It’s a safe premise that banks and their employees live by in Know Your Customer (KYC) regulations. And it requires banks to verify the identity of its customers. Except it’s just getting more and more difficult to adhere to it. It makes your customer onboarding process error-prone and expensive.
So how do you know that your new customer, a new loan, a new application is trustworthy? How can you keep compliant in an industry that changes constantly? What do you need to do to protect your organisation?
Here are 4 steps to build your KYC architecture:
Collecting Customer Information. It’s all the information that resides on ID forms your customer provides to open an account. Is it accurate? Detecting fraudulent documents is not as black and white as we had previously been led to believe. It requires customer identification, sanction reviews, and risk assessment. Besides identity theft and financial fraud, banks deal with money laundering (AML) and terrorist financing. Add to that all your customer information that resides in various systems of record, all siloed, all separate. Making the gap between what you see and what is really there as wide as the Grand Canyon.
Detection of Risk: Next you will need to verify that the customer information is accurate, and this person does indeed exist in order to weigh the risks involved by onboarding this customer. Often in back office processes, there’s a heavy reliance on manual efforts makes your processes vulnerable to errors and re-works costs. These manual efforts can include your employees manually moving customer data from one place to another or looking up and verifying information.
And while we may not like to admit it, these manual processes can include human shortcuts- shortcuts that may leave your bank vulnerable. Verification technology can automatically authenticate customer data. By leveraging an identity intelligence solution that easily integrates into your network improves compliance and due diligence, and help streamline your onboarding process.
Integrate Your Systems: One significant challenging aspect of the customer onboarding process is connecting disparate data from many systems and external sources into the onboarding process. What if you could quickly pull in information and update systems during and after the onboarding process using “software robots” or “bots” for short. You may have heard about Robotic Process Automation (RPA), but you might not be exactly clear as to what it is and how it works.
In its simplest definition, it is software that transforms your manual tasks to automated ones. RPA makes use of software robots, each tasked with a specific job much like a human. For example, these robots can collect data from regulatory agencies (such as SEC) and law enforcement agencies (FBI, Interpol) and added to your KYC and AML systems, they will perform your due diligence on your customer. And create an audit trail.
Create Customer Profiles: Once your customer information is validated, you can use automation technology, like RPA to start segmenting customer data. These are the building blocks to create your customer profiles. Once you have these customer profiles in place, your marketing team can create personalised banking offers based on customer preferences. Alternatively, this data can be used to create also profiles of suspicious or high-risk individuals based on customer behavior, geography and account transactions and that is included in your audit process.
Next week, I’ll be presenting at Finovate Spring, on Tuesday, May 10th with a live demonstration on how RPA enables compliance, manages risk and prevents fraud. We’ll share solutions that keep your bank transactions safer, compliant and a give a better experience for your customers.