Financial companies face a big problem with their Know Your Business (KYB) checks. A shocking 76% of businesses have abandoned onboarding because of slow checks and delays. Meanwhile, companies with faster checks are winning these frustrated customers.
Most financial companies still use slow, manual KYB processes: looking up business records by hand, reviewing documents, and lots of back-and-forth with potential business customers. This worked when companies only signed up a few dozen merchants each month. But now, with thousands of businesses wanting payment services, manual KYB creates bottlenecks that hurt revenue.
The real cost isn’t just wasted time – it’s lost business. When merchants face weeks of delays and endless paperwork, they simply go to competitors who approve them faster.
Learning from market leaders
The best payment processors have turned KYB into a competitive edge. Companies like Stripe, Square, and PayPal have shown that compliance and good user experience can go together.
For example, Stripe’s Connect platform lets many businesses start receiving payments within minutes while compliance checks run smoothly in the background. Square pioneered fast sign-ups for small merchants, using automation to verify even tiny businesses with little credit history.
These success stories share common features:
- Real-time data checks via APIs
- Risk-based approaches that adjust requirements based on merchant profiles
- Using multiple verification sources (government registries, watchlists, etc.)
- User experiences designed to reduce friction and data entry
Starting your KYB update
Companies that successfully modernize KYB typically begin with targeted improvements rather than complete system overhauls:
- Find the biggest pain points in current onboarding
- Start with API connection to one or two key data sources
- Use a tiered approach where simple cases get auto-approved
- Keep manual review for complex or high-risk cases
The technical foundation often begins with connecting to official business registries.
Implementation challenges and solutions
Companies updating KYB typically face several hurdles:
Data quality differences: Business registry information varies across locations, making standardization difficult. Solutions like OpenCorporates help by standardizing company data from over 140 jurisdictions globally.
Regulatory compliance: BSA/AML laws, FinCEN’s Customer Due Diligence Rule, and OFAC requirements set strict standards for verification. Automated systems must capture business owners (25%+ ownership), screen against sanctions lists, and keep audit trails.
Integration complexity: Connecting to multiple data sources requires tech resources. Leading companies address this by using dedicated KYB platforms or APIs that combine verification sources.
Core automation strategy
The most effective KYB automation strategies combine several technologies:
- Registry data integration: Direct connections to government business registries
- Document processing: OCR and AI to extract information from uploaded documents
- Identity verification: APIs to validate business owners’ identities
- Watchlist screening: Automated checks against sanctions lists
- Continuous monitoring: Alerts for changes in business status or ownership
This layered approach allows for what industry leaders call “invisible KYB” – verification that happens behind the scenes without burdening the user.
Overcoming old thinking
The biggest challenge isn’t technical but organizational – moving from a compliance-first to a user-experience-first mindset while still meeting regulatory requirements.
Companies that excel at KYB automation prioritize user experience without compromising compliance. They ask: “What’s the minimum information we need to collect up front?” and “How can we verify data without burdening the customer?”
This shift in thinking transforms KYB from a blocker to something that helps business growth.
Building a competitive edge
Companies that master KYB automation gain lasting advantages beyond immediate efficiency. They can:
- Scale merchant onboarding without hiring lots more compliance staff
- Enter new markets more quickly with consistent verification processes
- Offer better experiences to smaller businesses traditionally underserved by financial institutions
- Reduce fraud through more consistent verification
For companies looking to improve their KYB processes, practical next steps include:
- Review your current workflow to identify manual steps and abandonment rates
- Explore data providers like OpenCorporates that offer authoritative business information
- Consider a step-by-step approach where automation is applied to lower-risk segments first
- Document your verification process to maintain compliance during changes
The future of KYB is digital and real-time. Companies that invest in automating verification now will onboard the next million business customers faster and more securely than competitors still using manual processes.
For more information
Learn more about how OpenCorporates’ data can help you understand corporate structures and manage risk. Reach out for a demo or explore our services.
