Almost one in two (49 per cent) fintechs have identified KYC or Know-Your-Customer checks as their top challenge, according to the Rethinking Fintech Customer Experiences report. The report was launched by TDCX, (NYSE: TDCX), an award-winning digital customer experience (CX) solutions provider for technology and blue-chip companies.
The KYC challenge affects even the most established fintechs, with nearly four in 10 (37 per cent) 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. In a similar vein, 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 per cent). This was consistent with findings from a separate survey1 that more consumers abandoned financial service applications due to lengthy forms and excessive personal data requests. While it is compulsory for fintechs to collect customer information, complex onboarding processes can deter potential customers.
Mr Ricart Valvekens, Chief Client Solutions Officer, TDCX, said, “KYC has become a key focus for fintech companies. 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.
“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.”
Data analytics an area of opportunity
The report also found that only 21 per cent of fintechs use data analytics to support their KYC processes and 35 per cent of them outsource their KYC processes. Fintechs were most focused on using data analytics for personalized marketing (55 per cent) and helping customers make financial decisions (40 per cent).
Mr Valvekens said, “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. We have also observed that more clients are looking for ways to drive business performance through transformative CX solutions. To that end, we recently launched our digital CX Center of Excellence to provide greater support to our clients. One of our goals is developing best practices in data science and analytics to help businesses enhance cost efficiency.”
One of the companies that has tapped TDCX for its KYC needs is a global payment gateway provider. TDCX supports the company in hiring the right talent with the requisite skills to conduct KYC checks and enhanced customer reviews. With TDCX’s support, the company has been able to complete its KYC processes more quickly, translating to a 20 per cent increase in productivity.
The TDCX Rethinking Fintech Customer Experiences report aims to understand the latest fintech strategies and challenges regarding customer experience. TDCX surveyed 200 senior fintech executives globally from September to October 2022. The report is available for download here.