The widespread use of technology, especially the internet, which is increasingly rife in everyday life requires humans to apply standards and boundaries that are useful to prevent fraud, one example of this is the use of CRM systems by companies to manage customers and the use of KYC to find out customers more deeply. Broadly speaking, KYC is a practice that companies do to verify the identity of their clients in accordance with applicable legal requirements. Automated identity verification has emerged as a powerful and efficient solution to streamline the KYC process. By leveraging advanced technologies like artificial intelligence and machine learning, companies can now verify customers’ identities swiftly and accurately. This automated approach not only enhances security measures but also reduces manual errors and expedites onboarding procedures, leading to a more seamless and customer-friendly experience. Firstly practice step is the relationship between the client and the company.
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To learn more about KYC, see the explanation below which discusses its meaning and benefits.
You Must Know Your Customer
KYC is the process of identification and verification of the identity of a client in which a series of controls are applied to avoid having commercial relations with dangerous people associated with crimes such as terrorism, corruption, and money laundering. The process includes verifying that clients are who they say they are and then granting access to the product or service they need. You can verify clients using identity cards, documents, or biometrics.
Although it can apply in various sectors, KYC is usually relevant in the world of finance and banking as well as related fields, such as insurance, real estate, and trading. Doing KYC can be offline or online through e-KYC, which is a remote and paperless process to reduce costs and avoid the bureaucracy that usually takes a long time. In addition to KYC, the use of ERP software also reduces operational costs and saves time.
Related article: Customer | Definition, Types, and Characteristics
Benefits of KYC
Client identification and verification before establishing a business relationship certainly get benefits to the company, including:
1. Help lenders carry out risk assessments
Before giving a loan, you must do a background check to ensure the recipient is trustworthy and eligible for a loan. Therefore, KYC assists you in identifying the financial and asset history of potential recipients.
2. Prevent fraud
Many frauds occur because of identity fraud. By doing KYC, you can check if the client’s identity is what they say they are. Implementing an automated KYC solution is a crucial step in developing a robust strategy to avoid fraud
3. Steer clear of money laundering and other criminal acts
Money laundering is the illegal process of making large amounts of money generated by criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source.
4. Bring stability and investment to the country
If financial institutions are able to carry out their duties as collectors and distributors of funds properly, then public trust in the financial framework will grow.
5. Able to provide more loans
A good reputation causes financial institutions to be trusted to provide loans to many people. This certainly adds to the profits of financial institutions as well. Another way to increase profits is to use technology to maximize sales, for example, the use of Sales Management Software.
The mode of crime is becoming more sophisticated as time passes. Therefore, you must strengthen your security by implementing KYC to prevent fraud by clients that can harm your business.
Another goal of implementing KYC is to maintain the relationship between the client and the company. These relationships are important for the survival of your business. For easy relationship management with customers, you can use CRM Software from HashMicro. Our CRM software has various features, such as sales pipeline management, revenue forecasting, and sales report generation, which help you to increase customer retention and lead conversion. You can start HashMicro’s CRM Software demo for free now.