What is KYC?

KYC, or Know Your Customer, is a fundamental process that financial institutions, businesses, and crypto companies implement to verify the identities of their customers and ensure compliance with regulatory guidelines. 

KYC is crucial in mitigating risks associated with money laundering, fraud, and other illegal activities. It serves as a foundation for building trust and safeguarding the integrity of financial systems across various industries, including:

  • Banking: In the banking sector, KYC involves verifying the identity of customers before they can open an account or engage in financial transactions. It typically includes collecting personal information such as name, address, date of birth, and government-issued identification.

  • Fintech: Financial organizations require customers to provide necessary identification and information when entering into business relationships or making high-value transactions. This helps these businesses avoid fraudulent transactions and maintain the trust of their customers.

  • Crypto companies: In the cryptocurrency sector, KYC is increasingly crucial as it bridges the gap between the digital and traditional financial worlds. Crypto exchanges and wallet providers implement KYC to comply with AML (anti-money laundering) and CTF (counter-terrorism financing) regulations. 

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What are KYC requirements?

KYC requirements can vary depending on the specific industry. However, common elements include: 

  • Customer identification: Collecting basic information such as name, address, date of birth, and a valid government-issued ID.

  • Document verification: Confirming the authenticity of documents provided by the customer, such as passports or driver's licenses.

  • Risk assessment: Evaluating the risk associated with a customer based on factors like their transaction history and source of funds.

  • Ongoing monitoring: Continuously monitoring customer transactions to detect suspicious activity or changes in behavior.

  • Record keeping: Maintaining records of customer information and transaction history for a specified period, as required by regulations.


Gen Z consumer behavior and the KYC process

In adapting the KYC process to the unique characteristics of Gen Z consumer behavior, businesses must recognize the challenge posed by the generation's credit invisibility. Given the absence of a robust credit history for many Gen Z individuals, companies often subject them to an exceptionally stringent onboarding process, relying on manual reviews that can extend beyond the generation's accustomed expectations of immediate results. This heightened scrutiny introduces unnecessary friction, potentially resulting in missed opportunities as consumers may face unwarranted rejections or choose to abandon the onboarding process altogether due to its onerous nature. Consequently, businesses risk losing these potential customers to competitors who have streamlined their KYC procedures to better welcome Gen Z into their portfolios, fostering lasting relationships and capitalizing on the burgeoning market.

How does a strong KYC process enhance conversion rates?

Balancing security with a focus on customer experience is essential for improving conversion rates in KYC processes. Digital KYC solutions leverage technology such as facial recognition and document verification to simplify the KYC process significantly. 

Customers can now complete KYC requirements from the comfort of their homes using their phones or computers. This streamlined approach enhances the customer experience by saving time and reducing friction, ultimately boosting conversion rates for new account openings.

Businesses are also adding promotions to their processes to increase their conversion rates. For example, the Indonesian crypto assets platform, Pintu, is using Talon.One’s webhook effects to incentivize their acquisition and conversion activities, including KYC processes. 


"We take advantage of Talon.One’s webhook effects for our Rule Engine campaigns, including features used at the acquisition phase such as sign-up and referral initiatives, as well as conversion campaigns like Know Your Customer (KYC) and First Trading promotions. Using webhooks means we can allocate incentives in the form of crypto tokens to qualified users."


Jofiandy Leonata Pratama

Product Manager of Pintu

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