Although mandatory for regulated businesses in the Financial Services Industry, Know your Customer (KYC) processes are good practice in any business. Banks, in particular, are suffering from significant regulation overload as a result of post-2008 concerns as well as increasing terror and money laundering threats. In many cases, this has resulted in these banks building their risk assessment and compliance departments. Another major problem is customers do not realise any benefits themselves.
Current KYC processes tend to be manual and error-prone. Thomson Reuters (2016) surveyed on the KYC topic and found that 30% of banks take more than 2 months to onboard a new customer! I can relate personally to that.
My own experience with poor KYC
When I was appointed as CEO of SmilePass, it took 10 weeks for what should have been a simple process to be completed with Barclays. My requirement was simple – for my name to be added to the SmilePass bank account and to be able to authorise payments. The process was entirely paper-based, leaving little to be achieved on the phone or digitally.
The first issue that created a setback was my signature touching the edge of the box. I was pleased I wasn’t summarily executed for that and given another chance. In the second attempt, there was a mismatch between directors listed at Companies House and the bank, an understandable reason for the delay. The third attempt failed because my signature had apparently changed. I was now thinking of doing the executing myself. This kind of mindset and process is medieval. The challenger and digital banks are better as they think and act differently but are still not where customers need them to be.
So where do we need to be?
• Lower KYC and onboarding costs
• Less time to onboard
• Improved customer experience
I’m not convinced banks understand the benefits of investing in automating and improving KYC and onboarding processes. Certainly, the customer experience is almost universally poor. For example, customers are often asked to provide the same information on more than one occasion. They are also asked to physically go into the bank. They’ll almost always interact with call centre staff members who are clearly reading from a script. Customer expectations are constantly increasing – thank you Amazon. So the gap between expectations and service delivered by traditionally functioning banks is growing.
How to move into the future
Firstly, banks should think seriously where technology and specifically KYC software can help. Removing as much manual process as possible is critical. Getting the balance right between risk assessment and customer experience is essential.
Many of KYC software solutions available, including SmilePass, can facilitate remote KYC in a very secure way. Customers can be emailed to download an app and then use the app to scan the necessary documents remotely. Streamlined KYC software can verify documents against a range of forensic checks in real time while simultaneously conducting background checks including sanctions lists and PEP lists to name a few. A selfie can be taken on the phone and matched against the photo on any of the docs.
Remote, automated KYC is not a distant dream. This is all possible right now. It’s already happening. For enhanced due diligence, an example of step-up verification is the ability to read the chip on a passport to validate the passport at the highest possible level.
The technology is ready and forward-thinking organisations are already benefiting. If you’re interested in finding out more about how the SmilePass KYC solution can revolutionise your processes, check out our KYC brochure here.