Increasing Automation in the KYC Process

Larissa Lewis February 22, 2022 Banking

KYC

An effective Know-Your-Customer strategy involves finding the right balance of procedures, so innocent applicants don’t have to struggle through unnecessary paperwork and swamp banks with insurmountable diligence. How can banks swiftly identify riskier prospects while not wasting time and attention on vetting squeaky-clean clients? The answer is automation. 

Why automate the KYC process?

During the onboarding process, banks sift through records like proofs of address, passports, articles of incorporation, and data from consumer reporting agencies to verify the authenticity of a potential client. Preventing anonymity, evaluating corruption risks, and exposing false identities protects banks, and society as a whole, against brazenly illegal activity. Wading through hard-copy paperwork using manual, hands-on methods is not only risky, but incredibly time-consuming. 

As a document-intense process, KYC is the perfect champion for automation. But, according to a recent study, only 40.6% of KYC professionals say that their onboarding operations are fully automated. A surprising 26.2% still manage the entire process manually, making it difficult to promptly process the modern inundation of data.

Automated technology, like digital process automation, can supplement human eyes and ears to read, extract, review, and collate identity-related data. Not only can automation do the preliminary legwork, but it can efficiently maintain an iron-clad audit trail required by many governing bodies. 

Leverage these opportunities for automation 

By automating KYC, banks can quickly validate identifying documents, capture biometric data, and automatically cross-reference paperwork with third-party databases. Plus, banks need streamlined practices to perform these vital checks whether a customer is applying in-branch, over the phone, or through an app. 

Missed connections between data points aren’t just a paperwork misstep but can cost an institution billions of dollars in regulatory fines. Standing sentinel against these risks are efficient KYC checks underpinned by a well-oiled automation strategy. Here are the areas where top-performing compliance departments are implementing automation. 

Data extraction

When you’re using automated technologies, the type of information computers can rapidly evaluate isn’t limited to structured data like spreadsheets and templated forms. Banks can automatically compile information from faxes, email attachments, online chats, and voice calls to build upon a KYC assessment. 

Continuous monitoring

Another component of a successful KYC review involves customer due diligence, or CDD. This process aggregates customer behavior to try and predict a customer’s conduct. When things go off the game plan, systems can quickly raise a red flag to trigger a deeper investigation. 

The KYC process isn’t a one-time check-up. Risk assessments are continuously updated with new information and reevaluated for new threats. Finding seemingly benign connections between an ever-expanding dossier, for a human, can be a month-long affair while computers can perform these feats almost instantaneously. 

Improve the customer experience

Banks relying on manual processes often put a significant onus on the customer to establish a comprehensive KYC profile. Clients must arrive in person to file important records or jump through hoops to meet a hefty list of requirements—in some cases, multiple times for a single financial product. 

In large financial organizations, KYC procedures are often a patchwork. Each team member might have their own way of doing things. While this can expedite an individual issue, it’s impossible to scale. Enter automation: streamlined workflow tools that track what information has been collected and what’s still outstanding. You can map the entire process for quick visibility into the progress of an application, codifying every step to improve audit trails, processing time, and consistency. 

Assemble key data points in real-time

Instead of manual upkeep of customer records, computers can automatically infuse KYC dossiers with real-time information. This data can come in through third-party sources or from a customer’s behavior within the bank itself. 

Today, 50% of compliance professionals feel as though they do not have the tools they need to do their job effectively. The complexity of KYC data banks need to collect will only grow in the future. Regulatory bodies will tighten the reins as new technologies introduce fresh ways for criminals to evade authorities. By implementing automation now, you can get ahead of these challenges and shrink KYC checks from a weeks-long process down to an automated minute.

KYC IN BANKING: Collecting the Right Information While Maintaining Customer Experience

KYC

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