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We are in a digital age, that's for sure. And that affects customer onboarding processes too. Companies from various sectors, including banks, e-commerce websites, public transportation, and payment systems, digitalized their customer onboarding processes. Because customers adapted to this change well. Opening an account can now be easily handled online, so why need to go to the branch?
Of course, to use this convenience securely, it's essential to be sure about customers' identities. When verifying customer identities, companies can choose one of two paths: managing this process with their internal resources or outsourcing it to a professional identity verification company. Both approaches have their advantages and disadvantages. In this article, we aim to help you understand which option is better for your company by detailing these pros and cons.
Creating a KYC solution with your internal resources may seem quite appealing, especially for large corporate companies. Firms that already employ software experts believe they can manage this process as they wish. However, it's not as easy as it seems.
Full Control: The company retains full control over the KYC process and can shape it according to its needs, making quick adjustments when new requirements arise.
Lower Costs: Managing processes with in-house resources is undoubtedly more cost-effective. However, the cost-effectiveness of this method depends on factors such as the company's transaction volume, required security level, frequency of attacks, and expertise.
Time Cost: KYC processes can be complex and legally intricate, varying across regions and sectors. Learning these processes from scratch, understanding the legal requirements, and creating a risk map can be time-consuming for those new to this field.
Personnel Costs: Even if the company's staff is experienced and well-educated, managing KYC processes requires specialized personnel based on its nature. Employees need to be experienced in both legal and software aspects. Employing such competent individuals or providing employees with the necessary training and certifications can be costly in the long run.
Compliance with Legal Regulations: Due to evolving technology and emerging risks, national and international legal regulations in identity verification are frequent. Managing KYC processes in-house to comply with these regulations can be challenging, especially for companies operating in different countries.
Data Storage and Security: Ensuring compliance with legal regulations for storing customer data and finding cost-effective solutions for data storage can be another challenging workload.
A considerable investment may be required for servers, databases, security software, and other technological infrastructure.
Audit Processes: KYC processes are frequently audited for compliance with legal requirements. To pass these audits, companies either need a legal department or legal consulting.
As mentioned above, these problems can vary depending on the company's size, industry, location, and the complexity of the identity verification process. Before making the decision it is crucial to consider the company's specific needs and requirements.
Outsourcing KYC processes to a partner like Techsign offers several advantages. It reduces time costs, enhances security, and helps establish a more prestigious brand.
The benefits of outsourcing KYC processes include:
Expertise and Experience: These identity verification companies already know well about the risks in your industry and the roadmaps to be followed. So you don't need to experience everything yourself and can save time and effort.
Security: Companies specializing in identity verification are well-versed in various attack types, and commonly used methods. In other words, they know the fraudsters and their ways. When it comes to cybersecurity, the strength of the security wall is directly proportional to the data flow.
Cost Savings: While discovering the most appropriate identity verification method, security gaps may occur, resulting in financial losses for companies. Working with professional cybersecurity firms eliminates this risk.
Legal Compliance: Legal compliance is a critical component of identity verification processes. A professional KYC service provider knows well about current regulations in your country or region and can guide you on the necessary services and methods.
Data Security: Cybersecurity companies providing KYC services ensure the privacy of your customers' data by national data protection laws. You won't have to worry about this aspect.
User Experience: Companies specialized in identity verification understand industry users and their needs. They can assist in providing better experiences for your customers and strengthening your brand.
The volume of your company's transactions, the industry you operate in, the potential for attacks on your identity verification processes, and your growth plans are critical factors in determining which path to take. When making this decision, consider the following points:
Transaction Volume: Your monthly transaction volume is closely related to the identity verification method you choose. Companies with low transaction volumes and local customers may perform identity verification manually. However, some of Techsign's customers perform more than 5,000 identity verifications daily. They choose to outsource this service because they don't want to handle the workload of manual identity verification and manage a dedicated department within their organization.
Industry Requirements: The likelihood of attacks on systems varies by industry, and therefore, legal regulations and requirements also differ. Before selecting an identity verification method, gather information about how attacks affect your company and the methods used by similar businesses.
Future Plans: Your company's growth plans, especially if you plan to expand internationally, should be included in your decision-making process. Switching methods at a critical time can be problematic.
In conclusion, when deciding how to manage your KYC process, careful consideration is essential. A professional KYC service provider like Techsign can guide you in making this decision. They can provide a customized solution for your specific business needs and help you keep your customer data safe. To get in touch with Techsign, you can visit our KYC page.
