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Increasing front office capacity with reduced KYC outreach

By Veronica Genao | Tue 25 July, 2023
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Know your customer (KYC) can be a real distraction for the front office. Increasing front office capacity with reduced KYC outreach provides the opportunity to win more business and meet growth targets. Additionally, the more burdensome the KYC process is for corporate clients, the greater impact it will have on customer lifetime value.

Corporate banks can share an anticipated nine percent global banking revenue growth per year through to 2025. With the average onboarding process for a new corporate client taking up to 100 days, transformation is key.

The front office plays a crucial role in maximizing the customer experience. In this blog we look at how banks can explore strategies to streamline their KYC process. Furthermore, removing some of the roadblocks and allowing the front office to focus on generating growth and achieving competitive advantage.

Common complaints from the KYC front office

The front office, as the initial point of contact with the client, plays a vital role in gathering information to establish client suitability. However, relationship managers (RMs) encounter several challenges.

Outdated processes 

For many front office teams, the onboarding process is cumbersome and protracted. Additionally, there are often poorly designed KYC processes which have stemmed from legacy ways of working. Instead, the RM’s time is consumed by administrative tasks taking them away from the all-important value-add services that will see their customers adopt additional products and increase their lifetime value.

Lack of collaboration

Poor communication between front, middle and back-office functions is often attributed to a siloed approach. As a result it threatens front office efficiency and leads to a lack of connectivity between teams.

Disparate systems

RMs use customer relationship management (CRM) systems to manage their activities. Whereas the middle and back-office functions use client lifecycle management (CLM) systems to manage customer information throughout the client relationship. The customer however falls between the two from a disjointed approach to their KYC data being stored across several systems.

Poor data quality 

Legacy data models are often not fit for purpose. Instead, there can be incomplete datasets, multiple entries for the same client across different systems, lack of master data management (MDM) and insufficient current or historical data governance. Additionally, requests between teams are often raised via internal ticketing systems further impacting the time to onboarding.

Excessive client outreach

The front office can be stuck in the middle having to deal with constant requests from internal teams and frustration from clients which prevents them from focusing on achieving sales. By creating a more complete KYC profile the bank can increase the volume of straight through processing (STP) without the need for excessive and unnecessary client outreach.

KYC backlogs

With backlogs increasing, banks often throw additional headcount at the challenge. Instead, there is opportunity to prioritize the work, subsequently reducing the need for significant remediation by implementing automation into the business as usual (BAU) process for onboarding.

Three key benefits of automating KYC and increasing capacity for the front office

Streamlining the KYC process by introducing automation to replace manual processes brings immediate benefits to front office RMs. The rise of automation in banks is inevitable. It is the next step in the evolution of KYC and creates a new culture for the front office.

1. Front office efficiencies with reduced client outreach

Manual interpretation of the process is removed, allowing RMs to focus on selling, with automation picking up the repetitive tasks and reducing outreach. Digitizing the process, with one central view, accessed by front, middle and back office reduces duplication, outreach, and human error.

  • Up to 100% STP to remove bottlenecks and alleviate pressure by managing risk by exception
  • Reduced client outreach of over 60%
  • 80% effort saved on onboarding
  • KYC processes are reduced from weeks/ days to minutes

2. Data integration

With integrations to over 175 global pre-built public and premium data products, a single view of a customer can be built dynamically with greater insight.

  • 62% reduction in screening and ownership unwrapping time with reduced client outreach to non-publicly available information
  • Less client abandonment and improved time to trade by over 40%
  • Single platform for data with decisions shown in one place for improved collaboration
  • Integration with both CLM and CRM systems to ensure single source of truth and increased transparency across the KYC process and internal teams

3. Collaboration with more complete KYC profiles

Effective collaboration between the front office, compliance teams and other internal stakeholders is crucial for seamless KYC onboarding. With each team facing case backlogs, not enough resources, and poor processes, aligning technology is key. Particularly when looking to reduce repeated and unnecessary client outreach.

  • KYC process automation pulls on real-time data to create a more complete KYC profile. Forming a strong baseline reduces the need for repeat client outreach at refresh. Furthermore, wider collaboration is made possible with a single source of truth.
  • Up to 13 hours saved per analyst per case, significantly reducing ‘noise’ around KYC
  • Digital record of all KYC activity is automatically stored as standard, available to share, download and review when refresh or remediation is required
  • Consistent approach throughout the team with the added benefit of access to one single view all stakeholders

In summary

With regulation increasing, and the requirement for additional documentation, especially around beneficial ownership, manual onboarding is cumbersome. The burden on the front office to deliver growth in the client portfolio and increase repeat business requires them to focus on positive interactions with clients and prospects. Increasing front office capacity is therefore essential.

KYC process automation is required to ease the impact of the onboarding process on all teams within the bank, but most importantly on the front office. Furthermore, automation creates additional capacity within the team. Allowing sales to focus on the customer relationship role to drive revenue rather than the administrative KYC tasks. Key to this strategy is transforming the repetitive processes with minimal support and oversight. Through this approach, a wide array of front and back-office operations can be rapidly transformed delivering a significant impact.

By streamlining the KYC onboarding process banks can minimize customer inconvenience and drive revenue faster.

Author: Veronica Genao

Veronica has spent the last 15+ years supporting financial institutions through technology-enabled solutions for risk management and operations. At Encompass, she works with Tier 1 and Tier 2 banks across North America to support KYC transformation initiatives through automation. Veronica is a strategic, customer-centric partner within the FinTech/RegTech community, and was recently selected for Money 20/20's RiseUp program and awarded NYC FinTech Women's 2022 Inspiring FinTech Female.

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