Know your customer or KYC might seem like an obligation on businesses but that’s limited thinking. You, as a business, should see the upside. You do not create or market an item unless you know your customer. Right? Customer information is priceless for businesses. Sell them what they need not what they might need.
How can businesses profit from KYC?
Think of this government regulation (regarding KYC) as a marketer. Banks ask many questions from the customers before opening their accounts. They already acquired a lot of customer information. They can utilize this information to market their products.
If your bank account balance exceeds a certain limit, they offer you credit cards and other investment products. Simple! The more you know your customer the more tailored products you can sell them.
Companies, in general, know this strategy but to implement it can be challenging. Plus you can retrieve only a certain amount of information without annoying the customer. Records show that many customers leave before finishing an account opening form online.
This sword cuts both ways. Gathering useful information about customers can increase revenue but it also deters people from signing up. No one likes to fill long forms with personal details. And sometimes the form filling process can get complicated. Some might not understand how to correctly answer questions, which is the main reason they leave in the middle of an onboarding process.
The key to streamlining the onboarding process is to have an immaculate and truly user-friendly interface. Perhaps ask information in chunks. And keep analyzing user behavior. See where they are falling off the process. Then fine-tune it or change it.
This will not be easy for every business, especially when it is heavily invested in its core operations. Segues can cost an arm and a leg or disrupt the main business. An obvious solution is to outsource it.
But to whom?
Ask the CEO of a bank to share its customers’ data with you and you will see a petrified face staring back at you. Customer confidentiality cannot be compromised. That will not only be a breach of trust but it could also attract legal action. Banks should find services that are credible. To find one, you should look at its existing customers.
If it is serving a wide range of clients it is a good indication. If the list contains businesses that deal with customers’ money such as banks and investment firms then it is a sure sign of compliance. Read the policies and the fine print of different services and find the best KYC solution.
What to ask the customer?
Besides the mandatory KYC regulations, businesses can give the option to customers to share more information. This could help the company decide if the customer would be interested in a particular product or service. Email and phones are the basic facets of information but adding optional information such as interest in travel or technology can help companies in knowing their customers better and offering them tailored solutions.