KYC and the Battles Behind Closed Doors

The Big Banks are battling between KYC providers like Swift and Bloomberg, while KYC providers battle on the tech.

Know-Your-Customer (KYC) may just sound like another acronym, but its reach affects us all…literally.

KYC just means that you are handing over some bits-and-pieces of your information to validate and confirm your identity. But, the way your information is seen, processed and billed varies from each individual entity that requires the KYC process.

KYC Can Get Confusing

It seems that every offeror of KYC services has their own twist on the product and edge to make theirs better. Providers offer things like Email Risk Score, Social Media Scores, Correlation Scores…just to name a few. But, are these products really better and worth the extra cost to your bottom-line?

These fancy terms really just offer a marketing phrase on your digital footprint from places like Facebook, Twitter and marketing portals that collect your data.

Businesses then package up your data usage on things like how you access their platform, what time of day and location-based insights. This can be known as “mobile SDK data” and almost every tech company sells this for extra revenue.

We recently released a video on Linkedin that caused a lot of confusion why basing your initial due diligence for your Initial Coin Offering (ICO), Security Token Offering (STO), using just social media scoring KYC was improper.

Offeror's of digital tokens thought this as the “least-friction” way to check an individual and move into the fast-cash ICO earnings.

This method can be effective, but only as part of a comprehensive check for your customers. Not to be relied on without one or the other.

Artificial Intelligence To Fix KYC Costs and End the Battle

Our team has been applying some unique solutions in architecting a better KYC for banks and users alike.

This means relying on some of the newest AI logic to build around patterns in images and distances between text to isolate fraud. These systems are not only better than just using social data to build identity, but will allow us to build new datasets based on anomalies that would have been almost impossible to track before. Coupling this with logic to trace behaviors that are risk-prone, will also help aid in making the ultimate KYC solution.

A study done by SparkToro found that more than 60% of President Trump’s followers or about 33 million accounts were deemed fake by the algorithm it created to sniff out fake accounts. Whether or not you believe these created rules, it is something to ponder about.

SparkToro Criteria for evaluating Twitter Profiles

The critics will say that relying on one-two-three of these examples does not prove anything. But, the likelihood of 10+ criteria being met on a profile, heavily reduces the chance of that account being real.

As AI and Machine Learning grows, so will the data-points. Providers can at least let businesses choose how much risk and what data they want to accept. The whole picture is better than a half right?

Where does this leave the biggest buyers of KYC, the Banks?

Each bank has a different approach. Some banks have global teams that handle KYC compliance, whereas others have local teams that work on it.

During the latest meeting of AFP’s Treasury Advisory Group (TAG), bankers in attendance explained that it would be ideal if “every one of our clients went onto one KYC utility.” However, banks can’t push for one third-party solution over another. “We can’t push over Bloomberg or SWIFT,” he said. “It would save us millions and millions of dollars and so much time and hassle. But we’re not pushing any particular solution.”

As a provider in this space, our team saw this issue after researching and speaking to banks globally. We decided to first take two-steps forward in a consumer driven approach. While we aim to bring the lowest cost KYC on the market, we wanted to give the consumer protection first then work in reverse. We started with using a technology called blockchain, this allowed us to reach a large audience of data-conscious customers, while applying a hashed and metadata based identity for KYC.

What all of those big words really mean is that we decided to force adoption to banks to a single solution by packaging up KYC use easily for their customers.

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Currently, banks’ customers go to different institutions and are KYC’d each time. The institutions absorb each cost with no value-added to their customers.

Our aim is that users will go in and ask “Do you accept the Bridge Passport?” Combining this with lower cost and better KYC solutions, it will open the door for a growing business model.

Undoubtedly, breaking into institutions processes that are almost as old as the United States makes educating a priority. But, combining the newest technology and cost-reduction is a universal language that any profitable business will entertain.

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