From owning to sharing: why KYC is crucial for mobility providers
Shared mobility is on the rise. Research by ANWB Zakelijk (Royal Dutch Touring Club) shows that more than eight in ten entrepreneurs eventually expect to switch from owning to sharing means of transport, be it bicycles, scooters or cars. That popularity presents mobility providers with a challenge. How do they conclusively identify all these new customers?
Mobility providers need to know who they are entrusting a car, motorcycle or scooter to. ‘Know Your Customer’ (KYC) is very important in this sector. They need to know who the user is, if he has a valid driver’s license and if he can afford to pay the bill. Validation of this data is essential. For example, the mobility provider must be sure that the user submits a copy of his own passport or driving license, and not a stolen or forged identity card.
Providers face several risks if this KYC process is not in place:
1. Stolen vehicles
There is a risk of criminals using fake identities to hire vehicles with the intention of stealing them or using them for illegal activities. According to a recent study from Signicat, ID document forgery is the most common type of identity fraud. Stolen vehicles can lead to significant financial losses and reputational damage.
For example, in the Netherlands, The National Intelligence and Expertise Centre Vehicle Crime (LIV) concluded that car thieves are increasingly reselling and exporting rented or leased cars with false papers to foreign countries. Last year, police received nearly 1,300 cases. In 2016, the figure was 450.
2. Billing and collection problems
Not doing credit checks on a user can risk the user not paying his invoices and any parking fines he might receive.
If a customer's billing details are incorrect, this can lead to unpaid invoices. Correcting wrong billing data also incurs additional administrative costs. This can range from the time spent on finding out the correct data to costs incurred in resending invoices.
In some cases, incorrect billing data can lead to legal problems. If a customer claims not to have received an invoice because of incorrect billing data, this can lead to disputes over late payments or fines, customer dissatisfaction and even loss of customers.
3. Compliance issues
Leasing parties have to comply with various laws and regulations regarding the identification and verification of customers. In the Netherlands, for example, leasing is covered by the Money Laundering and Terrorist Financing (Prevention) Act (Wwft).
This law requires organisations to conduct a thorough customer due diligence, in which establishing the identity of the customer is a crucial part. Failure to comply with the Wwft and other relevant laws and regulations can lead to heavy fines and other sanctions, which can seriously damage the provider's financial position and reputation.
Onboarding often manual and ineffective
The importance of thorough onboarding cannot be underestimated. Unfortunately, many onboarding processes are still (partly) manual, requiring customers to come to an office to physically show their ID. These manual processes are time-consuming and error-prone, which can lead to delays for customers and higher costs for leasing parties.
Customers who have a frustrating or inefficient onboarding experience may even drop out. Signicat research confirms this: more than two in three consumers will have abandoned applications by 2022. This happens mainly because it takes too long (21%) or because too much personal information is requested (21%).
Automating onboarding
An onboarding process will require simplicity, speed and ease of use to smoothly guide customers through the steps. It also needs to be accurate and secure to protect customer data and prevent fraud. Moreover, compliance with all relevant laws and regulations is essential. Automation can help with this.
Signicat offers a full range of solutions that help optimise the onboarding processes. With comprehensive digital identity solutions, including compliant onboarding, secure login and electronic signatures, Signicat ensures local compliance in multiple markets.