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Four signs your business is ready for an automated KYC solution

By Chris J. Arthur-Collins | Tue 16 August, 2022

Getting a clear picture of your customers is the first step in defending against the risk of money laundering and financial crime.

However, the complex nature of modern financial crime and regulation is putting more pressure on compliance and operations teams. In this challenging environment, are manual KYC processes no longer fit for purpose? There are four signs your business may be ready for an automated KYC solution.

The need for automated KYC solutions

As the complexity, breadth and depth of anti-money laundering (AML) rules have grown, so to have the work and resources devoted to AML and KYC compliance.

Between 2020 and 2021, spending on compliance rose by 20% due to the combined impact of the pandemic, digital crime and increasing regulations. This figure is likely only to grow, while KYC remains a manual activity.

Reliance on manual KYC processes to manage complex, data-heavy customer risk analysis creates multiple problems for financial institutions (FIs), including slow service, risk of human error, high costs and poor customer experience. This is pushing many FIs to expand investment in automated RegTech solutions that can streamline key parts of the KYC process to improve efficiency and service.

Why businesses are turning to RegTech

To keep up with the pace of change, more compliance departments are turning to RegTech, including automated KYC solutions. These platforms leverage intelligent process automation and streamline data collection and visualization, enabling analyst teams to make better decisions, and focus on deeper analysis.

RegTech enables banks to onboard clients faster, with reduced risk and less customer friction, while also reducing operational costs and overheads.

Key signs that your business needs an automated KYC solution

Automated KYC solutions simplify and speed up the onboarding and ongoing KYC process for FIs, solving some of the key challenges businesses face in remaining compliant. Here are four key signs that your business might be ready for an automated KYC solution.

1. High abandonment rates at onboarding

Onboarding is your first chance to demonstrate your service to a new client. However, complex AML and KYC requirements mean that it takes an average of 32 days to onboard a corporate customer. Much of this time is spent on critical customer due diligence (CDD) activities, but long onboarding times can lead to lost business, with 63% of consumers having recently abandoned digital bank applications.

Automated KYC solutions, such as Encompass, can reduce the time spent retrieving data and documents by up to 98%, helping you to onboard customers faster, while improving data quality and risk management.

2. Compliance capacity challenges

Periodic or event-driven KYC refresh and remediation are key elements of risk management for banks and are essential for remaining compliant. They involve reviewing and updating client information, and re-screening and revising profiles in line with any new regulation. However, for time-poor compliance teams, manually reviewing all relevant customer profiles while also managing ongoing onboarding due diligence is a significant challenge.

Automating KYC remediation and refresh ensures organizations can quickly and easily perform updates by accessing external data sources through a single integration to a KYC automation platform, achieving faster compliance and mitigating risk.

3. Incomplete data for corporate structure unwrapping, screening and UBO verification

Modern automated KYC solutions connect directly to a wide range of data sources, enabling you to unravel complex ultimate beneficial ownership (UBO) in seconds – dramatically improving ROI by driving efficiencies and freeing analysts to focus on more complex KYC investigations.

Another important element of KYC at onboarding involves screening customers against relevant third-party data sources to uncover risk, such as politically exposed persons (PEP), sanctions lists and adverse media. However, without access to reliable, up-to-date information, this process can be time-consuming, inefficient and ineffective.

4. Non-standardized processes

Manual KYC processes are disjointed and often result in unnecessary client outreach and miscommunication between departments and teams, increasing potential risk exposure. Not only does this limit efficiency and efficacy, it also prevents any continuous improvement in performance due to the lack of a single process on which to iterate.

With an automated KYC solution, policies and procedures are executed the same way every time, all tracked and traceable through a digital KYC profile that updates in real-time.

Key benefits of using an automated KYC solution

RegTech solutions like Encompass are designed to solve the key KYC and AML challenges faced by operational and compliance teams. By streamlining and automating the most time-consuming data collation and analysis aspect of KYC, teams can reallocate resources from data processing and gathering to more high-value tasks.

Key benefits offered by Encompass include:

Move beyond manual processes

Banks that continue to rely on manual KYC processes are exposed to higher risk, while providing a poor customer experience and enduring higher costs. Moving to an automated KYC solution is an essential step to remain competitive in terms of service, cost structures and compliance.

FIs all over the world use Encompass KYC software to deliver on-demand KYC due diligence with smart process automation, helping them to reduce costs, comply with regulatory requirements and gain competitive advantage.

If you’d like more details or to discuss implementing an automated KYC solution, get in touch with Encompass. Or if you want to find out more about digital KYC and technology, download our guide The benefits of digital KYC.


The benefits of digital KYC

Why it is time to overhaul manual processes


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