Almost every aspect of our everyday lives is becoming more convenient as everything has shifted to digital nowadays.
Previously, there were only banks or FX shops to deal with finance-related operations, which at times would include extremely long waiting time. Now, giving our personal data for the sake of convenience and time saved. For example, there is no need to go and sign documents in person, visit bank branches and have an appointment to get credit. Both parties bear risks, however, modern technologies help to streamline these processes.
The government doesn’t require any specific KYC checks or a proper flow for user verification. Still, this is in the best interest of JO1N to avoid any fraudulent activities. Given there is a limited number of vendors suitable for our business needs, we had a strict selection process by choosing a few different kinds of providers. So, to eliminate various regulatory and operational risks, JO1N required two solid partners that would take over (1) KYC and (2) credit reference data aspects of our business.
Before we delve into the most interesting part of the article it is good to define the terms:
Few reliable credit reference data providers allow obtaining data identity verification products that allow consumers to demonstrate their employment, income and job security. Through a single API call, JO1N can instantly verify the stated income of a prospective customer. By taking the stated yearly or monthly income, either in a gross or net format, those providers can instantly match its validity from the customer bank account in seconds. This feature allows lenders to be truly confident of an applicant’s stated income, thus decreasing the level of fraud for both parties. In a similar fashion to verifying income, we are also able to verify personal information on a consumer so lenders can be sure who they are dealing with. By taking the name, address and date of birth inputted by a consumer, our providers can then pull the consumer’s account number and sort code from Open Banking and through its partnership with traditional credit reference agencies check that the bank account being pulled matches the name, address and date of birth held at the credit reference agency. This ensures lenders can be certain who they are dealing with in 100% digital journeys.
JO1N’s integration with such vendors is an integral step in acquiring the tools we need to continue to provide flexible financial products to customers. Real-time Open Banking insights are crucial in providing fairer credit for all by securely sharing buyers’ financial information with their selected provider, thus promoting fair competition and responsible lending practices. There are enormous marketing and profiling opportunities available from this kind of information. Bank data allows us to treat our customers individually, according to their circumstances, and to ensure a better experience for everyone. Internal research shows that open banking information wins in 76% of cases when the parent company has open banking data.
Fraudsters never sleep and will attack all companies. When operations go down at a start-up company, we might be left scrambling to deal with a wide range of costly consequences: lost productivity, brand damage, data loss, SLA pay-outs that allow criminally minded individuals to create accounts and perform illegal activities. The good news, some companies are willing to help and offer services to eliminate that kind of risks.
Possible checks of KYC:
Here’s a list of the key points within vendor selection that we took into account when choosing the right ones:
If you select the regtech and credit vendors, and you think that you’re good to go … surprise mother flowers! If you are using a few providers, you need to orchestrate them and sync. Kafka would be your best tool for streamlining the requests. But remember, now you have another issue: compliance and support teams.
Fraudsters are intelligent, always trying to outsmart the system. They use different numbers, documents emails, names and other tools. KYC and credit rating vendors are just the beginning of our journey to the exciting world of Fintech. Hope this article can serve you as a good base of knowledge on the security of the services you use.
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