The Secret To Fast Onboarding? Know Who Knows Your Customer

In the old days, Singapore’s retail market was dominated by big corporate merchants with storefronts, whose size, numbers and name-brand recognition made it feasible to onboard them manually. The country has around 100,000 such traditional retailers.

But it’s not the old days anymore. Today’s merchants don’t need a storefront, and they don’t have to be massive corporations to do business. Merchants have the option to sell goods on platforms like Facebook and Instagram — provided they can get the backing of an acquiring bank.

And there’s the rub. Such platforms have invited a proliferation of nontraditional merchants, and banks are hard-pressed to keep up with the influx. If they’re onboarding manually, there’s just no practical way to conduct a proper KYC (Know Your Customer) check for all of them.

Sean Lam, CEO of Jewel Paymentech, says that’s the most painful process for acquiring banks, and it’s what the startup aims to relieve with its new KYC module, which just launched in the Southeast Asia market.

Lam said the module helps banks reduce the time and expense of getting small merchants on board by eliminating physical appointments between applicants and officers, as well as all the paperwork that entails. Instead, he said, all of the preapproval legwork can be done via mobile app or website.

The key to this accelerated KYC process is that somebody already knows that customer. So, instead of doing all its own homework, the acquiring bank can look over the shoulder of banks who did the work before them. Lam called it “transference of KYC.”

“Most people in Southeast Asia who want to become merchants already have a relationship with a bank,” Lam explained. To open a savings account, the customer must walk into a branch — so anyone with a bank account has already been vetted by one bank or another.

Lam explained that Jewel is able to verify that the person really has that relationship by sending a random deposit and a one-time password to retrieve it. If the applicant successfully retrieves the deposit, he said, then it proves they are who they say they are.

The module is fully automated, which Lam said creates much greater onboarding capacity for acquiring banks by sparing them the tedium of manually onboarding all those small merchants — and fuels a growing economy rich with small businesses (SMBs) in the process.