KYC (know your customer) compliance is a challenge for many financial institutions. Even banks struggle as they are faced with serious compliance-related hurdles. Usually, this happens because of the regulatory environment as it is more and more complex. New requirements seem to appear every single month. Banks have to optimize their know your customer practices in order to be compliant. This can be done in various ways but the following should always be taken into account.
Consider CRM When Standardizing KYC Processes
KYC procedures are quite burdensome since they need updating and compiling really large amounts of data that always keeps changing. Oftentimes, the information is hard to ascertain. This is especially the case when determining the ultimate ownership.
KYC can lengthen the boarding time of the customer and can have a really adverse impact on the relationship between the bank and the client. In order to improve the process, both customer relationship management and compliance experts work together. When this does not happen, the process is not streamlined.
Proper Use Of Automation
It is nowadays not enough to offer a digitized process or onboarding platform. 90% of customers that start the online onboarding process never complete it. However, this does not mean that technology cannot help. The goal is to automate and introduce the right tools at important parts of the process to improve KYC due diligence. KYC can be streamlined by artificial intelligence, blockchain technologies, and workflow management tools. However, these need to be intelligently employed.
Banks need to invest in analytical tools and high-quality technologies that can ease the compliance burden for institutions. This should also free up as many resources as possible.
Always Focus On Data Quality
Data that is collected by financial institutions can be of poor quality because of many different reasons, like poor documentation, hasty data collection or inconsistent jurisdiction requirements. No matter the case, the KYC process cannot be effective, even when it is automated, with incomplete or low-quality data.
Always Add Value To The Experience Of The Customer
A very big negative part of KYC compliance is that the experience of the customer is negatively impacted. When the regulatory environment is really complex, customers have to take more steps in order to go through onboarding. KYC regulations do not become simpler as time passes. In order to offset this, banks have to focus on the customer experience. This needs to involve all the touch-points.
Technology can help in many ways. For instance, the bank can invest in customer visit management technology or UX systems to elevate the journey of the customer. The pressure is taken off many pain points that naturally appear during KYC.
KYC regulations are nowadays mandatory and have to be implemented in a way that is properly optimized. If this does not happen, it is a certainty that huge problems appear and customers are lost. All procedures have to be streamlined and banks need to make sure that they do all they can to improve the experience of the customer. Fortunately, this can be done in many ways.