A women scanned thoroughly, symbolizing know-your-customer procedures

What is KYC: An Overview for Fintech Companies

KYC, meaning Know Your Customer or Know Your Client, refers to the processes conducted to verify the identity of a customer and assess the risk of the business relationship with them. 

KYC is a crucial regulatory requirement for fintech companies and other institutions with financial responsibilities (like banks, credit institutions and insurance providers). Laws and regulations oblige those actors to validate the identity documents their clients provide. That’s equally true if the clients in question are legal entities instead of persons. KYC also requires companies to evaluate the clients’ financial status and monitor their monetary accounts for suspicious transactions. 

The goal: Adhere to Anti-Money Laundering (AML) and Countering the Financing of Terrorism regulations, prevent fraud and constrain the access of users, who don’t fulfil certain standards of credibility.

But Know Your Customer policies are not just boundaries. They also act as competitive factors. KYC yields insightful data on one’s own services and customers.

It thus helps establish a reputation as a secure and trustworthy company as well. And trust is likely the most valuable asset for any financial business today — at least KYC-approved customer bank data is in high demand elsewhere.

So it’s time for a deeper look into the meaning and definition of KYC, its chances and its challenges. 

This Know Your Customer Introduction for Fintechs Contains:

  • A definition of KYC
  • A discussion of key KYC-related concepts such as AML or EDD
  • An overview of legacy KYC procedures and their modern counterparts
  • A list of typical challenges fintech companies face with KYC

Now, shall we? 

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Two hands with medical gloves handing over a banknote, representing fintech during the corona year of 2020

How 2020 Changed the Fintech Industry – Trends and Developments

What a year… good thing, we have a new one in replacement. 

Last December, when putting together our annual industry recap articles (you can find some of them here if you are in for nostalgia), we could not have guessed that the fintech scene would be on the brink of profound change. Many predictions, fintech and banking experts had made for 2020, did not occur – or did not occur for the reasons that we assumed would provoke them. 

Everything considered, though, the financial industry got off cheaply in 2020, when compared to other industries. Some branches could even step up their game. 

The question now is, if the fintech trends of 2020 will continue in 2021 or if they will “return to form”, once the restrictions in worldwide trade, business and retail loosen again. A look in the rear-view mirror will give us some implications. 

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A point-of-sale for credit cards symbolizing the developments in the digital payment industry of 2019

2019: The Year in Payments

Matthias Gall, co-founder of trimplement
Matthias Gall looks back on the developments in payments of 2019

When I sat down to write my article on innovation in fintech and payments last year, I was a little disappointed about what I saw in Europe, as you can probably tell from the article. I decided to look somewhere else instead and found more innovation on the African continent.

This year, though, things are looking a bit different: pressure to innovate keeps rising in Europe. When it comes to payments in Europe, there might be light at the end of the tunnel.

Let’s start with one theme that manifested itself throughout the last couple of years.

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A car's dashboard, with the number 2019 stuck to it, symbolizing the automotive market of the year 2019 in this review article.

2019: The Year in Automotive

Photo of Thijs Reus, co-founder of trimplement
Thijs Reus looks back on the automotive developments of 2019

Sometimes, things take longer than expected. 

In my 2018 review, I have hinted at how PSD2 and GDPR would ring in a new, more dynamic era of fintech, filled with opportunities. And then again it didn’t. The PSD2 deadline has been expanded, as banks and other financial companies have kicked the adaption of their systems and services down the road, so to say.

In the meantime, BigTech companies like Google, Alibaba or Apple cement their market position with their own smart payment solutions.

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A picture of a waiting area at the FinTech Connect 2019 conference in London

FinTech Connect 2019 – Our Experiences

When you are browsing the net for a list of attractive fintech and banking locations around the globe, you will surely find London at the top end. It’s not only where Big Ben shakes its clapper but also where Big Tech and Big Finance shake hands. 

A few weeks ago, we set out to the capital of the UK to do very much the same, to network with the European fintech scene and present our software products and services. The occasion: The FinTech Connect 2019 conference.

To state it right away: The connection buildup proceeded well, but not without a few issues. Time to give FinTech Connect 2019 a run-down. 

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The start-up stage at Money20/20 Europe

Our Experiences at Money20/20 Europe 2019

You have a block of lead. You want a block of gold. How to get from one to the other has bothered the alchemists of old. We learned that such effort is pointless. We know more dependable ways to distill money. The formulas have changed: They are written in code and algorithms rather than ink. They manifest inside banking apps, online marketplaces or blockchains rather than flasks in a candlelit laboratory. And they drive thousands of people from all over the world to gather at the Money20/20 conference in Amsterdam just to show, discuss and innovate them.

Our co-founders Natallia Martchouk and Matthias Gall were among those modern “alchemists of finance”. From June 3rd to 5th 2019, they had traveled to Amsterdam. The mission: Meeting with other movers and shakers of the fintech, payment and banking industry.

Our co-founder Matthias Gall, walking the turquoise road of Money 20/20 Europe.
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A computer screen displaying the word cybersecurity

Cybersecurity – A Big Deal for Fintech

We do a lot of things online.

We shop at online marketplaces. We rent movies at online video libraries. We manage our finances in online banking apps – all from the comfort of our homes. On the downside, criminals don’t have to stand up from their couch either, to rob your bank or steal your private data. Internet crime and assaults on cybersecurity occur in increasing numbers. Banking institutions are a popular target, as are their little, nonconformist peers: Fintech companies.

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Picture of an ATM which is out of service, a symbol how Google Pay threatens banks and fintechs

Google Pay: Nuisance for Banks, Nightmare for Fintechs

When pondering on digital transformation in the financial industry, one quote by Bill Gates comes to mind. Admit it, you know which one. It just fits perfectly, as we see tech giants leave their mark with emoney payment solutions like Google Pay and Apple Pay. Bill Gates said: 

We need banking, but we don’t need banks anymore

He said this in 1994. The millennial generation probably did not listen to his words back then – living the kid life requires full attention. But today, millennials resonate very much with Gates’ words. According to research by Global Banking Insights, at least one-third of all US millennials believe that they will soon live a life without banks. 

And they might have a point. The number of customers inclined to use online banking services has doubled over the last 10 years. As a result, the demand for digital finance applications increases — and quite a few banks struggle to deliver on that front. The internet is not their native environment. Fintech companies try to capitalize on this, using their technological expertise to disrupt the tried and true ways of banking.

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Fintech 2018, a look back, written next to a sparkler

Our 2018 Fintech Review – A Look Back

The new year 2019 is still young, but the old year’s legacy can still be felt. So a fintech end-of-year review is in order, as 2018 had many opportunities to make an impact.

365 days, to be exact, during which the fintech industry came up with unforeseen novelties and thrilling developments: The online payment, cryptocurrency, and digital finance sectors presented themselves as versatile and volatile. There is much to look at in our fintech retrospective, from the cryptocurrency decline to the new challenges and changes in mobile payment.

So let’s approach this giant of a year from different angles. We asked the three trimplement co-founders, what kept them occupied in 2018 in different areas of fintech.

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