Customer Identification in banking is known as KYC (Know Your Customer). The first step of the KYC process starts with identifying a customer and ends with complying other basic information like income, expenditure, tax information, foreign transaction, etc. Then the information is required to be verified by the due diligence team. According to the organizations need and the requirement of the organization, the KYC process is done by the customer relationship managers or directly by the Customer Due Diligence team. On the basis of these information institutions like banks or other company take the risk of financial transaction with their customers. So, choosing the best customer identification system or KYC tool is the most sensible decision for the organization.
Factors of Choosing The Best Customer Identification System
The following factors should be must in your checklist while taking the decision for going through a customer identification or KYC system:
- Integration with Core System:
You are using a core system for a long time, right? Migrating to another system is not only cumbersome but also a very risky project whereas there remain the chances of losing data or interruption of the service. But if you choose a cloud-based biometric identification system it’s quite simple to integrate with your web-based core system.
- The Budget of the Project:
We do believe that the budget is the most dominant differentiator for choosing any system comparing the alternatives. If you choose any on-premises system you have to develop the whole system and the budget simply goes higher. Isn’t it better to go for any cloud-based solution for your project? Just sign up, configure, and start using. You can easily save a huge investment in developing a system.
- Maintenance-Free System:
Do you like to go for a maintenance-free system or just want to be with the traditional huge and expensive IT infrastructure which incurs the cost thousands of dollars each year? If you choose the cloud-based system for customer identification or KYC process you can easily eliminate the hassle of maintenance regarding IT infrastructure. Besides, a great ROI (Return on Investment) remains secured for the institution.
The Best KYC System is a Biometric Enabled One
KYC process is a critical function for any financial institution to determine the transaction risk and monitor the behavior of the customer; it is also a legal requirement for financial institutions to comply with Anti-Money Laundering (AML) laws. Let’s have a look at the steps of KYC which are necessary to be performed smoothly with the customer identification system:
Step-01: Customer Identification Program
The minimum requirement to identify a customer is his/ her name, date of birth, address, social identification number, tax identification number, the source of fund, etc. This information is supposed to be linked with the due diligence of the customer for the KYC process. For accurate identification, a biometric system is the best option till today, which is not transferable, and extremely complex to be forged.
Step-02: Customer Due Diligence
This is why customer identification is important in the banking industry. Customer due diligence is the process of determining the financial risk with the customers effectively and managing the risk to protect the institution from fraudulent and criminal activity. Three different levels of due diligence termed as Simplified Due Diligence (SDD), Basic Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD) is extremely dependent on the identification of the right customer.
Step-03: Monitoring Transactions
KYC process is just not like identifying the customers and determining risk but extended to monitor the transaction patterns of them. Spikes in transaction patterns, unusual cross-border activities, inclusion or exclusion of the authorized persons, changes in any required information are strictly monitored by the system. All of the monitoring processes start by identifying the right customer.
To conclude, in the banking industry customer identification is undoubtedly a sensitive factor which directly reflects on the KYC process as well as the financial risk of the institution. Why should you go for other identification methods whereas the biometric identification is the most-secure system?