⦿ Executive Snapshot

• What: A report analyzes the impact of KYC/KYB ownership models on fraud risk and costs.
• Who: PYMNTS Intelligence and Trulioo, based on a survey of 350 global firms.
• Why it matters: Understanding KYC/KYB ownership helps firms mitigate fraud risks and optimize operational costs.

⦿ Key Developments

• Firms using internal teams for identity verification reported a 78% loss rate after detecting KYA threats, compared to 44% for those using external providers.
• Internal teams incur higher costs, averaging $26 per consumer KYC review and $51 per business KYB review, versus $11 and $20 for external teams.
• Higher spending by internal teams does not correlate with better outcomes, as they also report more false positives and transaction declines.
• External teams reportedly perform better on loss prevention and customer friction, but may limit expansion into new markets.
• Hybrid models combining internal and external resources require careful oversight and performance benchmarks.

⦿ Strategic Context

• The report highlights the evolving landscape of digital identity verification amidst increasing automated threats in the KYC/KYB space.
• It emphasizes the importance of balancing internal control with external expertise to effectively manage fraud risk and operational costs in a competitive market.

⦿ Strategic Implications

• Companies may need to reconsider their KYC/KYB ownership models to improve fraud prevention and reduce operational costs.
• The findings suggest a trend towards hybrid models, which may become increasingly popular as firms seek to optimize their identity verification processes.

⦿ Risks & Constraints

• Firms relying solely on internal teams face risks of fraud exposure and operational inefficiencies despite higher spending.
• External providers may introduce limitations on market expansion, posing strategic challenges for firms looking to grow.

⦿ Watchlist / Forward Signals

• Future developments in KYC/KYB practices may depend on regulatory changes affecting identity verification processes.
• Companies' ability to adapt their verification models effectively will signal their resilience against fraud and market competitiveness.