Failure to establish solid Know Your Customer (KYC) procedures for your business and its customers can create issues from the off. Poor KYC can expose you to financial crime, damage your brand, harm customer experience and create inefficiencies - all of which costs money.
KYC is done well when firms take a risk-based approach to compliance, which is delivered through a blend of automation and human expertise. This allows your compliance team to operate at full capacity. It also ensures they are engaged in doing the right things to protect your business, support your customers, and enhance revenue generation.
Knowing how to get KYC done effectively means less customers drop out of your onboarding process, which creates more revenue opportunity. Plus, customers have a better experience of having chosen your company from the start. A solid approach to onboarding also ensures compliance with regulation and protects you against fraud and other types of financial crime.
Removing delays and friction from a KYC process can build a FinTech's reputation for being easy to deal with. The onboarding journey can reflect what the rest of the experience of "being a customer" will entail for them. Your company will feel competent and secure if the right impression is made from the moment an application is filled in and checked. Establishing trust in a financial services business is always a good thing - with customers and regulators. There is a lot of competition in the market, so robust, digital KYC processes that deliver a great customer experience will definitely be a competitive advantage.
So, how do you execute KYC and get it done well across your business?
How do you ensure your approach to KYC is right for day one and that it can be evolved over time to meet changing compliance needs and new regulation?
We created a report with insight from industry experts to break it down for you. The paper highlights 6 areas to consider when it comes to good KYC and how to get it done.
Better KYC in 6 steps
1. Check understanding
It sounds obvious, but it's really important to check everyone involved in executing your KYC procedure understands it fully. There can be lots of jargon used in compliance and perhaps the team employed in the onboarding process aren't seasoned professionals. Sometimes sales people are involved in KYC and need to understand how to execute it effectively.
It's key to check understanding on an ongoing basis - no shame, no silly questions.
It's also important to keep learning about compliance. This can relate to educating the business when compliance procedures change or it can relate to personal development. With new regulations coming on stream all the time having a team member take the lead on understanding and interpreting that can be truly valuable for your whole business.
2. Cross-team communication
Financial crime prevention is everyone’s business - it’s not something that sits inactive in the KYC policy. Compliance is a companywide action; it's a behaviour and company culture plays a huge part in fighting financial crime. This makes communication across different functions and teams crucial.
An example of cross-team communication around KYC could be sales speaking with compliance regularly to understand the process or how it's performing. This can help ensure agreement on risk. It's not feasible to accept no risk, yet it's not wise to accept too much. If all parties speak, this becomes easier to execute in practice.
3. Increase transparency
Being clear on what is involved in the KYC procedure will obviously aid execution, but so will being able to help teams understand where cases are in the onboarding or risk management cycle.
Increased transparency about where a customer is in the onboarding journey provides context for teams to manage customer expectations and it can reduce friction both cross functionally and with new customers.
The right system can be helpful when it comes to knowing exactly what stage a customer journey is at.
4. Technology with the human touch
Technology can play an active role in effective execution of KYC procedures. It can digitise compliance processes, speed up onboarding and automate data checks, many of which used to be manual.
However, technology can't and shouldn't do everything. There will always be a role for human intervention in the most effective KYC procedures. This could be when managing high-risk cases or it could be when completing corporate onboarding, where manual reviews are essential.
Having technology that automates what's possible in the process and brings in people where they add value leads to better KYC.
5. Freeing up customer-facing teams
Automating KYC processes allows compliance colleagues to focus on different and arguably more important tasks, rather than carrying out manual checks and sending endless emails.
Having an automated KYC workflow makes completing compliance tasks more efficient, which means firms can use their people to delve into the more interesting aspects of risk management - analysis, judgement and decision making.
6. Embrace change
Change is the only constant in compliance. You might get your KYC policy right on day one, but you will always need to change and evolve it in the days to come.
New regulations. Product launches. Changing threats. Entering new jurisdictions. A better form of tech emerges. There are endless reasons why you can and should embrace change when it comes to KYC.
The most effective compliance policies are alive. And with the right RegTech you can make frequent changes to the way KYC gets done in your business.
Get the report
Get your copy of the full report, which has lots of practical and useful information about KYC and how to get it done well.
This paper is part two in a series of three designed to help you establish, execute and review effective KYC. If you would like to get the other parts in the series, please go to the Resources/Reports area of our website.
Get in touch
PassFort is expert in compliance automation, bringing humans into the KYC process where they add most value. We would love to talk to you about your KYC processes to understand what you're doing now and to see how we could help you create more efficiency in the future.
Please get in touch anytime and we can arrange a chat.