Know Your Business (KYB) is a verification process performed by regulated organisations on other companies they want to do business with. (KYB) is the due diligence review of a company or a business that a financial institution like bank deals with - it can be a customer, partner, supplier or any other entity.
KYB process is intended to help prevent identity fraud, money laundering, terrorist financing or other criminal activities. It is also intended to protect the financial institution from such activities.
Automating KYB is a challenge for banks and financial institutions. There are many hurdles that need to be overcome. The biggest challenge is that business data needs to be validated against various data providers depending on the stage of the KYB chain, either to get organisation attributes or to run checks. This brings a myriad of technical challenges during integration, maintenance and synchronisation.
There is also the challenge of existing manual paper-based operations which banks and financial institutions struggle to replace. As with any manual process, there are human-induced errors which further complicate and slow down the KYB process.
Moreover, the ever-evolving risk profiles of companies and changing regulatory specifications induce more complexity to designing an automated KYB process. And finally, there may be situations requiring human intervention, like managing back-and-forth with customers and reviewing unstructured documents.
These challenges in automating KYB are today being solved by new technology companies around the world. Laboremus has automated the KYB process for banks and financial services companies in Africa.
What is Automated KYB and how does it work
When done right, automated KYB (Know Your Business) streamlines and accelerates the onboarding and identity verification of corporate customers. You experience faster processing times and more reliable data with minimal human error and excellent regulatory compliance.
With automated KYB financial institutions like banks, insurance providers, and micro-finance companies can more reliably prevent financial crimes such as money laundering, fraud, and terrorist financing. KYB also ensures compliance with relevant legal and regulatory requirements.
A reliable, automated KYB process should have the following attributes for it to be a useful mechanism for banks and other financial institutions:
With Laboremus' automated KYB, verification process is handled automatically and can be completed in just minutes. Business owners are verified, using comprehensive verifications and reports, including central business watchlists, KCCA and URSB database, TIN verification, and more.
Financial institutions can set up custom logic post these automated KYB verifications. For example, if you want to prioritise conversion, you can automatically trigger an email requesting more information if there’s no match against a business lookup report. Or, if you're focused on rooting out fraudulent businesses, you can set up ongoing monitoring against international watchlists.
A properly working automatic solution can perform the identification process, including all the necessary checks, much faster than if a human must do everything. To perform its job properly, the system operates in a large ecosystem of identity verification and trusted international data sources. This allows it to automatically identify datapoints like addresses, possible sanctions, directors as PEPs and Ultimate Beneficial Owners (UBOs). By integrating automation with existing workflows, the potential for human error is greatly reduced.
Then there’s the aspect of cross-border potential. When your business expands to new markets with their country- specific legislation, a properly automated digital system will be able to operate in your new environment just as reliably as it does in your other well-established markets.
Benefits of automated KYB for banks and financial services companies
Laboremus implements a detailed, automated and digital KYB process that delivers 3 major advantages:
First, you can create a reliable structure to your onboarding process. If you use paper forms, which are manually assessed, your customers can add whatever notes they want or they might forget to fill in important details. With digital forms, you can make sure that all the necessary information is filled before the user can proceed to the next part. This also allows you to perform quality checks on the information already while the form is being filled.
Second Easy digitisation of customer data. For example, when the user types in their organisational number, you can automatically fill in the name of the organisation and the address based on information received via an API. Unlike in the paper world, everything doesn’t have to be filled manually. Besides making things faster, this reduces the chance for human error.
Third advantage is that national borders tend to matter less and less in the digital world. Let’s say you are onboarding a corporate customer, and you must find out the UBOs. In the world of manual onboarding, you might have to ask for a passport copy from an owner in a different country to be delivered by a courier company. In the digital world they can scan their ID, sign it digitally and deliver it in real time. Getting hold of data is less of a burden for everyone.
1. Easy to onboard new customers
Depending on the product or service you are offering, having a clunky and outdated onboarding process can really hurt your conversion rate. This is especially true if your industry features tough competition. In 2019 alone, the global commercial banking market lost an estimated $ 3.3 trillion because of unfinished attempts to onboard corporate customers.
2. Faster and cheaper
As we have already discussed, automated digital identification makes onboarding faster than if everything must be done by hand. It also reduces cost since employees don’t have to manually gather and fill all the information. Instead, your personnel will have time to focus on other important tasks. On top of that, faster onboarding makes your customers happier. You can start doing actual business right away instead of suffering long waiting periods.
3. Pre-filled forms
While checking for company information, an automated identification system can speed up registration by auto-filling much of the company’s information onto your forms. The easier the onboarding process is for your customers, the less likely they are to drop off.
4. Regulatory compliance and security
An automated solution must be able to fulfil the highest level of compliance. This can be achieved by working with an experienced provider that has in-depth understanding of local markets, uses trusted international data sources, and follows regulations and industry best practices. This also allows you to easily expand cross-borders.
5. Identify UBOs
You need to be able to identify UBOs across borders and jurisdictions. Having access to trusted global data sources is the first step. The second step is to calculate ownership of shares and true control of an organisation, including voting power. Laboremus' solutions take away the complexity from UBO identification.
By connecting you to trusted third party registries, you get easier access to information. You can validate and enrich identity data on both personal and organisational level. This includes many features like names, addresses, financials, company registration data, incorporation data, sanctions, PEPs, business roles, ownership, and authorisations. Lookups work seamlessly across borders. Laboremus does all this through a single API.
7. Brand management
Doing business with the wrong people or entities can do massive harm to any company’s brand reputation and risks their entire business. A proper KYB tool helps you to make sure you don’t accidentally create business ties with anyone under sanctions which could lead to serious consequences. Even “just” getting caught under an avalanche of bad press is no joke and will hurt any business. Don’t lose the trust of your customers and the public.
8. Maintain a happy relationship with your current customers
After you have successfully onboarded your customers, it’s time to begin the second chapter of your relationship, to do business. With Laboremus' solutions, you can continue to offer your customers the same kind of frictionless and trusted service they already experienced during onboarding. Here’s how.
9. Simple login and authentication
Simple login means a smooth customer journey, but it doesn’t mean lack of security. By applying a multi-factor login with techniques like electronic IDs (eIDs), biometric scanning, a dedicated mobile app and SMS/email one-time-passwords, you can make unauthorised entry nearly impossible while still allowing the right users easy access.
10. Effortless payments
Proper digital identification makes payments both effortless and safe. It helps you avoid frauds, even sophisticated ones, where money isn’t either coming from or going to the bank account it’s supposed to go.
How Laboremus automated KYB helps financial institutions in Africa
Streamline by Laboremus helps banks and other financial institutions meet KYB compliance requirements while speeding up the onboarding process. You can onboard new customers online by doing an identity check automatically in real-time as part of your digital onboarding. And you can go deeper to identify who has signatory rights, who are the various shareholders and who are the decision makers.
Over 40 financial institutions in Africa use our identity verification, digital KYC/KYB and customer onboarding solutions.
We help our customers experience the following benefits that power their growth:
Do cross-border business seamlessly: turn a challenge into an opportunity by choosing one supplier that supports your market expansion ambitions by easing local regulations with compliant solutions for all markets.
Grow your business: 68% of potential end-users leave due to a poor onboarding experience. Choose the right technology partner to streamline your KYC/KYB and AML-compliant onboarding processes across channels and borders and watch your conversion rates take off.
Provide digital and secure customer engagement across channels with low friction: an easy login is the key to a smooth multi-channel customer journey. By implementing a seamless and secure digital identity journey, you can increase the digital engagement with your end-users and thereby also improve your retention. Get multi-factor login with electronics IDs, biometric scanning, SMS / email / OTP or a dedicated app. While also meeting all compliance requirements.
Reduce complexity, while saving time & money: It can be challenging to keep up with the rapid pace of technological and regulatory changes for digital identity solutions - and the security requirements that come with it. Outsourcing the development and management / operation of digital identity, authentication and signing solutions to a full-service Digital Identity provider with high regulatory and technical expertise, can save you money and time.
For further information about Laboremus and our digital KYC and KYB solutions, please visit www.laboremus.ug and connect with one of our product experts to understand how you can automate Know Your Business (KYB) for your organisation.