Since the 2008 financial crisis, banks and financial institutions have faced an increase in the number of regulations they must comply with, and when not in compliance, are charged with astronomically high fines and even risk losing their licenses to operate. Between 2008 and 2018, financial regulators issued $23.52 billion in KYC (Know Your Customer) and anti-money laundering fines alone.
Due to this increasingly complex regulatory environment and ever-changing laws, banks are scrambling to adopt new compliance requirements while, at the same time, providing their customers with a smooth, hassle-free experience. But this has proven to be a challenge.
To comply with KYC regulations, banks must verify the identity of their customers and assess whether the client is likely to be engaged in illegal financial activities, including money-laundering. Based on the customer’s risk rating, banks accept or reject applications.
This process is essential for the safety of both financial markets and society as a whole. However, although financial institutions spend millions each year on updating their KYC workflows, customers are still finding the process tedious and downright frustrating.
The challenge for banks and their customers
When it comes to the customer journey in banking, particularly the onboarding process, it can feel like an uphill battle for both parties.
On one hand, banks are struggling to juggle how to collect only the necessary information without burdening clients. The goal is to gather data that is relevant to each account applicant and have this data seamlessly integrated into their onboarding process, all the while ensuring complete regulatory compliance
On the other hand, customers are left feeling burdened with multiple requests for various documents, slow onboarding and response times, and poor customer service. In fact, banks lose customers during the client onboarding process.
According to research, onboarding times rose by an average of 3 weeks during 2019, with customers waiting up to six weeks to be onboarded. With little patience for lengthy wait times, customers are actively dropping out of the onboarding processes of some banks and searching for alternative institutions.
What do customers expect?
Today’s customers are digital-savvy, do their research and quick to look elsewhere if a financial institution is not meeting their needs or expectations.
In today’s world, customers expect a completely digitised experience when it comes to banking. They want to use the medium of their choice, oftentimes mobile, and expect real-time approvals and instant access to their accounts and profiles. Security is also of high priority, as highly sensitive data is being passed back and forth.
For these reasons, financial institutions are increasingly moving away from manual KYC to digitised KYC.
What does digitised KYC look like?
Unlike manual KYC, digitised KYC workflows are built with the customer journey in mind. It empowers the management of KYC policies and compliance from the first touch base in client onboarding throughout their lifecycle, including document refreshes, to ensure all data is accurate, up-to-date and relevant. Below are some of the features that can be found in our own digitised KYC solution:
- Systems and Data Integration – Relevant data can be integrated into a series of third party systems and bank-owned data repositories for a streamlined workflow.
- Centralised Data Management – This enables existing customer data to be reused and repurposed.
- CRM Integration – API connections into CRM systems give account managers the information they need when onboarding clients in real-time.
- Integration to Third Party Data Providers – Automating the consumption of this data reduces the back-and-forth generated when asking customers for more information and adds an independent verification to the process.
- Online Portal – Customers can upload relevant information on their own. This information can be updated to their onboarding application to speed-up compliance and enhance their profile.
- AI-powered NLP & OCR – Optical Character Recognition and AI-powered Natural Language Processing speed up the KYC process by sorting through, scanning and extracting useful data from a myriad of different documents.
- ID Verification – Customers are able to take selfies and upload photos of their identification documents for immediate verification.
The benefits of digitised KYC for the customer journey
There is a myriad of benefits banks enjoy when switching to an effective digitised KYC solution. But what are the biggest upsides for customers? Here are the top three:
With digitised workflows, onboarding and compliance checks can be conducted simultaneously, meaning nearly instantaneous onboarding and less back-and-forth.
With a digitised onboarding experience, the customer journey becomes frictionless and highly autonomous. Customers are able to navigate the process through the channel of their choice, at their own time, and with little to no human intervention.
The digitisation of KYC relies on the most up-to-date AI and ML-powered technology available, as well as centralised systems where data is managed. This technology is built to adhere to complex security and data privacy requirements across jurisdictions, keeping client data safe and secure.
Nexus’s AI-powered KYC/AML solutions improve customer satisfaction and retention with Intelligent Document Processing. Get in touch for a free consultation and discover how your current KYC workflows can be transformed with the latest cutting-edge technology.