KYC the key challenge for fintechs: TDCX report

Rhea-AI Summary

TDCX has released a report indicating that 49% of fintechs view KYC (Know-Your-Customer) processes as their top challenge, exacerbated by inconsistent document sharing and underinvestment in technology. The report highlights that 55% of fintechs focus on customer-to-business interactions struggle more with KYC compliance. Despite the obstacles, only 21% of fintechs currently utilize data analytics for KYC, while 35% outsource these processes. TDCX is addressing these challenges through its CX Center of Excellence, aiming to improve KYC efficiency and overall customer experience, notably resulting in a 20% productivity boost for one client.

Positive

• Launch of CX Center of Excellence to enhance KYC processes.
• Reported 20% increase in productivity for a client using TDCX's KYC support.

Negative

• 49% of fintechs struggle with KYC compliance.
• Only 21% of fintechs use data analytics for KYC processes.
• High customer abandonment rates due to complex onboarding processes.

Opportunity to enhance data analytics capabilities to improve the KYC process

SINGAPORE--(BUSINESS WIRE)-- Almost one in two (49 per cent) fintechs have identified KYC or Know-Your-Customer checks as their top challenge, according to the Rethinking Fintech Customer Experiences report. The report was launched by TDCX, (NYSE: TDCX), an award-winning digital customer experience (CX) solutions provider for technology and blue-chip companies.

The KYC challenge affects even the most established fintechs, with nearly four in 10 (37 per cent) mature fintechs echoing the sentiment. This could be due to the lack of a uniform global KYC standard and increased financial crime compliance requirements in global sanctions.

For example, TDCX observed that the KYC process is hampered when documents such as identity cards are not shared in a consistent manner (photo vs scanned, colored vs greyscale), resulting in back-and-forth correspondence which sets a poor tone for building good customer relationships. In a similar vein, underinvestment in technology continues to hinder the onboarding of new customers. Other key challenges for fintech leaders that were mentioned in the report were the need to maintain sufficient operating hours, a worldwide client base and the availability of quality, responsive services.

Fintechs with a business-to-consumer focus found it more challenging to manage KYC (55 per cent). This was consistent with findings from a separate survey¹ that more consumers abandoned financial service applications due to lengthy forms and excessive personal data requests. While it is compulsory for fintechs to collect customer information, complex onboarding processes can deter potential customers.

Mr Ricart Valvekens, Chief Client Solutions Officer, TDCX, said, “KYC has become a key focus for fintech companies. Not only is KYC essential for regulatory compliance, it is an unavoidable part of the customer onboarding process which will either lead to a seamless customer experience or a highly frustrating one.

“With the amount of required information for due diligence increasing exponentially over the past few years, fintechs are looking for ways to balance the need to provide their customers with speed and convenience while remaining compliant.”

Data analytics an area of opportunity

The report also found that only 21 per cent of fintechs use data analytics to support their KYC processes and 35 per cent of them outsource their KYC processes. Fintechs were most focused on using data analytics for personalized marketing (55 per cent) and helping customers make financial decisions (40 per cent).

Mr Valvekens said, “While it is unsurprising that fintechs are dedicating more resources to revenue generating activities, it would be beneficial in the long run to leverage data analytics to enhance their KYC processes. We have also observed that more clients are looking for ways to drive business performance through transformative CX solutions. To that end, we recently launched our digital CX Center of Excellence to provide greater support to our clients. One of our goals is developing best practices in data science and analytics to help businesses enhance cost efficiency.”

One of the companies that has tapped TDCX for its KYC needs is a global payment gateway provider. TDCX supports the company in hiring the right talent with the requisite skills to conduct KYC checks and enhanced customer reviews. With TDCX’s support, the company has been able to complete its KYC processes more quickly, translating to a 20 per cent increase in productivity.

The TDCX Rethinking Fintech Customer Experiences report aims to understand the latest fintech strategies and challenges regarding customer experience. TDCX surveyed 200 senior fintech executives globally from September to October 2022. The report is available for download here.

About TDCX INC.

Singapore-headquartered TDCX provides transformative digital CX solutions, enabling world-leading and disruptive brands to acquire new customers, to build customer loyalty and to protect their online communities.

TDCX helps clients achieve their customer experience aspirations by harnessing technology, human intelligence and its global footprint. It serves clients in fintech, gaming, technology, home sharing and travel, digital advertising and social media, streaming and e-commerce. TDCX’s expertise and strong footprint in Asia has made it a trusted partner for clients, particularly high-growth, new economy companies, looking to tap the region’s growth potential.

TDCX’s commitment to delivering positive outcomes for our clients extends to its role as a responsible corporate citizen. Its Corporate Social Responsibility program focuses on positively transforming the lives of its people, its communities and the environment.

TDCX employs more than 17,400 employees across 27 campuses globally, specifically Singapore, Malaysia, Thailand, Philippines, Mainland China, Hong Kong, South Korea, Japan, India, Romania, Spain, Colombia and Türkiye. For more information, please visit www.tdcx.com.

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¹ Source: The Battle to Onboard; https://btob.signicat.com/battle-to-onboard/onboarding-gone-wrong

View source version on businesswire.com: https://www.businesswire.com/news/home/20230214005430/en/

For enquiries, please contact:

Eunice Seow

eunice.seow@tdcx.com

Source: TDCX

FAQ

What challenges are fintechs facing in KYC processes as reported by TDCX?

49% of fintechs identify KYC checks as their top challenge, primarily due to inconsistent document sharing and regulatory compliance requirements.

How does TDCX plan to address KYC challenges for fintechs?

TDCX is enhancing KYC processes through its CX Center of Excellence, which aims to utilize data analytics for efficiency.

What percentage of fintechs use data analytics to support their KYC processes?

Only 21% of fintechs currently utilize data analytics for their KYC processes.

How did TDCX's client improve productivity in KYC processes?

One client reportedly achieved a 20% increase in productivity with TDCX's KYC support.

What did the TDCX report reveal about customer attention during onboarding?

The report highlighted that 55% of fintechs focused on B2C found KYC management more challenging due to lengthy forms and excessive data requests.