Tobias Neale, Head of Delivery at Contis


FinTech is an industry of constant change. In many cases, this change has led to wonderful technologies to make the financial lives of consumers easier and more enjoyable.


However, companies in the FinTech world have to be rigorous in the pursuit of ‘knowing their customer’. All companies with financial responsibilities must follow the guidelines set out by the FCA (Financial Conduct Authority) whenever they receive a request for an application.


It is crucial that FinTech businesses do their utmost to check applicant identities. This helps cut crime, fight fraud, and stops mistakes. Overall, it should help to lower costs and streamline the business operations that consumers can’t see, in order to provide those things they can: Lower costs and better services.


This process can be categorised into several different areas, but the four main points are:

  • Risk management
  • Customer due diligence
  • Transactional analysis
  • Potential for product misuse

Most financial institutions use three different stages of gaining the information required to judge an application. These boil down to three different degrees of accessing information:

  • CIP (Customer Identification Programs) – These cross-reference data from an applicant’s official documents with government data in a bid to confirm an individual’s identity. Artificial Intelligence has had a part to play in the security of this process, as self-learning algorithms allow quicker approval.
  • CDD (Customer Due Diligence) – The use of the above analytics combined with a deeper social analysis. This includes using social media as a way of analysing customer transaction data and financial responsibility.
  • EDD (Enhanced Due Diligence) – This combines the use of both CIP and CDD with the added emphasis on decision-makers. Every recordable piece of data around people’s profiles will be compared as to ensure companies are getting the full picture of the individual they are releasing finances to.

It is important that disruptors still use these processes in order to prevent fraud.

This is not only for compliance and security. If FinTech startups are subject to fraud due to inconsistencies in (know your customer KYC) processes they will tarnish their reputation as a secure financial provider. There could be legal repercussions for companies who do not enforce KYC laws.

The majority of high-street banks will use a mixture of human and digital processes in order to confirm identities. The nature of this process has the potential to cause friction as these security steps standing between the customer and their goal. This is something to address and explain, but not to be feared.

The nature of operating systems means that if a customer’s background undergoes a number of speedy checks and does not match the requirements needed to be granted an account, then they will be automatically rejected. However, all customers are given final sign-off by a human, someone who is able to recognise differences in spending patterns over time and apply common-sense on top of ‘computer sense’.

To streamline the time it takes to set-up accounts with digital account providers, FinTechs are using complex software to track digital footprints and cross-reference this with government records to confirm identities. Companies such as Monzo have taken this a step further, requesting an applicant take a video on the device they have used to register in order to confirm their identity. Whilst many still consider these processes to be frustrating, they are significantly quicker than the processes undertaken by the legacy banks.

Innovation within the technology industry should allow electronic KYC to be further streamlined. One example is software such as the one used by digital identity specialists Jumio. Applicants are asked to take a picture of their passport and then a subsequent photograph of themselves winking to confirm that the photograph is fresh.. This is further proof that FinTechs are striving to make the application for accounts/services as easy as possible.

For all of this to happen, FinTechs must operate on software that allows them to control and refine every aspect of the process. An end-to-end platform that is able to handle files of all types in order to verify identity and configure personalised accounts for each application lies at the core of an agile FinTech looking to surprise and delight customers with the ease of passing through required security checks.

It is not enough to only check your customer’s identity once. FinTechs must continually monitor the transactions and withdrawals of their customers in order to catch those accounts that do slip through the net under false pretenses (or get compromised). The use of artificial intelligence has the ability to automate the process by which customers banking habits are monitored and can only be good for the future-proofing of fraud in banking.

The technology on offer to FinTechs now far surpasses the standards set by the established banks of the past. FinTechs must avoid relying on single technologies, and use a mixture of both automated monitoring due diligence with human experience to crack the KYC challenges currently faced.



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