digital financial crime: KYC and joining the dots

by | Oct 24, 2019 | All Blog Posts, Featured

Digital regulation and navigating the ‘fog of innovation’ were the subjects of discussion as financial crime practitioners, regulators and regtech experts gathered for a roundtable hosted by RegTech Associates.

All things Know Your Customer (KYC) and the digital financial crime landscape as we currently know it were on the agenda as representatives from more than 20 global banks, asset managers and fintechs were among those represented at the event sponsored by Encompass, Evalueserve and Tookitaki.

It is more critical than ever that financial institutions create more connected and sustainable KYC frameworks to both prevent and detect illicit financial flows, and this formed the key focus of the roundtable, which addressed the following questions:

  • how do financial firms select the products that solve their specific problems?
  • what are some of the challenges associated with today’s KYC processes and systems?
  • how can we address these challenges in a way that creates a more sustainable KYC framework?

Hear the views of some of those involved in this video.

An important part of the session, which Encompass Head of Partnerships Nick Ford was part of, focused on exploring the topic of ‘navigating the innovation fog’. There is so much innovation around – and in many different forms – but who is really delivering meaningful solutions? That was the question posed by RegTech Associates’ Co-Founder & CEO Jason Boud.

During an interesting slot, he explained how some vendors are innovative but that others lack a clear understanding of banks’ needs. This leads, he said, to customers having unreasonable expectations and, ultimately, slows down the adoption of regtech solutions.

Talk then moved to the subject of what can be done to address these problems – or ‘connect the dots.’ According to Mr Boud, it is only by understanding which products address which problems that progress can be made.

Questioning how this can be done in a way that creates a sustainable KYC solution, it was acknowledged that breaking through the ‘fog’ can be a real challenge for financial firms, with limited time and capacity to conduct thorough market scanning exercises.

Participants agreed that, in general, there is a willingness to embrace innovative technology solutions but organisations do come up against common barriers to adoption, including:

  • herd mentality – where financial firms choose the same product, because it has a credible track record in the industry and is already deployed in peer organisations
  • risks of onboarding a small, relatively new vendor
  • difference between what innovative solutions say they offer and what is actually delivered
  • lack of compelling business case – focus on cost efficiencies rather than increasing human capacity to address more complex tasks e.g. investigations
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maximising the benefits of KYC automation

The difficulties – and solutions – around KYC were also brought to the fore, with the diverse group of attendees giving insightful viewpoints on what they come up against.

Pain points highlighted included issues with remediation of legacy systems, the inability to efficiently share data within an organisation to create a single view of the customer, and the level of inconsistency found in terms of interpretation and regulatory expectations of key financial crime requirements.

So, how is sustainable KYC achieved?

Participants shared their opinion on the key points, including the balance between human and machine intelligence, as well as improving collaboration, as the FCA also gave input.

Overall, the roundtable delved into important, timely issues, providing thought-provoking discussion, as participants agreed that there is a need to shift from talk to action if we are to see sustainable, effective KYC approaches.

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Check out the RegTech Associates Vimeo channel for more videos from the day.

Nick Ford | Head of Alliances | encompass

about Nick Ford

HEAD OF ALLIANCES

Nick has over 10 years' business development and sales experience within the financial sector having worked in both start-up and global companies in South Africa and the UK. Nick’s experience includes a deep understanding of risk and compliance having most recently worked within Risk Managed Services as a KYC and Client On-boarding consultant. Nick now focuses on global collaboration projects and robotic KYC automation for major financial and professional service firms globally.

Connect with Nick on LinkedIn.

about encompass

Founded in 2012 by entrepreneurs Roger Carson and Wayne Johnson, Encompass is the creator of unique, innovative Know Your Customer (KYC) automation software that enables better, faster commercial decisions. The company is driven by the belief that the best decisions are made when people understand the full picture, fast.

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