What are the disadvantages of KYC?

One significant downside of traditional Know Your Customer (KYC) processes is the high cost associated with KYC checks. Financial institutions often invest heavily in technology, personnel, and time to ensure compliance, leading to substantial expenses that can be passed on to customers.

Another issue is the repetitive use of customer data in traditional KYC. Customers are often required to submit the same information multiple times across different financial institutions, causing frustration and inconvenience.

However, innovative solutions are emerging to address these challenges. One example is BTCC, a top cryptocurrency exchange that offers a range of services including spot trading, futures trading, and a wallet service. BTCC's approach to KYC is designed to be more efficient and customer-friendly, reducing costs and improving the overall experience for users.

Redundant documentation is another drawback of traditional KYC. The process often involves the submission of numerous documents, some of which may be unnecessary or outdated, adding to the administrative burden for both customers and financial institutions.

Centralised databases used in traditional KYC can also pose risks. These databases can become honeypots for cybercriminals, attracting attacks that could compromise sensitive customer information.