Why Financial Institutions Should Modernize Their KYC Processes
While most financial institutions look to modernize and digitize their onboarding experience, too many are ignoring their KYC process. It’s time to take your KYC out of the dark ages and into the new millennium.
Leaving your KYC state as-is will only become increasingly inefficient and costly. More KYC analysts would need to be hired to meet the growing demand for online and mobile account opening. And as more and more institutions partner with emerging Fintechs, staying competitive with manual-based operations will be near impossible.
We’ve outlined a few other key reasons why managers should modernize their KYC processes ASAP.
To Streamline Operations
The current state of KYC at many financial institutions is often an outdated manual process involving excel spreadsheets, pivot table creations on Google, and negative news searches to identify risk. Distressingly, these various business lines are either unable or reluctant to share data. The silo effect then leads to overlapping issues of AML, fraud, and cyber vulnerabilities repeated over and over for the same potential client. And the resources, money, and time allocated to maintaining this outdated system are wasted.
The disconnect between front and back offices is also an ideological one. KYC is a recurring process that’s enacted throughout onboarding, account opening, account management, and account closing. By streamlining KYC, financial institutions also streamline their entire operations, enabling for a much larger volume of accounts and loans without having to invest in additional resources.
To Build Client Relationships
Ongoing relationships, not just one-time onboarding, must be the focus. The most ardent customer complaints with regards to KYC procedures focus on a lack of cohesion in data transmission and processing. They feel they’re having to upload the same documentation over and over again for different services, and the repeated requests for personal information can make a bank seem intrusive or unreliable.
By digitizing KYC processes, the information already collected within an institution can be easily accessed and managed across different divisions. Financial institutions can then offer a more cohesive client experience where, like in the hospitality industry, services can be easily cross-promoted without having to constantly re-enter client information. Additionally, the increased accessibility is suitable for multi-channel methods that provide services outside of normal operating hours.
To Avoid Fraud
As 2021 ends, financial institutions and regulators are seeing an increase in financial scams and improved criminal money laundering techniques. KYC continues to be a vital part of anti-money laundering (AML) solutions. But as cybercrime increases and customers continue to prefer online banking, financial institutions are beholden to ensure their KYC is capable of providing customers with convenience and data security.
AML regulations and coronavirus protocols are also in flux. A digitized KYC process makes it easy to maintain compliance at every stage of the client experience and minimizes the chance of human error.
To Stay Competitive
The emergence of Fintech startups into the banking services world has exposed traditional financial institutions to massive competition. People have come to expect the same online convenience they receive from e-commerce. This means more virtual touchpoints, which then mean institutions need to up their online game and find ways of engaging with customers without face-to-face interaction.
Our Vikar Digital Automation Platform is highly scalable and easily configurable into core backend and data systems. Our fully digitized onboarding and KYC module cuts manual processing time in half and reduces risk while enhancing customer experience. We enable our financial institutions to onboard and maintain clients in a complete, end-to-end digital experience resulting in straight-through digital processing. And because our platform was architected to sit on top of existing systems, bank officers can focus on relationship building and value-added analysis instead of prolonged hours on risk assessment and controls.
A successful KYC modernization includes an intelligent workflow shared across business lines that includes data aggregation, document management, a client/employee portal, and reporting analytics.
For financial institutions to have an effective KYC system they need to consolidate, modernize and digitize the entire process across their business lines. KYC is an integral part of the end-to-end digital onboarding experience. Not modernizing leaves financial institutions lacking, open to increased risk, and in a much less competitive position.