Making KYC and customer onboarding a competitive advantage

Commercial, corporate and investment banks face mounting pressures to transform. Making know your customer (KYC) and customer onboarding a competitive advantage can be a clear differentiator.

However, few have evolved their KYC processes. Many still rely heavily on outdated technologies, often resulting in overly complicated manual onboarding processes.

Automation is key to unlocking opportunity. But where are banks on the transformation journey and how are they preparing for the future?

Setting the scene

I recently hosted an Encompass breakfast event on the subject of making KYC and customer onboarding a competitive advantage. The session was an open discussion, only made possible by a blend of panelists.

Collaboration between bank and vendor insights, from deep KYC experience and broader perspectives, led to organic discussions. I was delighted to be joined by:

• Rob Drewienkiewicz (Head of Client Lifecycle Management, Wholesale Operations, HSBC)
• Delphine Masquelier (KYC Solution Manager, Quantexa)
• Alister Coates (Senior Manager, I&D – Financial Services, Capgemini)
• Simon Hornibook (Head of Client Lifecycle Management, Commerzbank)

Having had a chance to reflect, I am now sharing my key takeaways on three discussion topics.

Have we reached a critical point for KYC transformation?

In the opinion of the panel – yes!

Technology now allows banks to envision a better state. However, each bank will travel a different journey with incremental phases along the way.

pKYC may be a driver for transformation and a north star, but when you get there is not as important as taking the first step towards it. Focusing on a series of incremental phases which deliver tangible benefits is far more valuable and constructive. With each bank needing to run their own race rather than that of its competitors.

Having reached the critical point for KYC transformation, banks should set a road map. The transformation may span multiple years, particularly when recognizing the needs across several stakeholder teams.

The right foundations and a north star goal takes time. There also needs to be collaboration. Syndication of ideas across the bank is a positive, but not if it becomes a paralysis state.

Collaboration to support making KYC a competitive advantage

The panel also discussed how collaboration across tech providers and strategic integrators is a positive trend. The combination of tech and strategic integrations can only benefit banks in the move towards transformation. With one of the panelists sharing,

What we are looking for is a solution to our problem – not products. As banks, we do not want a series of people knocking at the door. We would rather have a collaborative approach from vendors to solve our pain points and challenges.  

Preparing KYC and customer onboarding for the future

The panel discussed how each bank is at a different digital maturity stage. Before meaningful transformation can be considered there must be a robust client lifecycle management (CLM). The data must be in good order and the bank should not be under remediation activity. All must be aligned, otherwise it will compromise the benefit of transformation.

Supporting my view, the panel also agreed that in-house builds are now lagging behind the available technology in the market. As an example, a bank may have a wealth of data integrations but not have functionality such as a match and merge capability, or the ability to automatically unwrap all the associated entities.

The future of KYC is perpetual

Agreed! But it is a long journey to get there, and it is not binary.

It is evident from this session, and others, that there are a lot of pKYC conversations, but no one I have spoken to is delivering the end goal yet. Everyone gets that pKYC has its benefits and it is an influencing north star, but banks are at various stages in the journey.

One of the panelists shared that they had been given the budget and directive for pKYC. Whilst they are a long way down the automation route and have delivered much value along the way, they are still undertaking periodic refresh. Further commentary added – ‘do not make the mistake of saying I am going to get to pKYC in a specified time. Instead think about the incremental changes and establish a realistic timeframe as you evolve

The mood within the room was: even if you do not end up at pKYC, you will still have significantly improved the KYC process along the way.

In summary my final take away was that banks recognise the opportunity to positively differentiate themselves through their KYC processes and that the journey to get there is clearer now than ever it has been, driven by developments in technology and collaboration across vendors.