In a recent whitepaper by RegTech firm Encompass Corporation, the company outlined what could be a smarter approach for KYC for businesses.
Amidst mounting regulatory pressure, financial volatility, and rising risks of financial crime, corporations are facing formidable challenges.
Pessimistic budgetary expectations loom large, especially when juxtaposed with wage inflation and stagnating compliance budgets. Firms, now more than ever, are being urged to be economical, tasked with accomplishing more with less.
While integrating know your customer (KYC) transformation is seen as a considerable investment, it is imperative for firms to unearth avenues for optimising their capital in the long run. This is aimed at diminishing the dependency on costly legacy systems and manual operations and embedding KYC within the overarching corporate transformation strategy. Simply allocating more funds towards expanding compliance teams is neither efficient nor sufficient.
In light of this, institutions are called upon to scrutinise the prospects of adopting a technologically advanced and data-driven methodology. A ‘digital-first’ KYC strategy offers not only a versatile service delivery but also a model that is streamlined and scalable for the future. Fortuitously, the evolution of modern technology eliminates the necessity for a complete system revamp.
Corporate banks have underscored the pivotal role digital transformation holds within the business landscape by embracing innovative technologies. However, competing budgets are predominantly secured by front office, ‘revenue generating’ operations, leaving a multitude of institutions encumbered with outdated, manual, and inferior processes pertinent to essential regulatory frameworks such as KYC and anti-money laundering (AML).
Reform in KYC processes presents inherent opportunities for institutions. Viewing compliance processes not merely as risk-mitigation measures, but as strategic avenues for growth, can enable institutions to harmonise technology and culture. This synergy will subsequently unlock the benefits of automation, enhancing revenue generation and client services.
The advent of advanced technology has rendered the transition to a more automated and tech-enabled KYC process less complex than perceived. The solutions available are designed to integrate seamlessly with a myriad of data and incumbent systems, building a robust digital ecosystem to bolster KYC. This includes client lifecycle management (CLM) and customer relationship management (CRM) platforms. Such integrative solutions offer a novel approach to KYC – one that is adaptable, scalable, and capable of aligning with an organisation’s growth trajectory, laying down a solid groundwork to futureproof KYC compliance.
Furthermore, having a surfeit of data does not invariably translate to better outcomes, especially in KYC’s context. It is pivotal for firms to meticulously review regulations to discern data prerequisites and ensure the procurement of only relevant, non-publicly available information. A streamlined data strategy, rooted in an effective risk-based approach to corporate onboarding, is indispensable. Acknowledging that not all organisations pose identical risks is crucial, and due diligence and data prerequisites may fluctuate based on jurisdiction, client types, and the banking products involved.
Modern KYC solutions empower users to refine much of the customer onboarding and periodic review process by automating data checks, document review, and risk-based workflows. By consolidating client data across existing systems and applying intelligent analysis, users can formulate customisable risk models to amplify efficiency, risk detection, and overall compliance.
You can download the whitepaper here.
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