According to a Thomson Reuters survey, an average bank spends £40 million a year on KYC compliance. KYC stands for know your customer—a mandatory procedure of crucial importance for banks that enables money-laundering prevention and helps limit fraud. It includes verification of ID, face, documents (e.g., utility bills as proof of address), and biometrics. With the current KYC banking processes, we have substantial duplication of effort between banks and third-party institutions. On top of it, customers have to pass the KYC procedure every time they want to work with a new bank. We decided to tackle this problem by developing a service for sharing KYC documents.
Our solution was the Open Banking track winner at FintechNations Hackathon 2021, which focused on finding solutions to banks’ service- and platform-related challenges . Supported by Microsoft for Startups, Payoneer, Visa, MasterCard, Facebook, and other major companies, the hackathon attracted almost 300 participants.
Solution for KYC cost optimization
Our KYC document sharing service enables the exchange of customers’ KYC documents between banks upon confirmation from the customer. As a result, it can save banks millions of dollars they spend on KYC procedure and regulate KYC costs. For instance, a bank (BigBank) runs the KYC procedure for the first time, say, for some Bob Fisherman, and spends some money on that. Another bank (TinyBank), in which Bob Fisherman also needs to pass KYC procedure to open an account, can request permission from Bob to get his KYC docs from BigBank, which has already run KYC on Bob. TinyBank will pay a fee for the exchange of KYC docs, so BigBank can get compensation for the effort it took to run KYC on Bob. Bob thus will not have to pass the KYC procedure multiple times, which makes for a much better customer experience, and the banks can optimize their KYC procedure costs by requesting customer KYC docs from another bank.
How did we built it?
First, we did our research online to find out the problems banks have. This is how we found out that banks spent too much money on the know your customer procedure.
Then we conducted user interviews with fintech guys and lawyer acquaintances to verify our problem hypothesis. Having verified the problem, we started brainstorming a possible solution, which resulted in user journeys for two types of users:
1) banks that run KYC and share the docs
2) their customers that upload the docs and grant permission for sharing
What’s next for KYC docs sharing
We definitely need to put more work into making the process of document sharing more secure, since it’s sensitive data that we are talking about.
It’s just one example of the solutions we have built for the fintech industry. If you are looking for the best solution for your fintech business, we at Broscorp would be happy to help you boost profits through the integration of the latest technology with developing custom software.