The true cost of KYC (and how Authenteq lowers it!)

Is saving over $1M  for every 100.000 customer identities you verify  worth a little reading?

If your company does 100,000 identity verifications per  month, our automated identity verification and AML solution could save you $1,046,800 per month on the true cost of KYC versus your current process. 

Know Your Customer (KYC) costs today have become breathtakingly high. Regulations pertaining to KYC compliance are changing rapidly, and the regulations themselves have become more complex. Major financial institutions have reported spending up to $500 million per year on KYC and customer due diligence. The fines for failing to meet the regulations are no laughing matter, either.

According to a report by Quinlan & Associates, one of the most common drivers of reduced profitability for financial institutions has been the increased cost of regulatory compliance. Particularly, compliance with Anti-Money Laundering (AML)/Counter Terrorism Financing (CTF) regulations. 

Most companies still rely on KYC processes which require an exhaustive amount of manual labor during onboarding,as data is often still captured through emails and papers and becomes siloed between a financial institution’s front and back office operations. This labor intensive process not only results in higher KYC-related costs, it also results in more errors. 

What is the true cost of KYC?

As an automated identity verification provider, Authenteq charges a fee for each identity it verifies. This is a part of the cost of KYC, but this per-verification cost is far from representing the true cost of KYC. The true cost of a KYC verification is made up of six main components:

  1. The salaries and wages of internal staff dedicated to reviewing identities and managing the KYC process.
  2. The cost of identity verification paid to a third-party supplier like Authenteq.
  3. The cost of licensing or developing the back-office technology required for identity verification and KYC processing.
  4. The loss of revenue from an identification process which drives customers away through excessive friction.
  5. The regulatory fines and cost of remediation associated with an insufficiently private & secure identity verification process, including the failure to vet the chosen identity verification partner for adequate data privacy & security. 
  6. The reputational harm and loss of customer trust due to a data-privacy or security-related incident such as a data breach. 

Any criteria for determining  which third-party identity provider to choose needs to  include these considerations when assessing how the chosen provider holistically reduces the true cost of identity verification and KYC. 

Let’s look at how Authenteq’s approach impacts each of the five areas identified above.

1. Authenteq lowers the true cost of KYC by reducing the internal staff dedicated to KYC.

An automated KYC process means no internal resources need to be dedicated to manual identity verification, KYC or CTF checks. At modern financial institutions, the average time for the KYC screening needed for a customer to open a new bank account is 18 minutes. A large portion of that time goes into an exhaustive customer identity verification process, customer risk assessments, and detailed documentation reviews. 

According to an Ernst & Young’s study, automation of KYC processes using artificial intelligence (AI) like those which Authenteq offers,  successfully reduced over “6000 manual resources” (full-time positions) in a single organization. 

2. Autenteq’s per-verification pricing is highly competitive

Through automation, modern software development techniques, and partnerships with industry-leading partners, Authenteq can offer highly competitive per-verification costs. For further details use the contact form to request a price quote based on your expected volume.  

3. Authenteq lowers the cost of licensing or developing the technology required for identity verification 

Authenteq offers multiple integration options, including the standalone Authenteq app for iOS and Android which can be integrated in less than a day. There is no licensing fee for the standalone app.

Authenteq’s SDKs are built for ease of integration and can be integrated into your own websites and mobile applications  in under a week. 

Regardless of the integration, Authenteq’s approach does not require your internal staff to make a determination on whether an identity has been sufficiently verified, as  the results of the identity verification, AML, and/or CTF checks can flow directly into your internal systems. The simplicity of these integration methods reduces complexity and lowers development & maintenance costs of these systems. 

4. Authenteq’s dedication to developing a frictionless process reduces loss of revenue due to friction.

Customer onboarding is fundamental to any company’s success and growth. One of the biggest challenges of KYC is manually sorting through unstructured data, which is a time consuming and error prone process. In the heavily tech-enabled society in which we now live,  customers expect quick and easy interactions. This means that manual processes, which have a considerable impact on turnaround times, drive away customers whose patience becomes exhausted when their expectations of timely service are not met. 

What is the alternative to this high-friction process that, in the best case scenario, takes 18 minutes to complete? Authenteq’s solution enables identity verification in under 60 seconds through AI-driven liveness detection, facial recognition, and automated data extraction from government-issued identity documents. 

The result is a win-win scenario where a total of 17 minutes are saved for both your business and your customer.

5. Authenteq’s approach lowers the risk of data privacy related fines and remediation costs.

As mentioned earlier, the fines for failing to meet regulations are no laughing matter. Not only does Authenteq’s approach allow companies to meet their KYC, AML and CTF responsibilities in a cost-effective manner, it also does not require your internal staff to make a determination on the validity of an identity. This approach reduces the risk of internal fraud and performance-driven false acceptances.  Built on Privacy by Design, Authenteq’s approach significantly reduces the risk of exposure to data breaches, General Data Protection Regulation (GDPR) violations, and associated fines. 

6. Authenteq’s approach helps to protect your company’s reputation and market cap.

Businesses must also consider the impact of reputational harm, from which it can be extremely difficult to recover. Forrester predicts one major brand will lose valuation of more than 25% due to a cyberattack in 2019. Facebook lost $100B in market cap for breaching its users’ trust following the Cambridge Analytica scandal.

Crucially, with regards to points 5 and 6 above, Authenteq does not store your customer’s data for later exploitation.

How much can you save? 

The average salary of a KYC analyst is approximately $55,333 per year. This number grows to $69,166 with a standard 25% overhead cost factored in. Based on employees spending 32 hours out of a 40-hour work week actively performing KYC checks, the cost per check is as follows:

  • $41,56/hour
  • $0,69/minute

If you are performing 100,000 KYC checks per month, and each verification takes 18 minutes to complete, you will require at least 170 employees dedicating 32 hours a week for KYC procedures.  Authenteq’s approach eliminates the need for these internal resources, saving at least $1,246,800 per month on just the internal cost of staff dedicated to the KYC process. 

With Authenteq, you can perform the same KYC check in under 60 seconds. Even at $2 per verification – a higher price than Authenteq charges its customers – 100,000 verifications per month would cost no more than $200,000.

This difference of $1,046,800  in savings only accounts for direct labor costs. The true cost savings are far higher, as this number does not factor in savings achieved with Authenteq’s approach in the other four categories that make up the true cost of KYC.

TL;DR: 

An automated KYC process can reduce onboarding costs by over 70% and reduce turnaround time by as much as 90% or more. If you perform 100.000 identity verifications per month, you can save over a $1,000,000 per month on your KYC checks while also reaping the other cost savings and benefits. 

According to the International Finance Corporation, the widespread use of KYC automation could deliver three major gains in addition to saving costs: 

  1. Improve the quality and accuracy of risk assessments with better customer due diligence information;  prevent corruption, tax evasion, money laundering, and other criminal activities that can result in large fines. 
  2. Process information more consistently and at a lower cost, which makes financial services more accessible and profitable. 
  3. Provide better information management, which improves accuracy and reduces the risks of doing business with customers, while at the same time making it cheaper and easier to create new customer relationships.

Here’s the cherry on top of the cake:

Automated Identity Verification is a win-win situation for you and your customers. Not only are you saving the company costs with more effective results, you are also reducing the time investment – and often the direct cost incurred – by your customers. Customers no longer need to mail documents or travel (in extreme cases even taking time off from work) to show up in person for an identity verification. Instead, they can enjoy a fast and frictionless onboarding process from the comfort of their own home, and look forward to a pleasant experience with your brand and your products.

Authenteq – Automated Identity Verification that saves costs without compromising on security, privacy or usability


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