About half (49%) of fintech firms have identified KYC or know-your-customer checks as their top challenge, according to the Rethinking Fintech Customer Experiences report from TDCX.
The digital customer experience (CX) solutions provider for technology and blue-chip companies surveyed 200 senior fintech executives globally from September to October 2022.
Findings show that the KYC challenge affects even the most established fintechs, with nearly two in every five (37%) mature fintechs echoing the sentiment.
This could be due to the lack of a uniform global KYC standard and increased financial crime compliance requirements in global sanctions.
For example, TDCX observed that the KYC process is hampered when documents such as identity cards are not shared in a consistent manner (photo vs scanned, colored vs greyscale), resulting in back-and-forth correspondence which sets a poor tone for building good customer relationships.
Also, underinvestment in technology continues to hinder the onboarding of new customers.
Other key challenges for fintech leaders that were mentioned in the report were the need to maintain sufficient operating hours, a worldwide client base and the availability of quality, responsive services.
Fintechs with a business-to-consumer focus found it more challenging to manage KYC (55%). While it is compulsory for fintechs to collect customer information, complex onboarding processes can deter potential customers.
“Not only is KYC essential for regulatory compliance, it is an unavoidable part of the customer onboarding process which will either lead to a seamless customer experience or a highly frustrating one,” said Ricart Valvekens, chief client solutions officer at TDCX.
“With the amount of required information for due diligence increasing exponentially over the past few years, fintechs are looking for ways to balance the need to provide their customers with speed and convenience while remaining compliant,” said Valvekens.
Further, the report found that only 21% of fintechs use data analytics to support their KYC processes and 35% of them outsource their KYC processes.
Fintechs were most focused on using data analytics for personalised marketing (55%) and helping customers make financial decisions (40%).
“While it is unsurprising that fintechs are dedicating more resources to revenue generating activities, it would be beneficial in the long run to leverage data analytics to enhance their KYC processes,” said Valvekens. “We have also observed that more clients are looking for ways to drive business performance through transformative CX solutions.”
To this end, TDCX recently launched their digital CX Centre of Excellence to provide greater support to their clients. One of the goals is developing best practices in data science and analytics to help businesses enhance cost efficiency.