Intelligent process automation: the next generation of KYC

In today’s technology-driven landscape, fraudsters and criminals are adopting increasingly sophisticated techniques to benefit from the financial system. This, combined with an ever-changing regulatory framework, requires firms to have a streamlined and robust Know Your Customer (KYC) onboarding process.

When it comes to onboarding new customers, a well-managed and executed KYC process flow can have wide ranging benefits. From cost and time savings through to improving the customer experience, firms with a robust programme in place will have a strategic advantage. For banks who want to realise these benefits, the KYC onboarding process can be significantly improved by taking advantage of the latest technologies available — particularly intelligent process automation.Here, we discuss the technology in-depth and how it will form the basis of next generation KYC.

What is intelligent process automation?

Intelligent Process Automation (IPA) is technology of the Fourth Industrial Revolution, designed to reduce the burden of repetitive, simple tasks on employees, freeing them up to complete more complex tasks that depend on manual labour.

The robotic component of IPA is software programmed to automate rule-based and highly structured tasks. Spanning multiple systems, including databases and other information sources, it offers a clear interface so that a process being automated appears as simple to operate by anyone already familiar with the work. As an example of this, encompass gathers and analyzes a wealth of complex information to dynamically build a visual picture of a company or individual in just minutes using IPA and artificial intelligence (AI).

IPA is also viewed as highly explainable, so those responsible for the process easily understand the state of operations, and where and when the robot requires human input.

How does this relate to other industries?

David Williams, Encompass’ Sales Director Asia Pacific, explains that in the context of other industries, particularly car manufacturing, there was a similar step change when Henry Ford implemented the automated assembly line. A major step forward in car production came when Ford broke out the assembly process into 84 distinct steps and had people trained and focused on a single element. A rudimentary assembly line was formed and efficiencies were gained.

There are parallels to the KYC process flow in banks within this example, as they have created internal centers of excellence for elements of the process and these teams pass work to each other down the ‘assembly line.’

The standardization of components and automation of the assembly line, which moved cars through the stations at a steady rate, were the major factors that reduced the overall production time of a car from more than 12 hours to just 93 minutes.

In absolute terms, Ford may have been able to reduce the time taken to build a car, but the most important aspect was his ability to then scale the production exponentially, which allowed him to significantly reduce his production costs as well. He could then price his product in a way that allowed it to not only reach a number of new customers, but also satisfy and increase loyalty within the existing client base.

Automation vs manual – the benefits

For firms who are working with manual KYC processes, the potential benefits of introducing automation are vast. When bringing in new customers, a streamlined and efficient IPA-centered approach can assist in the heavy-duty process focused tasks, such as ongoing monitoring or perpetual KYC (pKYC), allowing compliance professionals to work on more strategic projects. Artificial intelligence can also be used to assess risks and help to decide where employee time and skills are best utilized.

Traditionally, compiling customer data and profiles, as well as creating connected audit trails, has been done manually. But due to the nature of operating in this way, the cost of onboarding can increase — in terms of monetary spend, time and operational risk — as manual labour is open to error. All of these factors can have a big impact on a business, from its ability to attract new customers to reputation and profitability.

In contrast, automation executes the steps of the KYC process flow across your entire client base seamlessly and simultaneously, reducing the burden on humans and ensuring regulatory compliance. Intelligent Process Automation also offers the flexibility of keeping existing processes in place by simply replicating the steps analysts take with automation, meaning a level of consistency and familiarity is retained.

A technology-led approach to the KYC will give banks a competitive advantage within a fast-moving sector. Harnessing the power of the new generation of technology is the easiest and most convenient way to satisfy regulators, as well as ensuring the highest level of productivity and achieve efficiency.