The initialism KYC which mean in full Know Your Customer is one of the most commonly used terms in banking/customer relationship. It is defined by Wikipedia as “the process of business identifying and verifying the identity of its client“
KYC guidelines in banks was primarily designed to prevent the bank’s from being used by criminal minded individuals for fraudulent activities. It is the due diligent activities conducted by banks in other to verify the identities of their customers, their address/es, their business types and processes. It is mandatory on all banks to conduct KYC on all their customers.
KYC, apart from being mandated on banks by the regulator, also has its advantages to both the banks and their customers
Here are 7 benefits of proper KYC to bank customers
- Proper Account Mapping and Management – KYC allows a bank customer and his business activities to be properly classified for account management. The bank haven understood the customers business through proper KYC will deploy its most competent relationship team, trained to handle such customer. This gives the customer the opportunity to access the best the bank can afford for it’s business category.
- Bank Product Suit – There are several banking products on display that the bank customer can tap into. With correct KYC information provided by the customer, the bank can advise on which of the products can best suit the customer’s business need. A working class salary earner may not be offered facilities meant for a distributor of major manufacturer and vice versa.
- Financial Advisory Services – A banking relationship properly documented and recognized may be able to tap from the banks reservoir of financial advice. Lease option as against outright purchase of assets, Call account option and Money Market Investment option against keeping idle fund in account. Are some of the financial advice the bank can offer.
- Cleaner Bank Data – Properly captured KYC help bank books by helping to provide updated information on number of customers business/employment type, age categories and more. This will subsequently help the bank’s product offering and relationship manning plannings. It also provides timely access to data when needed.
- Customers Synergy – Bank often organize seminars and workshops where customers come together to share ideas and get enlightened by more successful business owners. Proper categorization of accounts base on correct KYC helps synergy possible in situations like this. Such seminars also help customers operating in same field to be invited together for mutually beneficial cooperation.
- Fraud Prevention – With a clearer understanding of your business and operation style, the bank could help prevent fraud on your account. A deviation from account operation style such as direct transfer instead issuing of cheques or payment of large sum to individuals instead of suppliers may trigger inquiries from your account officer and this may help prevent unauthorized transactions on your bank account.
- Cordial Relationship – And lastly, complete and correct KYC may help bonding between the bank and it’s customers. Special occasions such as Birthdays, Wedding Anniversaries and others may be recognized by the bank to the delight of their customers. Special Products Launch, Marketing Activities and other Special Business Activities may also be attended by the bank for more cordial
