Why it is important to effectively communicate your eKYC measures
When companies communicate their commitment to eKYC (electronic Know Your Customer) processes, they can build lasting brand equity.
eKYC processes are an evolution of manual KYC processes.
Communicating about eKYC helps to reflect a company’s values and highlight its position on the negative social impacts of financial crimes.
The regulatory challenges faced by financial institutions are numerous and ever evolving. In particular, maintaining compliance with these regulations requires financial organisations to keep a pulse on the most efficient KYC (Know Your Customer) measures – the method companies use to screen customers before allowing them access to their systems. While the objective of KYC procedures, which are usually paired with AML (Anti-Money Laundering) measures, is to prevent financial crime, they can also help institutions to avoid crisis communication situations.
The first generation of KYC procedures was manual, requiring hard-copy paperwork and in-person interviews. Today, the method has evolved into eKYC, or electronic KYC – developed in response to the trend of financial institutions onboarding customers electronically. These electronic procedures have vastly improved waiting times for approval, reduced human error, made it easier for customers without adequate identification documents and introduced greater transparency into the process.
These measures all represent good progress. But there is also a need for organisations, especially those doing business in or looking to expand to Asia, to communicate their eKYC measures effectively.
eKYC is about compliance, and compliance translates into trust between a company and its stakeholders, be they government regulators, customers or investors. Being able to promote a message of trustworthiness, through a commitment to eKYC measures, is important for building brand equity. People want to work with reliable companies – ones that they feel will take seriously the protection of their assets. A commitment to trustworthiness needs to be communicated effectively, across a company’s website, content and other marketing materials.
eKYC is about protecting against financial crimes such as money laundering and fraud. A commitment to eKYC is simultaneously a commitment to protecting the demographics of people affected by such activity. A report by Refinitiv on financial crimes in Asia Pacific found that the consequences of these crimes go far beyond their economic cost, delivering a significant social impact as well. This takes a variety of forms, including the “financing of terrorism, human rights abuses, slavery and child labour, and environmental crime.” Raising awareness, through strategic communication, of how eKYC works against these injustices is a powerful way of reflecting a company’s values.
eKYC is about ensuring capital stays in the right hands. According to the Refinitiv report, which was commissioned in 2018 and analysed more than 4,000 listed companies in Asia Pacific, losses due to financial crimes amounted to over US$166 billion; a disconcerting amount, especially given the opportunity costs of such money winding up in the hands of criminals. Amplifying a firm commitment to eKYC measures can go a long way towards encouraging collaboration between financial institutions in the fight against financial crime.
eKYC is a significant development in the area of regulatory compliance. But the value of such compliance can be multiplied through effective communications. It is important for companies everywhere to ensure their stakeholders know about their commitment to eKYC and the benefits it can yield in the broader fight against financial crime.