How to deliver customer insight and prevent fraud in a digital world

Today, with many products and services online, fraud in the digital space is on the increase with Juniper Research predicting that global online payment fraud is set to increase from $41 billion in 2022, to $48 billion in 2023. This makes it vital to know your customers (KYC) and know your business (KYB), business customers and suppliers – that they are who they say they are - if you are serious about preventing fraud.

While undertaking KYC and KYB reduces the opportunity for fraud, doing so has many other benefits. These include the ability to personalise communications, improve the delivery of services and the overall customer experience, to deliver a competitive advantage. KYC also helps to deliver operational efficiencies. These are all important factors for businesses to implement KYC and KYB practices, particularly during a period of high inflation and economic uncertainty.

What powers KYC and KYB is having clean customer data, which requires having data cleansing processes in place to clean and standardise user data held in batch, as well as when new data is collected at the customer onboarding stage.

Address autocomplete technology

Technology is playing a central role in cleaning data, alongside ID verification, for those serious about undertaking KYC. One of the most standout tools is an address autocomplete or lookup service. These are able to gather accurate address data in real-time at the customer onboarding stage by providing a properly formatted, correct address when the user starts to input theirs. Along with collecting correct addresses in the appropriate format, this technology can also improve the user experience by reducing the number of keystrokes required when typing an address by up to 81 per cent.

Technology is also available that undertakes first point of contact verification with phone and email, so these can be verified in real-time.

Deduplication

With the average database containing 8-10 per cent duplicate records data deduplication is equally important to deliver data quality.

Duplicate records are a major problem and often occur when mistakes are made in contact data collection at different touchpoints, or when two departments or businesses merge their data. It’s important to realise that duplicate communications, particularly of more expensive to produce printed material, is not only a waste of time and money, but can damage the reputation of the sender in the eyes of recipients.

Advanced fuzzy matching technology is the best at deduplicating data. These tools also reduce the potential for fraud because they ensure there’s a unified record for each citizen.

Data suppression tools

A critical part of the KYC process is data suppression, or cleaning. This requires using the appropriate technology to highlight customers who have moved or are no longer at the address on file. As well as removing bad addresses, these services can include deceased flagging to prevent the sending of mail and other communications to those who have passed away, which can potentially upset their friends and relatives, impacting negatively on your reputation. It’s also another important step to prevent fraud.

SaaS and data quality

The good news is that when it comes to delivering data quality, and KYC, it’s possible to source a scalable data cleansing SaaS platform that requires no code, integration or training. This technology is able to immediately cleanse and correct names, addresses, email addresses, and telephone numbers worldwide. The matching of records in real-time ensures there is no duplication, and data profiling is delivered to help identify issues for further action. Such a service provides a single, intuitive interface along with tools for data standardisation, validation and enrichment, resulting in high-quality contact information across multiple databases.

SaaS and ID verification

SaaS technology is not only leading the way in delivering data quality, but also electronic identity verification (eIDV). With the growth in fraud these tools are becoming increasingly popular. They are easy to deploy, scalable and support cross-checks against an individual's contact data in real-time as they complete a sale online, thereby ensuring the customer experience isn’t negatively impacted.

These tools must have access to reputable global data streams, such as government agency, credit agency and utility records, to match the name, address, date of birth, email or phone number against. They should also offer mortality screening checks to effectively confirm the ID of an individual, and be able to highlight any errors in the data, such as a typo in the address, which can easily be corrected.

Furthermore, it is advisable that the platform sourced offers access to worldwide sanctions, politically exposed person (PEP) data, and is able to offer adverse media checks to provide a full ID verification service. This way tight budgets can be protected against scammers, while also supporting best practice KYC.

Finally, alongside KYC, it’s important that the service is able to deliver KYB, to enable organisations to fully understand the risks posed by new and existing business customers and suppliers. Fraud is often committed by shell companies or organisational structures that just don’t exist in reality, so undertaking a KYB to validate an organisation can greatly mitigate that type of fraud from occurring. Also, it will help prevent financial crime, such as money laundering and terror financing, which could result in significant reputational damage.

In conclusion

While there’s no legal requirement for businesses outside of the financial services sector to deliver KYC and KYB, there are huge benefits for all that do so. By sourcing and using technology that supports the delivery of contact data quality and ID verification, and therefore KYC and KYB, organisations will not only be able to effectively prevent fraud, but obtain insight that will help them drive sales, ensure a better experience for their customers, and improve efficiencies during these challenging times.