The majority of organisations see the digital sophistication of their KYC approach as mediocre or poor, according to new research from Moody’s Analytics.
The report found that 76% of organisations assess the digital sophistication of their own KYC approach as either poor (29%) or mediocre (47%).
This finding comes from Moody’s Analytics new ‘Perpetual KYC: Transforming Risk and Compliance’ report. The study aims to uncover the key challenges faced by implementers of KYC and understand how organisations are transforming their approach to risk and compliance.
Another finding from the report was that the lowest-scoring firms, in terms of digital sophistication, tended to be traditional banks and professional services firms. These firms are typically weighed down by legacy infrastructure and paper-based processes.
Despite this, the report claims 50% of firms have an “enlightened” view of KYC and believe it brings the opportunity to improve ROI within their organisation through better customer experience.
One other finding from the report shows the rising interest in perpetual KYC. It stated that six out of ten respondents are familiar with the concept of pKYC, and understand that if executed correctly it has the power to be transformational.
Perpetual KYC differs from traditional KYC processes as it operates as an automated, trigger-based activity that works in real-time. Through this continuous KYC, compliance teams can stay on top of changes, rather than waiting for the annual review.
Keith Berry – general manager, know your customer solutions at Moody’s Analytics – said, “Compliance methods are adjusting to the new global reality, but there is still some way to go before they catch up with this new pace. Rather than just adhering to regulatory requirements, the future of compliance is one where organisations can tailor their KYC to their own risk appetite.
“Our research found a strong desire to automate KYC, and although all firms are at different levels of digital sophistication, for half of firms it is an opportunity to bring them closer to their customers. Perpetual KYC is key to transforming risk and compliance, helping compliance teams change their role from purely regulatory to enabling businesses to understand risks and make decisions with confidence.”
Last month, Moody’s Analytics partnered with Digital risk processing platform Cytora to streamline risk in insurance.
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