IDG Contributor Network: Adopting a continuous KYC mentality

Now more than ever, implementing know-your-customer (KYC) procedures to verify a customer’s identity—procedures that continuously monitor changes in customer data—is important as more consumers and businesses alike join the digital economy.

When onboarding new clients or users, banks and financial apps use outdated methods of authentication—such as knowledge-based authentication (KBA)—to verify a user accessing the service based on static and dynamic data that is compiled from public information, and from private data gathered through credit reports and transaction history. These knowledge-based questions are easy to guess or find through public records, social media, or on central servers. The data and questions, coupled with the need to present any required documentation, are a time-consuming experience that prove burdensome for users. 

Fraudsters move wherever the money goes, and with the expansion of mobile and digital payments (i.e. Apple Pay, Venmo), ill-intended actors will adapt to more sophisticated methods to obtain personal and financial data. Currently, bankers view data security as among the top challenges in payments today. As the industry projects $31.3 billion in global card losses in 2018, financial institutions must push to out-innovate the fraudsters, according to Accenture.

This past month, it was revealed that Zelle, a mobile payments app trusted by more than 30 U.S. banks, offers no fraud protection for its users. Customers, believing the service was secure, have reportedly lost thousands of dollars using Zelle for transactions involving sellers they did not know, for items such as concert tickets on Craigslist. Zelle, and the banks that back it, are under no obligation to help—Zelle is only meant to be used by users who trust each other, and once the buyer authorizes the transaction, nothing can be done to recover stolen money.