A holistic approach
Institutions, therefore, need to adopt a more holistic approach. This means evaluating their KYC programs across people, process, and technology.
This will allow banks to ensure that their defenses are not only robust and compliant with regulation, but also balanced against the needs and expectations of their customers, who increasingly demand more seamless and personalized experiences.
A holistic approach can deliver enhanced productivity, more accurate risk outcomes, major cost savings, and a materially better customer experience.
To get started:
- Assess your current function and processes: A fact-based understanding of your compliance function's cost and performance drivers, including any gaps and areas for improvement, is critical. Banks can achieve this by conducting an assessment of their program and processes using either internal resources or a reputable third party that specializes in financial crime risk management optimization. The right external partner can also benchmark your bank's program against industry best practices.
- Identify and optimize the necessary technologies: Redundancy of technologies across functions is common. For example, a historical division between AML and anti-fraud has created disconnects and data silos. This means institutions often under-leverage the technology they have at their disposal. Understanding how best to use the technology you already have and what additional technologies are available to support your KYC efforts is key to success.
- Transition to an adaptive workforce: An adaptive workforce is one that blends the strengths of humans and machines. Banks can automate most KYC processes. For example, banks can use robotic process automation to automatically gather, compile, and validate customer information and to screen, assess, and service their customers. Automating KYC processes reduces costs, increases efficiency, minimizes the risk of errors and security breaches due to human intervention, and improves customer experiences. When manual oversight is required, it can easily be outsourced, reducing operational complexities and allowing in-house teams to focus on more strategic initiatives.
Despite the billions being invested, traditional approaches to KYC are not working. A holistic approach to KYC is the answer to the apparent paradox of rising investment and fines. And it is your organization's best defense.