How to improve KYC conversion rates: 8 strategies

8 ways to optimize KYC for better conversion rates

In order to improve your KYC conversion rates, you need to improve the onboarding process itself. Here are eight strategies to achieve this:

1. Leverage as many data sources as possible to locate and verify individuals

Relying on a single data source increases the risk of failed matches. Because records from that one data source may be missing, outdated, or incomplete, valid customers might fail the initial identity verification check and be flagged as a false negative match. This pushes them into unnecessary extra checks or a manual review queue, adding friction to the onboarding process.

If you access a large variety of complementary data sources to receive as much information upfront as possible, on the other hand, you can keep more customers moving through onboarding smoothly since it’s a lot more likely that at least one data source is up to date and correct – and increase your conversion rates as a result.

Addresses, for example, are a common and useful data source used in identity verification. By quickly capturing, validating and standardizing customer location data at the first point of entry, you ensure a stronger customer experience, identity verification, and operational efficiency downstream. Unfortunately, addresses are also a frequent source of failed matches because they vary widely by country in language and format. This can make it difficult to match the data reliably against KYC, credit, telecommunications and registry databases that rely on standardized inputs.

However, some products, such as our location solution, can parse addresses into standardized components (i.e., street, building and postcode data fields) and normalize formatting to postal standards for each market.

Our solution can also make use of a type-ahead search connected to authoritative postal sources, which enables users to select a verified address instead of typing it in. As a result, typos, abbreviations and formatting issues are eliminated before submission and partial or ambiguous entries are resolved in-session.

This feature also speeds up onboarding: our location solution, for instance, reduces address data entry time by 78% and input errors by 20%. Better data upfront is a force multiplier – it drives revenue, efficiency and customer satisfaction. With our combined location and identity intelligence, businesses can achieve up to 98% address accuracy, 30% lift in onboarding pass rates and 97% reduction in onboarding time.

Take myPOS, a fast-growing European fintech providing small and medium-sized businesses with in-store, online and mobile payment solutions, for instance. By combining location and identity intelligence, myPOS increased its first-time KYC pass rates by 25% across its top four markets.

Apart from addresses, other common data sources used for identity verification include:

Utilities	Gas, water, electric
Documents	Passport, national ID, driver’s license
Government registries	Electoral roll, birth or marriage certificates, population registry
Credit bureaus	Experian, Equifax, TransUnion
Financial institutions	Banks, credit unions
Biometrics	Facial or fingerprint ID
Device data	IP address, geolocation, mobile intelligence
Watchlists	Sanctions, PEPs, adverse media

2. Cleanse and standardize data for accurate interpretations

Accessing a large number of data sources is one thing; cleansing them for more high-quality interpretations is another. When customer data is inconsistent or poorly formatted, genuine users are often treated as higher risk than they truly are.

Inconsistent formatting can happen due to a variety of reasons, one of which is fragmentation: if you stitch together multiple vendors for various datasets and KYC elements across jurisdictions, you may need to spend significant time interpreting and unifying data inputs.

From the customer’s perspective, this may show up as an error message or a request to re-enter their information. But each retry adds unnecessary friction, increasing the likelihood of a drop-off.

This is why putting an effective system in place – one that cleanses and standardizes all information at the point of capture – is another way to smooth out customer onboarding and improve overall conversion rates.

3. Find the right level of friction for each customer

A completely frictionless onboarding experience may sound like a good thing, but it can actually increase your risk of fraud and compliance issues. After all, onboarding that requires little proof or effort is attractive to fraudsters who can automate account creation at scale. What’s more, relying on minimal checks may only help you confirm identity existence, not necessarily ownership.

But too much friction can lead to drop-offs, which is why it’s important to strike the right balance.

Ideally, the level of friction for each customer should be based on factors like jurisdiction or risk score. Here are a few examples of how to achieve this in practice:

Tiered verification

Tiered verification balances your need for data and compliance demands with customer convenience. With this approach, you ask for only the necessary information to onboard a customer and request more later (if needed). This improves the customer experience, and therefore conversion rates.

In certain U.S. onboarding flows, for example, requesting a partial Social Security Number (SSN) might be sufficient for an initial check, with the full number requested later if verification fails or if some regulatory thresholds are triggered.

Dynamic routing

Dynamic routing refers to an automated onboarding process wherein customers are routed from one KYC component to another in real time, based on factors like region, risk score, or previous verification results.

As a result, low-risk users can be fast-tracked and auto-approved while high-risk customers pass through additional checks or manual reviews to confirm their identity.

4. Automate routine checks to streamline onboarding at scale

Manual processes are still quite commonplace in KYC, yet they’re also what’s often behind drop-offs. If a customer completes their application quickly but is told it will be reviewed within 24-48 hours, for instance, they may sign up with another provider that offers instant approval instead.

Fortunately, many KYC checks can be automated to speed up onboarding and make it easier to scale and increase conversion rates:

• Authenticate documents through smart capture ID technology instead of manual review: When users are guided by the technology to take a photo of their documents, it ensures they capture all the necessary information and prevents them from submitting unusable images that cause downstream KYC failures. Any image issues, such as blurriness or glare, are detected before submission.
• Automatically validate customer data against trusted sources: Compare the user’s information against authoritative databases and detect close matches that may contain typos, such as if the customer mistypes their address. Otherwise, these genuine customers could fail the initial identity check because of a simple misspelling.
• Use biometrics to block impersonation attempts: Automating liveness detection, such as movement prompts or blink tests, and matching a selfie with an ID photo can help ensure identities are genuine.
• Perform ongoing monitoring: Automatically refresh data via API connections to global authoritative registries to regularly rescreen customers against updated watchlists to detect new hits.

5. Integrate advanced risk signals to spot fraudsters early and minimize false positives

Advanced risk signals offer stronger fraud detection earlier in the funnel and minimize false positives by providing additional context and improving risk scoring accuracy.

These signals can include:

• Email intelligence: Identify synthetic identities by detecting red flags, such as newly created email accounts, patterns linked to mass account creation, or known fraud-linked domains.
• Mobile data: Confirm phone number ownership and stability by indicating whether a number is active and reachable, the length of time the number has been registered, whether it’s prepaid or postpaid, any recent SIM changes, and the number type (mobile vs. VoIP, for instance).

Some providers also offer additional advanced risk features. GBG Trust, for example, is a cross-industry solution monitoring millions of transactions, across 28+ sectors, with powerful rules to deliver real-time fraud protection.

By positioning it at the top of the onboarding workflow, you can detect things like suspicious identity data anomalies or high-velocity submissions in real time.

Here’s how it works: when a customer interacts with your platform for the first time, a risk score between 1-100 is generated. This score reflects patterns of suspicious activity across the network, enabling you to send higher-risk customers through additional authentication steps from the get-go and detect fraudsters early on in the process.

6. Invest in a clear, user-friendly UX for faster onboarding

A confusing user experience can negatively impact conversion rates because it frustrates the customer and may cause them to make errors. If the instructions are unclear, such as asking for proof of address without explaining what qualifies, the user may upload the wrong document type, fail the check, and abandon the process when asked to upload another document.

One way to improve your UX is by using pre-populated onboarding forms that flag errors before the information is submitted. These forms minimize data entry errors by using pre-filled data to reduce typos in names, addresses or dates of birth and auto-formatting phone numbers and postcodes. Fewer mismatches against verification databases means fewer failed checks and higher automated pass rates.

Other ways to offer a clearer UX include:

• Implementing progress indicators to show users how many steps remain
• Using simple and clear language instead of jargon, such as “Take a photo of your ID” instead of “Upload government-issued documentation”
• Making sure screens are clutter-free so that customers don’t feel overwhelmed

7. Keep track of each individual as a complete case file for quicker manual reviews

Without a unified case file for each customer, manual reviews can be slow and error-prone. To counter this, all relevant information should be collected and stored together as a single, organized record.

This can include:

• Submitted documents, such as ID and proof of address
• Biometric data, such as a selfie or liveness check
• Risk scores, including email, phone and device intelligence
• Verification results
• Notes or flags from automated or manual checks

When a human analyst needs to review a case, they won’t have to search multiple systems to gather all necessary information – and this reduces the amount of time spent on each review, speeding up onboarding.

8. Bring all KYC elements together through a single global orchestrator

Having identity checks and data sources fragmented across multiple systems makes KYC slower, more costly, and more operationally complex as you need to handle a high number of technical integrations and contracts.

The benefit of using a unified solution is that all your KYC elements, from document authentication and biometrics to watchlists screening, come together in one platform. This eliminates the need to juggle multiple vendors.

And when the solution processes all data uniformly across providers, you get one clear, consistent output, which can simplify decision-making and reduce errors from inconsistent data formats.