Tuesday, 24 November 2015

beyond #KYC and #AML - acronyms for modern times - CYA NKYC JKTTM UCFRC JBTST

I've been asked a few times recently to go through that KYC process - "Know Your Customer" - the one where you have to identify yourself formally with a passport, driving licence and utility bill. It wasn't for mobile phone contracts, although that is a typical usage example.

It seems to be another creeping part of security measures. Formally it's part of the 'Know Your Customer and Anti Money Laundering" processes from the Money Laundering Regulations 2007 and the related European Joint Money Laundering Steering Group recommendations. I suppose that if the process separates me from drug barons and mafioso then fair enough.

I suspect this process, as well as being KYC, is increasingly becoming a CYA (Cover your a***) manoeuvre, and no doubt one that can generate a new form of fee income based upon the taking of a couple of photocopies. I notice that the 'automated check' alternative seems to run at about £18 per use.

It's ironic that in these times of increased checks the same organisations are taking other steps to NKYC (Not Know Your Customer). That's my term and as the name suggests, it's all about trying to not get too cosy with an individual customer.

Around the turn of the millennium, a popular practice was to create loyalty cards and systems that allowed better apparent knowledge of a customer.

Behind the scenes the data crunchers worked to identify the customer lifecycle and the trigger points when new things might happen. Simplistically it was "Hey, the new dads buy the Pampers, let's put a stack of beer at the end of the nappy aisle." And apparently it worked, dads bought the beer and sometimes remembered the nappies as well.

Another aspect of lifecycle was prediction and segmentation. This could also deselect the people that were no longer desirable in the profile. Either offer them something 'more appropriate' or freeze their services until they go elsewhere. Financial services have been known to refer to this as private financial services vs bucket bank.

Alongside all of this was the slightly unintended consequence of customers actually wanting to contact the organisations with which they had these longer-term relationships. Insurance, banking, that type of thing. We all know how that has gone, with often dodgy script-based call-centres (in fairness, my current bank is fantastic).

And in amongst it has been hidden a special truth. The NKYC element and the related inertia selling of the product. I've heard people running things say to me that they want the customer to sign up and then to never hear from them again.

I get it. JKTTM (Just Keep Taking Their Money).

This is great for some forms of insurance, most utility bills and other forms of regular service contract.

The thing that's changed is the UCFRC (Up Charges for Regular Customers) manoeuvre. Sometimes people say 'Usual' instead of 'Regular" but that's the rude version.

The approach is simple enough. Have a regular customer?

Don't offer them more. No, no, offer them less.

Keep them on moribund tariffs, create a new increase that's higher than everyone else. Keep it JBTST (Just Below The Switching Trigger).

Of course, there's all of the brokerage organisations with friendly cuddly toy gifts to help manage this, if you have the time to rummage through comparison lists and reset everything.

So one last term...


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