Fenergo’s Niall Twomey outlines a recipe for e-KYC Utility success, based on research of previous attempts in the marketplace, and looking at current initiatives being explored globally.
Over the last year or so, we’ve seen financial services providers in Bahrain, the Nordics, the Netherlands and Abu Dhabi coming together to create e-KYC utilities in the hope of delivering greater compliance efficiencies and creating a better and more competitive customer experience.
However, KYC utilities are not a new concept in themselves.
In this article, Fenergo’s Chief Technology Officer, Niall Twomey, outlines what the company considers a recipe for e-KYC Utility success, based on research of previous attempts in the marketplace, and looking at current initiatives being explored globally:
Recipe for e-KYC Utility Success
Having reviewed previous attempts to introduce KYC utilities and the newer technologies that power e-KYC utilities, we outline six key ingredients for a successful e-KYC utility:
1. Management Buy-In and Collaboration from Stakeholders
Understanding and managing the needs of all stakeholders is required to ensure they are all fully engaged, and to facilitate a collaborative approach to drive the initiative to fruition, and beyond.
2. Standardise KYC Policies and Future-Proof for Regulatory Changes
Any e-KYC utility platform will need to keep abreast of a rapidly changing regulatory environment. It takes a collective effort with senior buy-in from all parties and the right technology solution to preclude different approaches and interpretations of KYC policy, to achieve regulatory clarity and harmonisation, and make the KYC platform successful.
According to Fenergo’s recent Global Commercial Banking Report, the increasingly complex regulatory landscape is cited as a reason that client onboarding times have increased for many financial institutions (FIs). Regulators are applying increasing pressure on FIs to identify clients with links to criminals or politically exposed persons (PEPs). Nearly 93% of banks believe increased AML/CTF obligations and regulatory focus as a result of rising financial crime poses a challenge for their organisation.
3. Standardise Data Requirements
Data complexity is a barrier to most technology processes and is particularly prevalent at FIs that still have paper-based documentation and manual processes in place. In another survey of C-suite executives at global commercial, business, investment and corporate banks, Fenergo found that 81% of respondents believed that poor data management lengthens onboarding and negatively affects customer experience. 74% believed data management is overlooked strategically despite it being a top business concern.
Standardisation and consolidation of data is key to the success of any e-KYC utility model. Participating FIs need to be technologically empowered to collect, process and route data and documentation in a standard way to get the most out of this process and eliminate the need to re-key information.
4. Data Quality
Furthermore, to ensure speedy and compliant client onboarding, data must be trusted and of high quality. This can be achieved by employing secure and efficient data capture methods. It is recommended to perform a KYC remediation exercise to increase the quality of the KYC data required to be shared.
5. Future Proof Digital KYC Technology
Enterprise software needs to be integrated across multiple platforms and systems, and any new KYC platforms will require an IT infrastructure that is capable of integrating with the wider ecosystem of data providers and external systems. FIs should look to future-proof their technology stack by ensuring an API-First approach to readily enable future integrations of data, screening solutions and other technologies that will maintain the relevance and reliability of the solution.
6. Enable Ongoing Conversations
To drive the enduring success of the initiative and address the continuously changing regulatory and technology landscape requires managed and regular engagement between the key stakeholders, adhering to a defined programme management process and compliance guidelines.
C-suite executives at most FIs are under considerable pressure to deliver safer but faster customer onboarding journeys. The key to achieving this comes down to their ability to manage client lifecycle events and milestones via re-usable, verified and up-to-date customer information.
This remains a significant challenge even today.
Being involved in an e-KYC utility can help facilitate the process and improve the client experience. However, the FIs themselves are still responsible for ensuring right checks are made, and they need to take ownership of their KYC and regulatory compliance process.
This article was sponsored and written by Fenergo. The author is Niall Twomey, Chief Technology Officer at Fenergo.