KYC, or Know YourCustomer, is the crucial process of verifying an individual's or company's digital identity in the course of commercial activity. As human beings, trust in our identity, i.e. who we are, is at the heart of our social interactions: whether renting or buying property, receiving our salary, shopping in the supermarket, opening a bank account, or even reimbursing medical expenses.
KYC is not a new concept, but the rapid digitization of our societies means we need to adapt it to new uses. At Memority, we're convinced that well-equipped digital identity processes are a growth driver for businesses.
Identifier, login, IAM, password, IDaaS, Fido, passkey: all these barbaric terms have been dreamed up by our technology companies to reproduce ancestral concepts in the digital world. The more recent terms Identity Factory and KYCaaS extend this long list to offer new services.
From handshake to state authentication: the historical evolution of identification processes
Whereas in the beginning, a simple handshake was all that was needed to exchange one goat for three chickens, organizations and governments have long since put in place processes designed to guarantee the identity of individuals. Clay or wax tablets, discovered in large numbers during excavations in Mesopotamia and other ancient sites, were used to record decrees, loans, contracts and other commercial transactions. These tablets were authenticated by a representative of the ruling authority, often a scribe, who signed or stamped them with the seal of the local ruler.
As our civilizations evolved, the role of scribe was passed on to the Roman Scriptores and then to the copyists of the Middle Ages. As early as 1215, the Lateran Council imposed the keeping of registers of baptisms, marriages and burials by parishes, to combat consanguinity. This system was progressively enriched by councils and royal ordinances, until the French Revolution, when this role was gradually taken over by state services, notably mayors and notaries in France.
Trust in the industrial age
The importance of identity in modern society is undeniable, and record-keeping is by no means new. It's a fundamental process that dates back millennia, and continues to play an essential role in our current social and commercial interactions.
The modern age has seen a meteoric rise in transport and communication capabilities, enabling us to meet people farther and farther from our usual social circles, the historical guarantors of trust between individuals. Growing concerns about money laundering, the financing of terrorism and other criminal activities prompted the United States in the 1970s to introduce the Bank Secrecy Act, a law designed to detect and prevent money laundering. The same is true in France, with the LCB-FT. Checking the identity or documents of a new user is a legal obligation in many business sectors. This is known as KYC ("Know Your Customer").
From digital trust to digital identity
Telecommunications, E-commerce, and now xTechs: FinTech, InsurTech, EdTech, LegalTech, PropTech, TravelTech, RetailTech, and so on. The list of fields progressively revolutionized by technology continues to grow. Some that were thought to be protected are no longer so, such as notaries, who were considered reluctant to change due to their role as guardians of the books.
Large companies have long since industrialized and automated the maintenance of their user registers. Initially simple digital directories, they have evolved into identity and access management (IAM) applications, providing identity management interfaces and processes. Then they migrated to the cloud with IDaaS (IDentity as a Service), lightening the burden of infrastructure maintenance.
Finally, Identity Factory Memority offers organizations a service where identities are produced, managed and secured efficiently, reproducibly and securely. This includes automated processes for the creation, management and revocation of all types of identity (employees, partners, customers, connected objects), as well as mechanisms to guarantee the security of identification information and data associated with identities. Modern interfaces simplify data entry, and connectors facilitate integration with information system business tools. Integrated authentication, federation and access control functions streamline complex legacy IAM systems. The speed and controlled cost of Memority's activation makes it accessible not only to large organizations, but also to ETIs and even certain SMEs.
Digitization of processes: between progress and risks for digital identity
Indeed, since 2019 and the confinements, the last laggard organizations have digitized numerous processes, to succeed in continuing their activity despite the distance. Relying on services that enable them to do ever more, ever faster, but sometimes forgetting the historical reason why certain processes were deemed complicated, archaic or useless, and yet underpinning our civilizations: the importance of trust.
This rapid democratization has enabled too many malicious actors to take advantage of our weaknesses. Despite all the awareness-raising, training, warning messages and three-step validation screens, it's still all too easy to usurp an individual's digital identity. This can have devastating consequences for the owner of the stolen identity, or the defrauded correspondent.
For example, there are countless stories of unwarranted consumer loans, cars sold without papers, elderly people extorted, friends stranded on the other side of the world asking for money... Or considerable sums of money obtained illegally (drug and arms deals, etc.) laundered all too easily via digital exchanges.
The revolution in digital identity control services: solutions accessible to all
These multiple reasons have motivated companies to offer digital identity control services that are more accessible to non-state or financial organizations. This is to enable them to comply with regulations and reduce their risk. These services have been in existence for some fifteen years, and offer a wide range of services designed to adapt controls to the level of trust required for their customers' business needs.
As a result, our fellow citizens have discovered practices that have been used for several decades by certain large companies, and for the past ten years by technophiles and other crypto-addicts: electronic signatures, automated identity document verification, electronic wallets, encryption keys, etc. These are tools and services that can be used to reduce the risk of fraud. These are tools and services that automatically authenticate a person using their identity documents, thereby simplifying identity checks. While some are still tedious to use, others offer such fluidity that we are beginning to use them not only to reinforce security, but also to improve the productivity of our organizations.
To sum up
KYCaaS, or Know Your Customer as a Service, enables identity checks to be carried out in less than 5 minutes, whatever the time of day or day of the week, and at a cost of just a few euro cents.
- KYC -> Know Your Customer: customer authentication process
- KYCaaS -> KYC as a Service: online service to automate the KYC process
-Identity Factory Memority -> online service for producing, managing and securing all types of identity for organizations, to speed up and streamline user journeys and identity management processes.
