The business verification industry in 2023: Why your business needs KYB solutions today
Know Your Business regulations and systems allow corporations to check on other businesses working with them. While KYB Solutions are crucial for all businesses, they are particularly important for B2B businesses. B2B businesses have their entire business models completely dependent on other businesses. Keeping tabs on those they engage with allows businesses to ensure that their workings are legal and they are not dealing with fraudsters. Business verification is gaining increasing attention in 2023. With a number of business verification services available today, being aware of market trends has become necessary.
Know Your Business Solutions – A brief introduction
Know Your Business KYB is a simple yet essential process for developing a successful business. While its counterpart KYC or Know Your Customer is a well-understood and implemented framework, KYB is still striving for attention.
Know Your Business is essential for all businesses that desire to protect themselves from being scammed by other businesses. These other businesses can be partners, clients, suppliers, or consultants, etc. KYB solutions are primarily installed to verify a range of characters of a potential partner business. These characteristics are largely dependent on a business’s personal needs and its service provider.
However, for the most part, these include the other company’s,
- Name
- Registration details
- Details of Ultimate Beneficial Ownership or BFO
- Financial information
- Industry rankings
Being aware of this data allows enterprises to make informed decisions about taking up new partners or clients as well as about retaining old ones.
Digital KYB Solutions – What’s going on in 2023
Thanks to the coronavirus pandemic and businesses moving online, the past few years have shown immense success for the business verification industry. Additionally, with many already utilizing KYC due to legal requirements and benefits, it was natural for businesses to adopt business verification services as well.
According to a 2022 report by Market Growth, the industry worth or market size of the digital KYB industry in 2022 was about USD 186 million. This industry value was projected to increase to USD 348.93 million by 2028 with a CAGR of 11.81%. By the year 2030, the Know Your Business industry might project a CAGR of 13.05%.
A growing trend in digitalization as well as entrepreneurship has also acted as a benefit for the KYB solutions businesses.
The banking sector was a key player for Know Your Business solutions. However, receiving increasing investments, in digital banking, over the recent few years is another reason behind the soaring growth of the business verification industry.
Why KYB checks must not be ignored or put off today
A growing business industry means growing competition and that requires efforts to stay in the game. With today’s competitive economy, scams and frauds have become wholly unaffordable. Even a single incident can bring a business down in terms of finances as well as reputation. The same goes for errors, data breaches, lawsuits, etc. When there are many competitors in the market, reputation matters a lot. Know Your Business verification services, besides offering security and safety features, are a very efficient way to build up brand reputation in 2023.
Rising Fraud Trends and Benefits of Company Verification Services
B2B fraud is a recent rising trend in digital fraud. According to the Association for Financial Professionals, in 2018 over 82% of businesses had to deal with B2B fraud. This was a major rise as compared to the previous years. With the 2020s ongoing now, B2B fraud will likely be the highlight of this decade.
KYB solutions authenticate the identities of entities that a business may potentially interact with. Business verification reduces all chances of interactions with fake businesses, shell companies, or simply those that aren’t doing so well and have the potential to drag your business down too. Offering one of the easiest ways to combat such fraud, Know Your Business solutions also help calculate and mitigate financial risks allowing for a better business.
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Protection from Money laundering schemes
Whether you have a banking business or you deal with cryptocurrency, utilization of business verification services is an essential requirement for all financial institutions.
Know Your Business Processes were not always a requirement for financial institutions. These were only introduced in 2016 after multiple incidents of money laundering were observed. Ever since 2016, money laundering has only increased and organizations such as FATF are rigorous in the implementation of AML regulations and coming up with new solutions. For businesses in 2023, adherence to AML and KYB regulations is essential. Any lacking in compliance can mean fines, temporary or permanent bans, and even jail time.
To sum up
For financial institutions, verifying businesses you interact with has become as essential as registering your company.
Rising rates of fraud and financial crimes have made 2023 a very sensitive year for businesses that deal with international clients. Additionally, different countries have different regulations. This makes Know Your Business solutions even more important for international companies. Compliance and legal protection are the simplest and most straightforward benefits of business verification. However, the total benefits of utilizing business verification services are endless as they help build customer trust, increase profitability, and build a brand reputation. The Know Your Business process is simple, and today, the existence of Digital KYB solutions has made it even easier and much more efficient.