KYC | Know Your Customer.
Historically only one industry has been forced to get to know their customer, financial services. Originally created to introduce an industry standard for the prevention of various financial crimes, today the Know Your Customer (KYC) frameworks around the world are seen as a risk and compliance rather than an attempt to truly understand a customer. KYC has become a regulators way of balancing the privacy of the public with the need to flush out identity theft, cheque fraud, money laundering and appropriation challenges. But has KYC gone too far into the void of risk management and compliance? In this information rich age, do banks need to rethink their approaches to ‘getting to know a customer?’ This might be important given they control one of your most value assets, your money.
Interestingly, over the past decade we have witnessed the proliferation of connected networks that distribute information and services at rates never seen before in history. Wikipedia has accelerated into the position of the number one Encyclopedia , Amazon has moved into a dominant position in the retail space, and iTunes has revolutionised the entertainment industry. Which leaves us to some challenging questions… in the modern world which service providers know you best? Does Google understand you better than your bank?
One of the mega trends of the post dot com errer, was the creation of a consultancy driven agenda on Customer Relationship Management, or CRM. A theory meant to revolutionise the way an organisation collates, manages, understands and acts when it interacts with its customers… but has it? Have you ever tried calling your bank on your birthday just to see if they realize its your birthday? I have a few times throughout my life, even had a laugh when a call centre operator used my date of birth to verify my identity, but still couldn’t see it.
Lets take a simple example… yourbank.com versus google.com. Statistics suggest the digital consumer visits both in equal portion. Yourbank.com will always show a generic broadcast landing page, showing no understanding of the visitor, whether your a return customer or a first time visitor. Google on the other hand uses intelligent analytics in an attempt to tailor the visitors experience specific to their context, which includes language, geographic, historical and search pattern optimization. What’s preventing a bank from optimizing their homepage based on some of these simple criteria. Given the benefit, you’d think it would be a priority. Imagine Geoff, a single white male in his late 20’s that regularly travels the world, enjoys a social lifestyle, frequents places that suggest a degree of affluence and has started browsing the internet for investment options. All of which is possible today. So when he lands on yourbank.com instead of getting a generic product and company page, he is presented with optimized information tailored to him. An invitation only platinum credit card and an invitation to chat with one of the bank financial planners.
It comes down to a simple challenge… Is KYC about risk management or understanding the customer? Should regulation be the only reason we collect and utilize customer information? Granted there are basic needs for verifying a customer. But as an industry of practitioners do we need to think differently about deepening our understanding and engagement of customers in this information rich world?