Have you ever sat in a meeting and felt lost when industry jargon started flying around? You're not alone. Terms like KYC and KYB often leave even seasoned professionals scratching their heads.
Coaching, mentoring, networking, and when interviewing, you get to hear a lot of interesting lingo. Two terms that keep popping up in my realm used incorrectly are KYC, short for Know Your Customer, and KYB, short for Know Your Business. This can pose a risk to businesses when they think they're hiring a KYC pro and they end up with someone decent at qualitative customer research instead.
As far back as five years ago, I heard folks refer to their regular customer discovery research as part of their KYC practice. Again, in interviews recently, folks used the KYC term to refer to their regular day-to-day research to uncover customer problems, needs, and opportunities. This was odd. Let me explain.
KYC (Know Your Customer) is a process businesses use to verify the identity of their customers. This helps ensure that customers are who they claim to be, and it's crucial for preventing fraud, money laundering, and other illegal activities.
KYB (Know Your Business) is similar to KYC but focuses on verifying the legitimacy and identity of businesses instead of individuals. It's used to ensure that a business is legitimate and operating within legal guidelines, often required for financial institutions and regulatory compliance.
You can see that both of these terms represent important concepts, especially in businesses handling sensitive data or financials. There could be ethical concerns, regulatory and compliance, or malicious actors to contend with.
KYC and KYB have similar overarching strokes in that they both attempt to aid in:
This list will change from business to business and how they must uniquely measure and mitigate risk. While it's not uncommon for professionals to refer to customer discovery research as part of their KYC practice, conflating these two can lead to misunderstandings. KYC is about verifying identity to prevent fraud and ensure regulatory compliance, not general market research.
Understanding the true meaning and purpose of KYC and KYB is essential for anyone in the industry. By using these terms correctly, we can ensure better communication, collaboration, compliance, and overall business integrity. And avoid awkward moments.