KYC and the imperative for digital transformation
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Where to start with pKYC

By Dr Henry Balani | October 12th 2022
Where to start with pKYC | Encompass

To successfully move to a Perpetual KYC (pKYC) approach, financial institutions need to focus on the journey rather than the destination.

The impact of a transition to a pKYC model is far-reaching, so each stage of the journey must be well planned and executed.

To help banks embarking on their own pKYC journey, our Advisory Board has identified the five areas that must be considered above all else:

  • Data
  • Process
  • Technology
  • People
  • Policy

Data must come first

Data is the cornerstone of a transition to pKYC, according to our Board. Banks must review customer data against external data sources to assess the risk of money laundering and comply with regulations. The maturity of the organization’s use of data is key, especially in connection to quality, ease of access, currency and the relevancy of external data sources to meeting compliance requirements.

A successful pKYC journey, though, relies on more than ‘perfect’ data. Focusing on continually increasing the maturity of internal and external data is also critical. Given the need for timely and accurate data, FIs can benchmark their data maturity level by its effectiveness as they move through the journey. Data maturity can be measured here based on the availability, relevance and accuracy of the underlying data attributes.

Processes and pKYC

In order for pKYC-focused operations, which are another important element of the pKYC journey, to be truly effective, banks must also map their current and future processes against defined benchmarks. Process mapping involves visualizing each step of the KYC process to identify gaps, as well as areas for improvement. These can include greater process efficiency, lower operational costs and more accurate risk assessments. As with any, these benchmarks should be used as a guide and need to be reviewed and acted upon continuously.

The importance of the role of people

High quality data can be a catalyst for change – with easier buy-in from decision-makers. KYC operations are a regulatory requirement and the transition to a new perpetual model requires acceptance by key stakeholders. Good quality data can improve operational efficiency and customer satisfaction, key elements that drive the successful adoption of pKYC.

As part of this process, banks must also consider regulators, who monitor, provide oversight and impose penalties. Regulators need to be informed on the new pKYC model and its effectiveness in complying with regulatory requirements.

WHITEPAPER

Identifying your logical start point

Perpetual KYC Advisory Board Session 3

 
Author: Dr Henry Balani

Dr. Henry Balani is Global Head of Industry and Regulatory Affairs at Encompass. He is a noted industry thought leader and commentator on Regulatory Compliance issues and trends affecting the financial services industry. As a published academic, Dr. Balani also lectures on international business, economics, and regulatory compliance courses globally. Dr. Balani holds a Doctorate in Business Administration from the University of Wisconsin, an M.B.A. from Northern Illinois University in the USA, and a B.S. in Economics from the London School of Economics.

LinkedIn Profile | Dr Henry Balani

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