CONSIDER THE CUSTOMER EXPERIENCE by leveraging digital strategies such as client lifecycle management (CLM) workflows and customer portals to reduce inefficiencies and shorten the timeframe. Further improvements can be made by moving towards ‘perpetual’ or ‘continuous’ KYC, in which customer information is updated based on triggers indicating out-of-date information, rather than a specific amount of elapsed time.
Relevance today: High. While many financial institutions are already in the process of implementing customer portals and CLM systems, perpetual KYC still seems to be more of an ambition. A recent poll also highlighted that 41% of respondents still felt that ‘fear of regulatory fines’ was the main strategic driver, emphasising that the customer is not always at the heart of KYC changes. This is understandable given the $18.4 billion of KYC and AML related fines in 2019 and the $5.6 billion of fines from Jan to July in 2020.
OPTIMISE PROCEDURES which have often been written in such a way as to pass regulatory scrutiny, rather than specifically for Operations staff. Teams have had to rely on additional guidance, experience and specialist support to execute their role, invariable resulting in high errors rates and re-work. As referenced in the Oliver Wyman report, re-writing procedures to provide greater clarity and concise guidance can result in error rate reduction in excess of 50 percent.
Relevance today: High. A key challenge with KYC is that it should never simply be a procedural, check-box exercise – judgement and experience will always be required. As well as making your procedures more concise, organisations should also leverage technology to support procedural execution through rules, workflows, visualisation and case management.
RATIONALISE CUSTOMER DATA because the master customer record lies at the heart of KYC, and as a result, needs to be highly structured, easily accessible and contain all the necessary information. The issue is that many KYC systems have been built up over time, using a combination of vendor and in-house solutions, which are not well integrated or aligned, each having their own view on data management and potentially different taxonomies. By taking a more federated approach to data management, it is possible to reduce data complexity and rationalise platforms. This helps to both reduce cost and create value in other areas that leverage KYC data.
Relevance today: Very high. Data is the cornerstone of any KYC process and in creating a single view of the customer, it is possible to drive simplification and rationalisation across your KYC environment. Most organisations still operate with KYC data sitting in multiple systems and even across multiple records, creating a huge challenge for driving efficiencies or greater customer focus. This will remain a top priority for any organisation looking to transform their KYC operation.
DRIVE AUTOMATION ACROSS THE PROCESS to help reduce the reliance on manual processes and costs by including automation of data sourcing, data extraction, scheduling, orchestration, quality review, and summary generation.
Relevance today: Very high. While big strides have been made across many organisations in the area of automation, there are still huge opportunities to leverage technology and data to automate KYC, improve efficiency and reduce costs. The move towards a more automated perpetual KYC will be a key theme of 2021.
OPTIMISE THE RESOURCE POOL to reduce costs by shifting to lower cost locations. However, this inevitably means a loss of experience, at least initially. It is key to recognise that different capabilities are required and adjust your processes to accommodate this new set of resources – by offering greater levels of support and routing work – to ensure efficiencies are optimised.
Relevance today: Medium. This is less critical today than it was two to three years ago with most organisations already on their first wave of KYC offshoring or outsourcing strategies. Interestingly, however, is that some organisations have started to bring back some of their key operational functions back to lower cost locations onshore – a trend which we’re expecting to see grow over the next few years.
MEASURE EVERYTHING simply because ‘what gets measured gets done’. With complex processes, such as KYC, there are a vast number of metrics that could be measured and potentially improved. Enhancing any part of the process, could result in significant productivity or efficiency gains across thousands of clients or large numbers of resources, as such it is critical to select the right levers to pull. Key performance indicators could include: case completion time, productivity per team / person, customer touch-points, case error rate, effort per record or number and severity of audit findings.
Relevance today: High. While a general improvement in the underlying technology allows for the better capture of information, most organisations continue to struggle to produce performance metrics on a consistent basis. Moreover, where metrics are available, they are often not utilised to the full effect to drive decision-making and deliver transformational change.