The initialism KYC which in full means Know Your Customer is one of the most common term used in banker customer relationships. It is defined by Wikipedia as
“the process of a business identifying and verifying the identity of its clients. The term is also used to refer to the bank and anti-money laundering regulations which governs these activities.”
KYC guidelines in bank was primarily designed to prevent banks from being used by criminal minded individual intentionally or otherwise for money laundering activities. It is the due diligence activities conducted by bank on their customer in other to verify their identities, their addresses as well as their business types and processes. It is mandatory on all banks to conduct Know Your Customer activities on all their customers.
Know Your Customer (KYC) was further extended recently to KYCB which means Know Your Customer’s Business
Here are 7 ways KYC and KYCB information can help your banking relationship
1. Proper account mapping and management.
KYC well conducted with accurate information allows customer and his business activities to be classified for proper account mapping and management. The bank, after having understood the customer and Its business activities will deploy its most competent relationship manager or team who are trained to handled such business activities. This gives the customer access to the best its bank can offer in the Its business category.
2. Bank product suit
There are several banking products designed for different customers. With correct KYC information provided by the customer. The bank is able to advise on the best product that suits the customers business. Thus a government contractor will not be offered Overdraft to execute contract and a distributor of a major manufacturer will not be offered a Term Loan or an LPO Finance Facility to stock goods in its warehouse.
3. Financial advisory services
One of the services provided by banks to their customers is financial advisory, an account or banking relationship adequately recognized by its activities will be able to tap from the banks reservoir of financial advise. Advise like lease option as an alternative to outright purchase of vehicles or office space may be offered to free customer cash flow for operations. Keeping idle funds in short term investment rather than letting it remain idle may also be a good advise that banks can offer when customers information is well captured.
4. Clean bank data
Dirty data is one of the major challenges facing banks in Nigeria today especially the older banks. Correctly captured KYC help banks books by providing up to date information on numbers of customers in different business, age categories or working class . This will consequently affects products planning and manning as well as product offerings positively. It also allows timely access to information and bank data when it is required.
5. Customers synergy
Properly captured KYCB allows bank to assist their customer synergies. Customers with mutually beneficial products or services offering can be linked together for business interest. Banks often organizes seminars for their customer where they can come together to share ideas and get enlightened by more successful business owners. Correct KYCB allows customers operating in similar fields to be invited together to same forums.
6. Fraud prevention
With a clear understanding of your business or account operating style, your bank can help prevent fraud on your account. A heavy withdrawal of cash on a salary earner account that only uses ATM, mobile banking or USSD will automatically trigger questions from the relationship team. Likewise issuance of cheque on an account of a distributor who transfers most times to its principal and pay salaries to his worker only from his account could also help trigger questions fro the relationship officers.
7. Cordial relationship
Finally a complete and correct KYC and KYCB allows banks to bond more with their customer. Birthdays, wedding anniversaries, launchings of new product or services by customers principals can be recognized and attended by relationship teams to the customer delight.