KYC Decoded:5 Ways To Know Your Customer Trust

Do you know your customers and their trust for that sake? By any means, you ought to, especially if you are an FI (financial institution). That's because, as an FI, the blame is all yours in terrorist financing and money laundering, practices often done by those you think are genuine customers. You could face reputation damage, sanctions, and fines if you aren't cautious about the trust of your customers.

In this regard, KYC in full Know Your Customer is the trending pursuit that protects organizations from losses and fraud caused by illegal transactions and funds.

Practically, KYC helps organizations to:

• Determine customer identity
• Assess money frauds associated with a typical customer to help monitor the customer's money practices.
• Ascertain that the primary source of a customer's money is legitimate.

As well as preventing exploitation by criminal customers and determining their trust, KYC can promote your reputation to potential new clients for the confidence that your operations are legal and genuine.

This article unravel five ways to understand and determine your customer trust. But it'll first explain the concept of KYC.

KYC And Why It Matters

The best way for FIs to fight online fraud, especially amid widespread internet usage and technology advancements, is to assess client intent and identity before opening an account. Monitoring should continue afterward if you've been confident about a typical customer and have opened an account with them. This applies to all other finance-related sectors like crypto, insurance, and real estate. Every supposed customer should comply with the Know Your Customer protocols.

Generally, it's so that you can avoid suspicious activities and irregularities that can adversely affect your practice. Let customers provide proof of identity, personal documents, factual verification, address, and everything else that supports their genuineness.

You can automate the screening process using KYC compliance software while upholding regulatory compliance.

5 Ways to Know Your Customer Trust

1.Collect Meaningful Data

It's one thing to collect clients' data, and it's another to collect meaningful data that confirms that the client is indeed who they say they are. Too many customer details can lead to data waste resources and discourage customers from registering.

Again, identity theft is a dominant issue, affecting about 15 million people in the US and accounting for over $24 billion stolen in 2022.

So, know your customer regarding who/ why/ how/ and if data plus validation documents are necessary to ultimately know their trust and save your practice from risks.

2.Check Reviews

This is a good way to understand customers' thoughts and takes on your brand and services. Of course, good reviews are what every business wants, but the bad ones are equally important. The bad ones depict where improvement is required and whether customers believe in your offer, a convenient way to assess their trust. Subsequently, you can adjust where necessary and fit the expectations of most clients.

3.Monitor Customer Behavior

Besides knowing your customer during registration, keeping track of their behaviors, whether online or not, is necessary. This is so that you can be aware of red flags and risky behavior before getting to you.

Use digital resources and tools to Know Your Transactions, KYT. Ideally, implementing KYT keeps you ahead of financial crimes and KYC requirements compliance.

4.Create Comprehensive KYC Policies

A comprehensive policy detailing how customers are onboard and what is required of them before and when onboard is paramount to knowing customer trust. Adding ways in which customers can report suspicious activities, plus ongoing policy monitoring, is a good way to know your customers.

While at it, ensure you are informed on regulatory updates to make policies at no risk of noncompliance.

5.Conduct Sanctions Screening

Another effective way to know your customer's trust is through sanction screening. It involves comparing the customer details with sanction lists and international watchlists maintained by regulatory bodies, international organizations, and the government.

The KYC process becomes more efficient through sanction screening because you can profile a typical customer with the correct information. Ultimately, financial crime cases will be low while putting you compliant with laws and policies.

This process is better conducted in the initial stages before registering anyone and subsequently after that.

Conclusion

It's good to know your customers' trust for two reasons: To ensure you're engaging with people with clear intentions and to determine your deliverable plus how happy and competent you are, i.e., how customers trust your services.

No business of any form or establishment should determine the customers' trust as it profoundly impacts how you run, the decisions you make, and how likely you are to make losses subject to financial crimes. Through collecting meaningful customer data, checking reviews, monitoring customer behavior, creating comprehensive KYC policies, and conducting sanction screening, among other ways, you can ultimately know your customer trust.

Moreover, it will help you stay compliant and current with the trends in customer dynamics and your business.