For motor financing, know your customer (KYC) checks boil down to three major points of impact. That is, the critical moments where not having an adequate KYC journey can do significant damage for a motor financing company.
Lending money
This is a fairly obvious one, but the moment your company lends money to a customer should definitely involve a KYC check. This is a normal use case for any KYC process.
Many motor financing companies have been doing this for decades and need to focus on upgrading their KYC journey to have an orchestrated process. This should be most considered in scenarios where distance has integrated itself into the sales process via the Internet or telephone.
However, even when the KYC process is done through a dealership, it is still wise to implement an upgraded KYC journey.
Dealerships have a vested interest in the KYC journey returning a positive result and with outdated journeys may be able to influence that decision, leaving the motor financing company exposed to undue risk.
Taking possession of the car
Delivering a car to a pre-agreed address in order for the customer to take possession is ubiquitous to the industry. That is true for purchases and rentals. But when the customer takes possession, without any KYC check to ensure that they’re the right person, the company is exposed to risk.
If your company hands over a car without checking the identity of the person and knowing their address, then you could easily lose thousands per transaction.
It would not take much for a bad actor to lie and say they live in an apartment building. Using that façade, they meet the car delivery agent in the carpark, take the keys and drive off into the ether.
Even worse, if KYC checks are not done at the point of taking possession of the car, then a man-in-the-middle attack could take place and a bad actor could take possession of the car before it has been handed over to the correct buyer. This would not only see the motor company lose a significant amount of cash, but they would also risk their reputation and trust with the customer.
Digital identity checks are now able to be performed quickly and easily, it makes sense to integrate them to the process of handing over a car to a customer. One simple check could save your company from being defrauded out of a five-figure product.
Renting a vehicle
The last point of impact is when issuing a short-term rental. This particular transaction has fairly thorough KYC processes in place, especially when the rental is carried out via a physical location.
However, there is an increasing trend of more mobility-friendly car rentals and to loop these in with carsharing schemes. But the risk is similar to when a customer takes possession of a vehicle, only now it is multiplied by the number of customers who will be sharing the vehicle.
Identity checks are carried out for insurance purposes. But going deeper on this issue, to include addresses and obtain a greater understanding of the customer, means that it’ll be easier to identify potential fraudsters. It will help with reducing the chances of a bad actor from abusing the inherent weaknesses of carsharing and defrauding your company out of its assets.
Make an impact that matters with a superior KYC journey.
