – which is why biometric information and documents are often a cornerstone of identity authentication. Whatever method is employed, authentication is a vital step in proving that a person should have certain rights and privileges – for example, having the opportunity to open a bank account. 

Risk Assessment

The purpose of risk assessment is to identify and evaluate potential risks that might arise from providing services to a particular customer. Some prospects then get inducted into another stage, which involves enhanced due diligence (EDD). EDD is intended to mitigate the risk associated with high-risk customers and involves a more detailed analysis of a customer’s risk profile.

Ongoing Monitoring

Once a customer has been onboarded, there is an extra stage to the KYC process. Ongoing monitoring allows banks to identify any unusual patterns or changes in customer behavior that might indicate high-risk transactions. Sometimes organizations are also mandated to carry out an additional stage – reporting suspicious activity. Any activity that appears odd or out of the ordinary must be reported immediately to the relevant authorities.

4. What benefits does effective user onboarding bring to businesses in terms of compliance and KYC practices?

KYC practices play an important role in combating financial crimes like money laundering. In fact, if a business fails to carry out KYC onboarding properly and does not meet its anti-money laundering (AML) responsibilities it can suffer huge fines and significant reputational damage. KYC compliance, on the other hand, can play an important role in fighting fraud, money laundering, and tax evasion.

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 5. What impact does efficient onboarding combined with KYC have on fraud prevention and risk management?

Verifying customers’ identities through KYC onboarding can prevent fraudsters from entering your systems in the first place. If ID verification is carried out properly, it should identify out-of-date, inaccurate, or mismatched information. Efficient onboarding can also play an important role in risk management – every business must protect its reputation at all costs, and KYC plays an important role in this respect. 

6. How can Veriff’s KYC tools enhance the efficiency and accuracy of the onboarding process?

Veriff has several KYC tools that can enhance the accuracy and efficiency of the customer onboarding process. 

Our powerful identity verification solution is proven to deliver speed, convenience, and low friction to users. Combining AI-powered automation with reinforced learning from human feedback, our solution supports more than 12,000 document specimens from more than 230 countries and territories. See the worldwide map here!

One aspect of the KYC onboarding process that can’t be sidestepped is Proof of Address (POA). Our POA system helps you stay compliant whilst getting a comprehensive view of a user’s identity. Users can easily capture an image or upload a copy of a POA document. The document type and issue date are then checked to ensure they are suitable and valid. Providing the document passes this test, the user can then be onboarded successfully. 

Our Age Verification solution completes our list of KYC products. Supporting 12,000 identity documents across 230 countries, it enables you to seamlessly confirm whether users are above a predefined minimum age threshold.

 FAQs

1. What is the difference between KYC and client onboarding?

Client onboarding is the process of welcoming new customers into your business, while KYC (Know Your Customer) is a process of identifying and verifying individuals. It is important to note that not all customer onboarding involves KYC.

2.  What is client onboarding in KYC?

Client onboarding in KYC is a set of processes business must conduct before taking on a customer. The procedures involve verifying a person’s identity by collecting information associated with their name, date of birth, and address. 

The post Ultimate guide to streamline client onboarding with a comprehensive KYC checklist appeared first on Veriff.

Bias can be present through the way a person interacts with a system; for instance, if a person has to understand or follow complex instructions, this could be biased against people with limited cognitive abilities. Additionally, if a process requires physical movement, like manipulating a device, this can represent bias against people with limited physical mobility, often the elderly. If a system only works on new – often the most expensive – technology, this presents bias against people with limited financial means. 

In terms of innovative digital tools, thanks to its usability, capacity to scale, and effectiveness at preventing fraud, businesses are increasingly adopting remote identity verification (IDV) for the customer onboarding process. As an IDV industry leader, Veriff is committed to creating equal access to goods, products, and services for people across the world.

However, acknowledging and tackling biases in IDV is essential for creating fair and accurate systems which are not discriminatory. To outline how we’re committed to tackling bias, we sat down with our Senior Product Manager, Liisi Soots, to detail her views of what bias is, how bias can be found in technology, and actionable steps to reduce bias.

Can you define the concept of bias and how it arises?

We see bias in everyday life when a person unfairly favors or disfavors a person, idea, object, or other matter, displaying a skewed perspective. It can be influenced by factors such as upbringing, daily environment, social group, or culture. To give an example, for many people in Western cultures the term ‘wedding dress’ evokes a white dress and veil, but not all cultures would associate that as a ‘wedding dress’.

When talking about bias in machine learning, we have to consider whether systems are biased towards or against people because of factors including age, race, gender, or disability. A system could work better for children and not so well with old age people, or vice versa. The existence of bias puts people at real risk of discrimination based on traits they have no control over, so it should be seriously addressed.

What are the different types of bias that we see in the IDV space and why are they problematic to our customers?

In addition to the biases of age, race, and gender, in IDV we have to be mindful of specific situations where bias can occur, like what kind of identity document or personal device an individual is using. For example, not everyone can afford the newest high-spec mobile phones that can take a high-resolution image. At Veriff, we already support a wide variety of identity documents and devices, and continue to expand the breadth so that more genuine people can get verified online.

Veriff operates in many different countries and industries, which means our IDV solutions have to be able to be used by a wide spectrum of people. As part of our quality assurance processes, we regularly monitor how our solutions are performing with different groups of people, for example, whether we are performing similarly for men as we are for women.

Veriff operates in many different countries and industries, which means our IDV solutions have to be able to be used by a wide spectrum of people.

Liisi Soots

What we are trying to mitigate is a difference in performance; for example, based on gender, making sure that women are getting through our IDV flow as much as men, ensuring that we are not blocking them, or people of different races. This is so that our system is equal towards everybody, no matter where they are from, or what they look like.

For companies today, it’s vital to ensure that they are able to onboard genuine customers from around the world. Failure to do so limits the company’s ability to scale, expand in new markets, and creates the risk of financial or reputational harm if customers are affected by bias.

How would you say that bias affects machine learning?

Systems including machine learning models are built by humans, therefore the bias humans have are naturally propagated to all the systems that we are building. Machine learning models have to be created using the best practices possible. We train our models with a wide range of data, making sure we gather different regular and edge cases.

If any of these areas had inbuilt bias, for example from using only a limited data set built from a narrow population or created by individuals who only had exposure to limited cultures, then there is a risk of introducing bias into the algorithms. Veriff is constantly aware of the risk of introducing bias into our systems and we consciously try to mitigate the risk by monitoring our performance and acting when problems arise.

The bias in machine learning is more relevant than when we have bias in humans as we are using models to make thousands of decisions daily. We as humans are not making thousands of decisions a day. With machine learning, we are propagating the bias to a wider context. We don’t want the systems to be biased, to be discriminating against some people. We are measuring how we are performing for different racial groups and genders and we have to make sure that we are performing equally.

What can businesses do to eliminate bias or mitigate the risk of bias?

There are multiple methods to remove bias. The first is the data that we train with: what data we are putting in the model and how we get the data. It’s really important to make sure that the data itself is not biased, that we don’t have data only from white men, but we have data from different racial groups and we have it equally distributed. 

It’s important that we have a diverse range of professionals, like data scientists and annotators, from different backgrounds working with the data, because they raise different questions and ensure that the data is prepared well. Lastly, we can eliminate bias and mitigate it by making sure that we are aware of it, that we are measuring how much bias we have in models and are making changes to ensure high quality.

Veriff uses manual document checking alongside machine learning in the IDV process. Does this help remove bias?

Putting together the automatic and manual flow helps to make sure that we provide the best service to the world. If we are not sure about an automated decision, our highly trained specialists can double-check the decision when we ask. If the investigation identifies any errors in the algorithm decisioning the response is fed back to the system as a process of continual improvement.

How close is Veriff to achieving “zero bias”?

In mathematical terms, no system can ever have zero bias. The most important approach is to ensure that we, as a leading technology company, continually monitor our systems for any evidence of bias. If this is ever found, we ensure that we have a process to promptly mitigate and rectify any issues. Additionally, there are new laws coming in place that also regulate machine learning bias and measurements.

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The appeal of emerging markets is obvious, notably Africa and Latin America. The African gaming market is forecast to hit a value of $6.8bn by 2030, almost double its value in 2021. The Latin America market is valued at around $15bn.

However, each region comprises vast populations, with dozens of cultures and languages, varying cultural and business demands, and a range of regulatory regimes. While this variety leads to a diverse range of needs, there is one common theme: to succeed, operators must optimize their processes for onboarding customers.

While this variety leads to a diverse range of needs, there is one common theme: to succeed, operators must optimize their processes for onboarding customers.

Chris Hooper

Delivering speed and security in onboarding

Veriff’s Identity Verification (IDV) is designed to make the process as simple as possible, relying on a simple selfie and a photo of a government-issued identity document. Veriff’s solutions include powerful tools for gaming operators, such as Age Verification, SSN Verification, and Sanctions and PEP screening. This ensures a safe, swift, and accurate verification process, which is vital for gaming operators in emerging markets.

IDV plays an important part in organizations achieving KYC and AML. While it is vital to ensure legal compliance, operators must also prioritize players, and avoid making the process burdensome. The right IDV approach is essentially the best of both worlds, ensuring that players are onboarded as conveniently as possible while also providing robust ID checks, such as by utilizing Veriff’s document database, ensuring that genuine customers access the platform.

Overcoming region-specific challenges

Localization will be crucial to meeting demands for speed, accuracy, and security. Operators must understand the requirements and realities of individual markets. For example, while markets like the UK may have strong, traditional credit rating databases, this may not exist in markets in Africa. In Brazil, for instance, fraud is a significant issue that operators must confront, with issues around chargebacks or bonus abuse.

It is therefore essential that operators can turn to the latest technology and access the right data and documents. For Veriff, IDV is key to the next level of AML screening, KYC compliance and player protection. This will be key in emerging markets, where younger players are driving the evolution of the gaming sector.

Realize commerical potential faster with IDV

In Africa, for example, almost 60% of the population is aged 25 or below, while more than half of sub-Saharan youths aged 17-35 have gambled on sports. These players want a frictionless experience; they do not want to spend too much time getting onboarded. When this happens, it takes longer for operators to realize commercial potential and could entail losing prospective customers to competitors.

If gaming operators want to meet these customers’ demands for speed, while ensuring the accuracy required by regulators, they must prioritize the latest advances in IDV technology.

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