Instant everything: why KYB is now even more vital to financial services

Advances in the technology underpinning real time payments and instant settlements have transformed financial services, with unprecedented speed and convenience, and a host of happy customers.

‍

Blockchain and distributed ledger tech has combined with artificial intelligence and machine learning, along with faster payments systems, API integrations, and regulatory developments, to create the ideal playing field for the payments industry.

‍

The stats speak for themselves: in the UK, the Faster Payments Service (FPS) saw a jump in payments processing from 1.5 billion transactions in 2016, to double that figure just five years later. 

‍

Across Europe, the SEPA Instant Credit Transfer facilitates instant payments across dozens of countries having launched in 2017, while Allied Market Research expects the global real-time payments market value to reach $26 billion in 2026, a CAGR of nearly 18% since 2018.

‍

Big business benefits

‍

It, perhaps, goes without saying that in a world where time is money, the ability to offer real-time payments and settlements makes for a significant competitive advantage.

‍

Speedy transactions allow for a host of business benefits like improved cashflow management and financial flexibility, on top of the sort of customer service enhancements that increase rates of satisfaction and loyalty.

‍

But while speed is a gamechanger for many businesses, it comes with a greater need to ensure that transactions, as well as the businesses behind them, are genuine and fraud-free. 

‍

In this context, getting to grips with Know Your Business (KYB) best practice – vetting businesses before they engage in financial transactions – is more important than ever.

‍

Financial institutions and payment processors must upgrade their legacy systems to support real-time processing, which involves integrating advanced technologies like cloud computing, APIs, and blockchain.

‍

Speed versus safety?

‍

Instantaneous transactions leave little room for traditional fraud detection methods, which rely on time-consuming checks and balances. So companies must employ advanced technologies and strategies to mitigate risk.

‍

Machine learning and AI are at the forefront of fraud prevention in real-time payments; technologies that can analyse transaction data in real-time, identifying patterns and anomalies that flash red for fraudulent activity or sub-par financial robustness. 

‍

And by continuously learning from new data, AI systems can adapt to an evolving landscape to provide more accurate risk assessments.

‍

Add a changeable regulatory environment to the mix in financial services and it becomes clear that businesses of all stripes must revise and adapt, just to keep up. For example, a major challenge for businesses operating in the sector is to create an ideal balance between efficiency and security. 

‍

Traditional KYB procedures can be time-consuming, often requiring manual checks and lengthy approval processes. Worse, in many cases they just aren’t up to the job of detecting and weeding out dodgy transactions.

‍

But while artificial intelligence has helped to speed up the pace of payments globally, it can also help win the battle to ensure those transactions are solid. With AI-fuelled solutions like Copilot, by Detected, it’s possible to verify and clear transactions from low or no risk businesses in an instant.

‍

Better yet, it monitors customers, providing alerts when their status changes, for example if their creditworthiness reduces for whatever reason. This creates watertight relationships with key clients, ensuring safe transactions through your association with them.

‍

When it comes to instant payments and settlements, then, there’s far less trade off between customer experience and the security of your business, giving you the freedom to offer the best possible service without compromise.

‍

Market movements mean financial businesses must adapt to survive, and providing lightning quick transactions is a big part of the puzzle. But as firms adapt to the new normal, they must not forget the continued importance of security to their continued success.

‍

With the best KYB tools, your business can go on adopting the latest and greatest technology without dropping the ball on either speed or security.

‍

To find out more about how Copilot can support your business, please get in touch with one of the team. We’re excited to show you what it can do.

“In a world where time is money, the ability to offer real-time payments and settlements makes for a significant competitive advantage.”

The UK’s Faster Payments Service (FPS) processed more than 3 billion payments in 2021, up from 1.5 billion in 2016.

‍