Faster, easier and lower-cost digital channels have been adopted by regulated organisations to achieve new business growth. However, current regulatory requirements create a complex landscape, particularly when it comes to delivering the convenience of signing up through digital channels and the business is still using manual processes for Know Your Customer (KYC) identity verification instead of KYC software.
With fraud increasing year on year, today’s Anti-Money Laundering (AML) and KYC regulations are set to become ever more stringent. With fines for AML non-compliance also on the increase, businesses must look for new ways to deliver their AML and KYC regulatory requirements. Enter stage left – KYC software from Regulatory Technology (RegTech) providers.
Automated KYC Software to Reduce Fraud
Financial crime will never be eradicated. There will always be fraudsters wanting to launder their ill-gotten gains. With the advancement of the digital economy and the creation of a borderless financial world, regulators and businesses must increase their efforts to fight the war against fraud.
RegTech software applications enable businesses to improve their regulatory compliance, manage risk and prevent AML breaches. More specifically it allows businesses to automate manual KYC processes and streamline Know Your Customer onboarding.
Using such software is the way forward as it keeps a record of all client interactions from onboarding through to monitoring and remediation. Effectively providing a holistic approach to the entire KYC client lifecycle management.
Further benefits include:
Reduced KYC Abandonment
Protracted manual onboarding can require customers to attend an office in person or at least go back and forth with copies of documents being mailed to the business for verification. This time-consuming process leads to high abandonment rates.
By using KYC software, businesses can onboard their customers remotely, with the results often provided in minutes rather than days.
Accelerated Onboarding Times
Eliminating manual and slow KYC onboarding and replacing the process with software, increases the sales funnel and pipeline for new business, as it flows better. The front end of the business can be confident of the automated process and focus on winning more business as they hand off their new business quicker.
Access from Anywhere
Hosted in the cloud, KYC software enables all users to access the platform from anywhere at any time – to the benefit of both the customer and from the perspective of the compliance team, in this new hybrid way of working.
Using clever APIs, data is pulled from a variety of secure sources across a range of jurisdictions, into one single view and platform for the purpose of verification and ongoing monitoring.
Friction-Free KYC Onboarding
The complexities of verification can be onerous and time-consuming, particularly when done manually, which goes against the need for a frictionless onboarding experience in today’s ultra-competitive market.
Efficient and ‘friction-free’ client onboarding is the key to customer engagement. No longer are customers content with waiting days for verification to be completed – they expect it to be made in minutes, and they are certainly not prepared to give their information several times over, to each successive department.
Motivated Compliance Team
Often the Compliance team has unmanageable workloads, which leads to poor morale, high turnover of staff and increased risk of human error. By using software, a greater number of cases can be processed quickly, by automating the repetitive tasks, allowing the team to focus on the more complex, risky and, some may say, more rewarding cases.
Easy Implementation when Digitally Transforming KYC
Good software providers are well versed in the complexities of delivering digital transformative KYC processes. Using customer success teams, the implementation process identifies the goals to ensure the business obtains early adoption and the best value across all teams.
Often the implementation can be carried out remotely and can be delivered ahead of schedule, with less complexity, downtime or delays than anticipated by the business and operating efficiencies being gained immediately.
Integrating your KYC
An important feature of KYC software is the use of secure APIs that allow businesses to integrate the system with internal third-party applications. These can include CRMs, document management systems or core banking applications.
Configurable KYC Rules
With FATF (Financial Action Task Force) encouraging businesses to take a Risk-Based Approach to compliance, KYC software is an ideal solution to provide highly configurable rules. Solutions can be mapped to the risk profile required for individual businesses and amended as necessary for ongoing monitoring and remediation projects dependent on the workflows at any given time.
Improved AML Compliance for CDD/EDD Compliance
Automated onboarding software verifies documents and individuals remotely, through international database searches, as well as visual identity verification software. In addition, it’s simple to include checking against PEPs and Sanctions registers, as well as due diligence of beneficial owners or directors for adverse media and political exposure, for EDD purposes.
Unravelling complex corporate structures, to meet the AML requirements of the regulators, is beyond the scope of any manual process in a timely manner.
By automating the complex activity, regulated firms can quickly gain a better understanding of the structure and the entities involved, to identify UBOs within corporate customers.
KYC Reporting and Analytics
KYC software allows greater scope for reporting and analytics. The entire business can access or build reports relevant to their function. This can be used for budgetary purposes, target setting, analysis of trends, as well as standard compliance requirements.
Reporting can also be configured by team or by individuals, such as “only cases relevant to you” or the ability to identify ‘Ambers’ from a Red, Amber, Green (RAG) scoring, for alerts and flags, for cases that breach the risks associated with the business.
Accurate Audit Trail to Meet Compliance Mandates
A dynamic audit trail can be accessed by internal teams and auditors when required.
The Regulators are not looking for fraud to be eliminated completely, they are realistic in their view. Instead, they look for demonstrable and effective processes for AML compliance.
KYC Software Security
Software services are generally hosted within the EU on Amazon Web Services, with all data encrypted to ensure the highest standards of security are met.
As an example, NorthRow makes use of both Amazon Web Services and Microsoft Azure, to ensure we do not have a single point of failure in our architecture. All the data we hold and the services we provide are backed up at regular intervals to protect against disruption or loss of data. We are independently audited and certified for ISO 27001 and Cyber Essentials Plus and carry out full penetration tests at least once a year.
Automated Client Lifecycle Management for Proactive Compliance
Delivering digital transformation across the business and indeed for KYC onboarding isn’t optional anymore – it’s a must to stay competitive. Using software provides the opportunity not just to Know Your Customer but to truly Understand Your Customer.
Regulated businesses should take advantage of the numerous benefits of automated client life-cycle management software platforms, otherwise they will fail in this new world of digital experiences.