Know Your Customer (KYC) Buyers’ Guide 2025

State of the market: Know Your Customer (KYC) solutions allow organizations to verify their clients’ identities during the onboarding process to help prevent identity theft, financial fraud, and money laundering.

The global KYC market was valued at USD 2.93 billion in 2021 and is expected to grow at a CAGR of 20.8% by 2030. Currently, the majority of customers are in the BFSI, government, and telecom industries.
Market growth is being driven by increasing cases of identity-related fraud amongst financial institutions and stringent government regulations imposed as a response to help prevent fraud and money laundering.
- 92% of all cyberattacks are estimated to be financially motivated, making financial institutions an attractive target for threat actors seeking a large payout.
The COVID-19 pandemic also had a large impact on market growth, as it drove organizations to search for remote, digital verification methods.
- “The pandemic […] drove a lot of businesses across many different industries to double down and start focusing on their digital interactions with their customers, with their business partners, and with their employees.” – Jason Keenaghan, Thales.
- “As a US citizen with a bank account, it’s very common to go down to your local branch. The pandemic changed that—people couldn’t go and stand in line or stand with other people inside buildings. So, US banks suddenly became digital first! This means providing secure remote authentication for their customers.” – Joe Palmer, iProov.

Why trust us: We’ve researched, demoed, and tested several leading KYC solutions, spoken to organizations of all sizes about their customer verification and governance challenges and the features that are most useful to them, and interviewed executives from leading providers in the KYC space.

You can find our product reviews, interviews, and Top 10 guides to the best KYC products on the market in our Identity And Access Management Hub.

Our recommendations: Before we jump into the details, here are our top tips on how to get the most out of your GRC solution and make sure you’re choosing the right one for your business:

For maximum user attrition: While verifying your customers’ identities is important, it’s not worth much if they decide not to sign up at all because the process is too long, complex, and tedious. So, make sure your tool is designed with usability in mind: prioritize features like a mobile interface, multi-lingual support, real-time verification, and customizable branding.
For non-technical teams: Choose a solution that’s easy to integrate with your current onboarding setup. Typically, this means opting for a cloud-based tool or one with easy-to-use APIs.
For compliance-focussed organizations: Make sure the tool itself complies with data privacy regulations by storing customer data securely, and that it can help you achieve compliance with any other requirements relevant to your business.
For growing organizations and enterprises: Choose a solution that can handle multiple requests at any given time and securely store the data of a growing customer base.

How KYC solutions work: KYC solutions can be deployed in a few different ways:

On-prem: This method gives the most control over sensitive customer data and enables you to meet strict requirements for data residency. It’s typically preferred by large enterprises and financial institutions.
Cloud-based: This method has lower up-front costs, is easy to implement and maintain, and is highly scalable. It’s suitable for businesses of all sizes and often preferred by fintech and digital platforms.
Hybrid: This method is suitable for organizations that want the cost and scalability benefits of the cloud whilst still adhering to strict data privacy regulations.
API-based: This method requires developer expertise to integrate the KYC solution directly into your existing system. It’s widely used by fintech platforms, e-commerce, digital wallets, and mobile applications.
Managed: This method enables you to offload your verification, compliance checks, and reporting to a third-party vendor. It’s a cost-effective option for organizations with little in-house expertise.

Once deployed, when a new client signs up to your service, the KYC solution carries out a series of checks on that client to ensure that they’re a genuine, legitimate user.

The first check involves collecting the user’s personal details, such as their name, address, and contact details.
The second check involves verifying the user’s identity. This can be done in a few ways, such as scanning government-issued identity documents, carrying out biometric checks (via face recognition, “selfies”, or voice scans), analyzing their digital footprint (i.e., their online presence and web history), and cross-referencing their social media profiles. To prevent fraudsters from faking user IDs, modern KYC tools use machine learning to ensure the real user is authenticating in real-time.
The final check involves making sure that the user’s identity doesn’t have any prior associations with criminal activity. To do this, the solution cross-references the user’s details with blacklists published by organizations such as Interpol, the FBI, and HM Treasury.

If these checks confirm the user’s identity, they can proceed with the onboarding process. If they fail to confirm the user’s identity, the onboarding process is halted, and the user is prompted to provide additional evidence.

Benefits Of KYC Solutions: There are four main use cases for implementing a Know Your Customer tool:

Prevent fraud and mitigate risk.
- By verifying the identities of your customers, you can reduce your business’ risk of being exposed to financial crime such as fraud and money laundering.
Ensure compliance with regulatory requirements.
- Many industries must adhere to strict regulations that require organizations to know and verify their customers.
- A KYC solution can help you achieve and prove compliance with regulatory standards and frameworks, reducing the risk of legal penalties, fines, and reputational damage.
- For example, by using a KYC tools to verify the age of your customers, you ensure compliance with the Children’s Online Privacy Protection Act (COPPA), which protects the data of children under the age of 13.
Streamline the onboarding process.
- In the past, verifying someone’s identity required them to travel to a specific location to provide their ID in person.
- With a KYC tool, new customers can complete verification tasks from the comfort and convenience of their own home.
Improve your reputation.
- KYC tools can help you foster customer trust by showing your customers that you’re protecting their personal data and using it responsibly.

Common KYC challenges: There are a few common challenges that you might come across when implementing a KYC solution. Here’s what they are and how to overcome them:

Meeting changing compliance requirements: We recommend using a KYC tool that allows you to incorporate multi-jurisdictional compliance requirements and offers frequent updates to align with regulatory changes.
Data inaccuracy leading to false positives and regulatory risks: Choose a solution that offers a user-friendly interface to help minimize errors during data entry and uses robust validation mechanisms to ensure that each customer’s data is accurate and complete. For example, look for tools that use a “3D scan” that requires users to photograph their face from several angles, rather than taking a single face-on selfie.
High costs and complexity: Implementing a KYC solution can be resource-intensive and require significant up-front investment in technology and infrastructure. Opting for a cloud-based solution can reduce infrastructure costs, and leveraging machine learning to automate the verification process can minimize manual effort for your team.
Onboarding delays causing poor attrition: To minimize customer frustration, look for a tool that carries out automated checks in real-time and offers a mobile-friendly interface. You should also regularly monitor its performance metrics so you can identify and quickly address any bottlenecks.
- “You want to eliminate churn on your customers. You don’t want drop offs. You want to ensure you are removing as much friction as possible.” – Jason Keenaghan, Thales.
Data privacy concerns: Make sure that your chosen solution complies with data privacy regulations relevant to your business, such as GDPR and CCPA. You should also encrypt any sensitive customer data and conduct regular security audits.

Best KYC providers: Our team of software analysts and researchers has put together a shortlist of the best providers of KYC solutions, as well as adjacent lists covering similar topics:

Features checklist: When comparing Know Your Customer solutions, Expert Insights recommends looking for the following features:

Identity verification: Your KYC tool should be able to validate customer identities in real-time, using a combination of document scanning (e.g., for passports and driver’s licenses) and biometric scanning (e.g., facial recognition, fingerprint scanning, and voice recognition). It should be able to access international databases to complete these checks.
Compliance management: Your tools should check customers against Politically Exposed Persons (PEP) lists, sanctions lists, and adverse media databases. The tool itself should adhere to data privacy standards, and it should help you prove compliance with any other standards relevant to your business via comprehensive audit trails.
Automation: The tool should automatically assign customers a risk score based on pre-defined criteria and use AI or a rules-based engine to flag suspicious activity and automatically approve low-risk customers.
User-friendly interface: Customers should be able to complete the verification process via web, mobile, or in-app interfaces, and in their native language.
Real-time alerting: The tool should continuously monitor each customer’s risk profile for changes or suspicious activity and alert you in real-time of any unusual or anomalous transactions.
Analytics and reporting: You should be able to access reports on onboarding times, compliance rates, flagged activity, and successful sign-ups. These will help you identify and address inefficiencies in the KYC process, as well as prove compliance.
Integration: You should be able to integrate the KYC tool with your existing CRM, ERP, or onboarding systems via API.

Future Trends: In recent years, the KYC market has embraced cloud technologies, machine learning, and biometrics (face recognition) to enable organizations to verify clients’ identities remotely.

As the market grows, we expect it to continue embracing technological advancements in AI and digital footprint analysis to improve usability and accuracy.

KYC solutions may also evolve to embrace the use of “ID wallets”, which are applications that allow users to store verifiable credentials digitally. They work in a similar way to payment wallets such as Apple Pay and Google Pay, but instead of storing card details, they store digital versions of government-issued IDs, passports, health records, and so on.

Further Reading: You can find all our articles on Know Your Customer solutions in our Identity And Access Management Hub.

Want to jump right in? Here are a few articles we think you’ll enjoy:

Shortlist: The Top 10 KYC (Know Your Customer) Solutions
Interview: How HID Is Securing Hospitals, Airports, Banks And Digital Identities
Interview: Jason Keenaghan On Protecting Consumer Privacy With Better Customer Identity And Access Management
Interview: Looking Authentication In The Face
Blog: How Does Multi-Factor Authentication (MFA) Work?

Know Your Customer (KYC) Buyers’ Guide 2025

How to choose the right KYC solution.