There has been rapid digital growth over the last two years, accelerated by the global pandemic. Consumers’ expectations are now higher than ever, and their patience is reducing – they expect to sign up or be onboarded instantaneously. They also value their privacy and demand high levels of data security. 

In this blog, we look at how businesses can meet the demands of customers by creating a better user experience and yet still achieve compliance.

Why is an efficient KYC process crucial?

Efficient, ‘friction-free’ client onboarding is vital for any company to achieve growth. Delivering it within regulatory requirements is, of course, essential. The balance of speed and efficiency versus accurate reporting and compliance is critical. 

Anti-Money Laundering (AML) regulations continue to get tighter, and the UK is one of the world leaders in introducing compliance initiatives to combat financial crime. Life for regulated entities is set to get tougher, particularly with the introduction of the Economic Crime Levy, which will only add further expense to the bottom line. 

The cost of delivering a robust compliance program can be high, particularly if a company is still onboarding their customers using manual processes as it demands a substantial headcount. Manual review is not only a costly resource against the operational overheads but also negatively impacts the customer experience for the onboarding process.

Automated KYC/KYB verification

Companies who have avoided introducing automated client onboarding cite a combination of concerns. These include cost implications, integration with their legacy system/s, downtime and loss of data. This might have been the case historically, but should no longer be a barrier. They are misconceptions that create apprehension and prevent businesses from achieving growth and delivering exceptional customer experiences. 

The truth is, integrating automated client onboarding software into your existing systems, however disparate, is not an issue. Software solutions are powered by clever API and AI technology to automate routine tasks that are a drain on many a compliance team.

Customers, whether individuals (KYC) or companies (KYB) are now prepared to wait days, or even weeks, for the onboarding verification to be completed. We live in a ‘deliver now and deliver once’ world. People expect instant responses to their applications and are no longer prepared to give their data multiple times just to satisfy the protocols of manual KYC processes.

The importance of adopting automated KYC/KYB 

Automation doesn’t just apply to onboarding tasks. The technology can be used throughout the whole customer lifecycle and the Customer Due Diligence process. To continue to comply with the demands of the regulators, regulated entities need to have ongoing monitoring in place. Data goes out of date very quickly – virtually overnight – so clean results can only be guaranteed if you have access to a solution that can provide real-time reporting.

Failure to comply, with the prospect of punitive fines from the regulator for failing in your AML obligations, has been enough to drive many from a manual process.  

Recent events between Russia and Ukraine have shown the need to identify Ultimate Beneficial Owners (UBOs) of businesses. PEPs and Sanctions checks are essential for any company dealing with individuals or companies. Without automation providing easy updates and real-time monitoring, important data changes can easily be missed and allowed to remain undetected for many months. Any such breach would be frowned upon by the regulators, and subsequent fines would be inevitable.

With the advent of the 6th Anti-Money Laundering Directive (6AMLD), companies and their officers can no longer hide behind the claim that “they didn’t know anything about it!”. The onus now is for businesses to be held accountable for ensuring compliance. So, for the authorities, it’s not just catching those committing a crime but identifying anyone abetting or allowing the crime to happen, whether by design or ignorance of the act.

How do I introduce automated client KYC/KYB onboarding?

The first question you should ask yourself is – “What tasks do I want to automate?”

There will be tasks that are repetitive and time-consuming and can be delivered without human intervention. Automating these with a software platform such as NorthRow’s WorkStation will allow your team to free up their time to focus on the more complex cases.  

At NorthRow, we partner with all our customers and support them through the design and build phase of their instance of WorkStation. With a choice of over 600 ‘rules’ businesses can select a unique set of rules that are matched to their risk appetite. 

With a period of testing and access to any training, businesses can be up and running far quicker than they had imagined. Efficiency improvements are immediate, and the speed of onboarding is reduced to minutes rather than days, immediately. 

Deputy MLRO and Head of Customer Due Diligence, Knight Frank said, “…there has been a positive change towards client onboarding. We have seen a significant improvement from a cost and time perspective”. Read more of our client stories here.

Compliance automation tools

From an easy-to-deploy app to provide identity verification for ease of onboarding, KYB/KYC onboarding and monitoring for AML; to intuitive dashboards to monitor cases in real-time and provide data insight and reporting, there is a range of KYC automation tools available to businesses. 

Modern facial and audio recognition software, biometric and ‘liveness’ checking, as well as remote document verification techniques, lend themselves perfectly to the onboarding process, speeding it up and shaving the time down from weeks to days or even hours. All of which can be achieved with total confidence, and with an audit trail that fully satisfies the regulators.

Choosing your automated onboarding partner

Any automated process should be designed to address your specific and unique needs – it’s not about your needs fitting the software available!

NorthRow provides bespoke solutions to satisfy any company’s onboarding needs and AML requirements. Our RemoteVerify software speeds up onboarding and provides the reporting necessary to satisfy the regulators, making life simpler for compliance teams and allowing them to concentrate on in-depth queries that arise. 

NorthRow’s powerful single-API platform was designed to meet the challenges that companies face, when dealing with financial crime and the regulators’ requirements. We have a number of tools that can be used singly or in combination, using the latest technology: biometric facial recognition, voice verification, liveness video, lip-syncing and anti-spoofing techniques; and our RemoteVerify tool can seamlessly check multiple identity documents.

On the monitoring side, our tools interrogate multiple national and international databases and report to your compliance team on an “only cases relevant to you” basis, which saves time in trawling through lots of records that don’t apply to your customer base. 

Ultimately the time has never been better to explore how automation can help your business deliver better customer experiences and save on operational overheads. It really is easier than you think to deploy!

Why automate identity and verification for customer onboarding?

ID verification is a non-negotiable element when onboarding new customers. It’s an essential part of the Know Your Business (KYB), Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements. When done well, it supports the business in creating long-term customer loyalty with minimal inefficiencies in productivity, lower exposure to risk and faster time to revenue. The rate of automated onboarding has increased over the last two years but what are the key considerations, when weighing up the benefits of automating your processes, particularly for Identity and Verification (ID&V)?

Accelerate the customer journey

There was a time when visiting a branch or posting documents for verification was acceptable for onboarding. That’s no longer the case. We live in an ‘always on’ society where customers expect fast, and often immediate, responses.

Automation of ID verification will help accelerate the onboarding process for businesses in any industry. Workflows can be digitised and integrated into existing systems. Latency between touchpoints is reduced to accelerate time to revenue and every touchpoint can be managed to provide an improved customer journey.

Fully automated systems incorporate the latest facial, voice, liveness and biometric verification processes, alongside remote document verification, to ensure both accuracy and swift responses.  

During the automated onboarding process, a customer will be asked to upload documents and/or take a ‘selfie’. The software will then automatically compare it to millions of records held within powerful databases with real-time responses provided to expedite the verification process.

With the right solution, your business can digitise the verification component of the user journey and focus human interaction at other stages of their lifecycle to build loyalty. 

Scale with your business

Manual processes aren’t suitable for scaling businesses. As soon as a customer base, or the level of complexity, increases, there comes a tipping point where manual data entry become too expensive, or human error becomes too big a risk. Spreadsheets and CRM systems can only take a company so far. Once the level of data and number of customers or products hits critical mass, they become a hindrance rather than a solution.

Dealing with customer data is an extremely important part of a company’s daily processes, whether onboarding, servicing, or monitoring activity. Human resource is an expensive commodity that is not always accurate or runs 24/7.

Compliance teams have a difficult task. They are often viewed as the blockers to a company’s success as they insist on accuracy and are often process-driven – and rightly so. 

The truth of the matter is that their activities provide a hugely important safety net that ensures that a company does not fall foul of the regulators by enabling the introduction of errors into critical processes. 

Your compliance team’s workload can be reduced significantly, alongside your sales support and servicing function, by introducing an automated identity and verification system. Not only will it significantly reduce the need for human intervention on sales, but it will also provide for an accurate onboarding, monitoring and remediation function, which are all essential when servicing and upselling.

KYB/KYC regulations and automation

Love them or loathe them, the regulators are there to deliver an important task, mainly to guard against company fraud and money laundering attempts from ‘bad actors’. The way businesses and regulators collaborate when onboarding new customers is ripe for transformation. 

It is incumbent on businesses to do everything in their power to keep pace with the new AML innovations available to ensure that their data is as clean and accurate as possible. Failure to do so will attract interest and scrutiny from the regulators, who will not hesitate to impose fines if they deem that a company has allowed mistakes to happen, due to insufficient investment in, or attention to, compliance procedures. The most basic of which is identity and verification: if you can’t accurately and positively identify the credentials of the person you are dealing with, then you have no basis for doing business with them.

A manual documentation process is a major bottleneck that slows progress in keeping a streamlined audit trail. However, with end-to-end automated KYC processes the regulators can be satisfied and there are better outcomes for reporting and evaluation.

Additional benefits of a digital identity and verification rocess

In addition to the key benefits described above, there are several other advantages to introducing an automated ID&V process into your onboarding system:

• Improved sales-to-revenue time: By shortening the time between an enquiry to ultimate purchase, by significantly reducing the time taken to accurately identify the applicant, revenue streams can be achieved much quicker. This reduces your cost-per-sale and enables your teams to concentrate on the next opportunity, increasing the number of sales that can be achieved in the same timescale.
• Stay ahead of the competition: With more and more companies introducing automated systems for onboarding, not just financial institutions, companies who still rely on manual or part-automated processes will eventually fall behind. It’s a very competitive market out there, and any edge that you can gain, whether by innovating to stay ahead of the market or by introducing automation to keep up with the competition, will improve your business’ chances of competing in or leading the market.
• Staff morale: Providing an environment in which your staff can both enjoy their work and see how that work is contributing to the success of the company, is a great way to boost morale. There is plenty of clear evidence to suggest that a content and engaged workforce works much more efficiently, further boosting the effectiveness of what they are being asked to do. Automating systems that have become a burden to staff, to the extent, perhaps, where they no longer enjoy their job, or, worse, see little point in it, can be very detrimental to morale, fuelling dissent, increasing staff turnover and reducing the whole company’s effectiveness

Traditional methods of ID verification are no longer sufficient if businesses want to achieve regulatory compliance whilst they scale and grow. The rise of international terrorist financing and increasingly sophisticated schemes such as synthetic identity theft have necessitated more advanced methods of ID verification. It is no longer enough to simply compare a person’s ID to public records because ID can be stolen or forged.

The next generation of accurate identity verification technology relies on facial recognition, but with a twist. To determine the authenticity of a person’s claimed identity, it requires the customer to provide two images: a form of photo ID, and a selfie taken in live mode.  

This requires automation, so the quicker businesses adapt, the better!

If you would like to discuss how our identity verification services can help your compliance team book a call to learn more.

Last updated: Tuesday 5th March 2024