PYMNTS Intelligence Alternate Banner June 2024

AI for KYB Onboarding Helps B2B Partnerships Scale Securely

AI for KYB Onboarding Helps B2B Partnerships Scale Securely

The key ingredient to success is often collaboration among businesses.

With news that Verituity raised $18.8 million to support the growth of its verified payout platform, knowing and validating who they are doing business with is top of mind for B2B firms.

B2B onboarding and know your business (KYB) programs are critical processes that set the tone for company relationships. Effective onboarding can lead to higher customer satisfaction, retention and long-term partnerships. Less effective onboarding or supplier relationship management, on the other hand, can have results that are ultimately disastrous.

The traditional methods of KYB and partner onboarding are often labor-intensive, prone to human error and slow to adapt to today’s dynamic regulatory landscape. These challenges can leave enterprises and financial institutions open to fraud and risk.

Observers believe that artificial intelligence is poised to revolutionize KYB and B2B onboarding processes, providing organizations with automation, accuracy and insight into the identity of the businesses they transact and operate with.

With B2B partnerships and online marketplaces driving growth across the landscape, business verification innovations and onboarding process improvements are becoming an increasingly crucial piece of the enterprise growth puzzle.

Read also: Managing Third-Party Risks Emerges as Key B2B Issue

Transforming KYB and Partner Onboarding Processes With AI

KYB is an essential process for businesses to verify the legitimacy, financial health and operational integrity of their corporate clients and partners. It involves collecting and analyzing vast amounts of data, including company registration details, financial records, ownership structures and compliance with regulatory requirements. Effective KYB processes help mitigate risks such as fraud, money laundering and reputational damage.

As Scott Steinberg, chief operating officer of Enigma Technologies, told PYMNTS, there has been an evolution of KYB practices — and there’s increased urgency to use technology to tackle “best practices” and satisfy existing and new laws.

Where KYB may have once been “an informal ‘sister’ or ‘brother’ of know your customer” initiatives, he explained, “KYB has become much more important.”

“If that customer has to go through a lot of friction to be able to pass your KYB checks [however], there’s going to be drop-off in that application process,” he added. “There’s going to be a drop-off in that signup process.”

The aid of better, automated data processes, using AI to strive toward instant KYB verification, is proving to be valuable in enabling future-fit B2B relationships.

And KYB’s cousin, partner onboarding, is also getting a much-needed, end-to-end facelift across its workflows via the help of data and AI. Partner onboarding is the process of integrating new partners into a company’s ecosystem. This includes suppliers, distributors, resellers and other strategic allies. A streamlined onboarding process ensures that partners are aligned with the company’s standards, policies and expectations, facilitating smoother collaborations and driving mutual growth.

PYMNTS Intelligence found that companies are integrating technologies addressing advanced ID verification more often as remote onboarding becomes more important and ubiquitous.

AI-powered systems can automate the collection and verification of business data from multiple sources, including government databases, financial institutions and public records. Natural language processing algorithms can extract relevant information from documents, websites and news articles, reducing the time and effort required for manual data entry.

See also: Unmasking Digital Imposters Is Rising Priority for Industrial Economy

Identity Theft, Phishing and Data Breaches Have Reshaped KYB Landscape

AI can also cross-reference data from various sources to ensure consistency and detect discrepancies that might be missed by human analysts, while at the same time analyzing data on partner preferences, behavior and performance to create personalized onboarding experiences. This includes tailored training programs, customized communication and targeted support. By addressing the unique needs of each partner, businesses can foster stronger relationships and drive better outcomes.

Still, firms need to be aware that the same digital solutions they are using to streamline their workflows and optimize onboarding processes can also be used by bad actors looking to take advantage of a wide-open digital playing field to commit fraud and impersonate legitimate businesses and vendors.

As Prove Identity CEO Rodger Desai told PYMNTS, major breaches such as a hack into Change Healthcare have provided huge swathes of transactional data. This then becomes fodder for fraudsters looking for “replayable” relationships that can give them grist for business impersonation schemes, fake invoices and even employee details to appropriate to create synthetic identities.

PYMNTS Intelligence found that companies relying on legacy and manual verification solutions lose above-average shares of annual sales to fraud, at 4.5%. However, firms using proactive and automated solutions, such as those powered by AI and machine learning, typically reduce their share of lost sales to 2.3%.

Ultimately, future advancements in AI will enable more sophisticated analytics capabilities, allowing businesses to scale their KYB and partner onboarding processes more effectively, accommodating growth without compromising on quality or compliance. This will be particularly beneficial for companies operating in multiple jurisdictions with varying regulatory requirements.

For all PYMNTS AI and B2B coverage, subscribe to the daily AI and B2B Newsletters.