KYC practices for the current digital economy

As Africa continues to move online and embrace more digital solutions, there are numerous opportunities for users to engage with the global economy while also providing opportunities locally.  During the pandemic, many industries in Africa that had delayed going digital because of technological constraints or concerns about digital security were forced to go online so as to serve their customers, who at the time spent the majority of their time indoors. Businesses that came before them had already started amassing users because they already had the systems they needed in place. The challenge for newly digital businesses was acquiring new customers while ensuring a smooth online transition for their existing users. This was a complex undertaking that needed more guidelines and stringent regulations.

The percentage of fraud attempts caught is in the double-digits

Running KYC diligently allows businesses to trust the users they onboard on their platform. Some fraud methods take a lot of time to get noticed and cost businesses a lot of money in fraud losses. At the end of 2022, we saw the fraud peak at 28% and seem to stabilize, with most businesses now having put in place measures for fraud mitigation after being forced to transition online during the pandemic. We have noticed a prevalence of low-sophistication fraud like stolen ID and selfie spoofs across markets.

Genuine users are more valuable now

Most users are now more frugal with their spending and may abandon some platforms they use to save money. Some businesses may try to relax or eliminate their KYC processes to attract more users in the face of the impending recession. We believe that genuine users are more valuable than garnering more users at such a time. KYC is a continuous process, not a one-time thing. Monitoring existing users for changes in use or suspicious activity prepares businesses to catch fraud as soon as it happens and enables them to serve the rest of their users better. Choosing a great identity verification partner allows businesses to stay on top of KYC and compliance so that they can concentrate on their core business.

Biometric KYC over textual KYC

There is no single solution that can meet the needs of every business in every industry. Some industries require more stringent KYC measures than others so as to remain compliant. For example, banking and fintech continue to face stringent regulations both locally and globally. The use of biometrics is gaining more traction for KYC as it is more secure and provides more security to businesses that want to be deliberate about their platform security and their users' data. Across industries, 50% or more of total fraud goes undetected with the use of textual KYC alone. By incorporating biometrics into your KYC, you can create a more robust identity solution and provide a more seamless onboarding experience for your users.

Data privacy has gained prominence in Africa

When using such crucial information about your users, the need for data privacy comes up. International regulations have been getting more stringent, e.g., GDPR and African nations have followed suit and developed their own data privacy rules. The key aspect of these laws is that data collectors and processors must get user consent before collecting, processing, and using user data. Countries like Nigeria, with their Data protection bill (2020), have taken this instead and have elaborate ways to affect them. With iGree and the tokenized version of NIN (vNIN), the government has taken it upon itself to run the user consent process. This is to ensure that all businesses remain compliant and that no one maliciously gains access to their users' personally identifiable information. As the continent progresses toward digitization and digital identities, these laws will become more stringent as more user information becomes easily accessible from anywhere.

In our latest end-of-year report for 2022, we delve into these other topics, providing you with insights on current trends and best practices as we approach 2023. Get your copy here!