Digital regulation and navigating the ‘fog of innovation’ were the subjects of discussion as financial crime practitioners, regulators and regtech experts gathered for a roundtable hosted by RegTech Associates.
All things Know Your Customer (KYC) and the digital financial crime landscape as we currently know it were on the agenda as representatives from more than 20 global banks, asset managers and fintechs were among those represented at the event sponsored by Encompass, Evalueserve and Tookitaki.
It is more critical than ever that financial institutions create more connected and sustainable KYC frameworks to both prevent and detect illicit financial flows, and this formed the key focus of the roundtable, which addressed the following questions:
An important part of the session, which Encompass VP of Strategic Alliances Nick Ford was part of, focused on exploring the topic of ‘navigating the innovation fog’. There is so much innovation around – and in many different forms – but who is really delivering meaningful solutions? That was the question posed by RegTech Associates’ Co-Founder & CEO Jason Boud.
During an interesting slot, he explained how some vendors are innovative but that others lack a clear understanding of banks’ needs. This leads, he said, to customers having unreasonable expectations and, ultimately, slows down the adoption of regtech solutions.
Talk then moved to the subject of what can be done to address these problems – or ‘connect the dots.’ According to Mr Boud, it is only by understanding which products address which problems that progress can be made.
Questioning how this can be done in a way that creates a sustainable KYC solution, it was acknowledged that breaking through the ‘fog’ can be a real challenge for financial firms, with limited time and capacity to conduct thorough market scanning exercises.
Participants agreed that, in general, there is a willingness to embrace innovative technology solutions but organisations do come up against common barriers to adoption, including:
The difficulties – and solutions – around KYC were also brought to the fore, with the diverse group of attendees giving insightful viewpoints on what they come up against.
Pain points highlighted included issues with remediation of legacy systems, the inability to efficiently share data within an organisation to create a single view of the customer, and the level of inconsistency found in terms of interpretation and regulatory expectations of key financial crime requirements.
So, how is sustainable KYC achieved?
Participants shared their opinion on the key points, including the balance between human and machine intelligence, as well as improving collaboration, as the FCA also gave input.
Overall, the roundtable delved into important, timely issues, providing thought-provoking discussion, as participants agreed that there is a need to shift from talk to action if we are to see sustainable, effective KYC approaches.