In recent years, a spate of new regulations targeting financial crime has left Banking and Financial Services (BFS) firms grappling with complex compliance targets and an increased spectrum of customer information that needs risk review. Research by PwC shows that the effort imposed on banks for Know Your Customer (KYC) compliance has grown 14 times over the last decade.

In our last blog , we explored how enhanced expectations from global regulators are powering a shift from erstwhile KYC reviews to a perpetual KYC system. We also saw the advantages of leveraging hyperautomation in this transformation. Studies show that the adoption of perpetual KYC has allowed some banks to achieve savings of 60-80 percent of the total effort across the customer book.

In this blog, let’s delve into the nitty-gritty of hyperautomation for perpetual KYC, particularly how it brings in operational efficiency and builds a future-proof system.

The Need for Domain Experts

Perpetual KYC is a technology-driven solution that employs automation and trigger events to keep an ongoing check on each step of the KYC review chain. Risk profiles are thus constantly updated and only complex cases are flagged for manual intervention.

Key steps in implementing effective perpetual KYC include:

  1. Enhanced data: Instead of collecting documents and storing them on a Document Management System (DMS), the information is digitized using character-recognition technologies to extract meaningful data. This enhances workflow by accurately capturing critical details

  2. Development of effective rules: This involves creating automated data comparison as well as data-resolution rules, so only the exceptions need manual interventions

  3. Embedded hyperautomation: This transforms the existing KYC platform with internal and external applications and databases, employing document feeds and rules to trigger events for perpetual KYC

Executing an optimized KYC system requires strong domain knowledge gained over years of experience across traditional banking and FinTech. Steps 2 and 3, particularly, need an in-depth understanding of financial crime, regulatory requirements and operational pitfalls.

More significantly, experience is critical to realizing the full potential of hyperautomation in this field. It is needed to implement essential features such as digital onboarding (with self in-take design), automated identification and verification, and integrated e-mailing. It is also crucial to identify, create and execute an exhaustive list of advanced use cases (e.g., automated monitoring for AML-related events and AI-powered risk adjustment).

A High-level Process View of Perpetual KYC

In conclusion, global regulators expect financial institutions to comply during new customer onboarding and continuously monitor their transaction behavior to assess and document risk-related data caused by changes in KYC profiles. To this end, BFS firms must develop clear, quick and auditable processes to manage ongoing customer reviews. Hyperautomation meets all these needs in a cost-effective and minimally disruptive manner. It is, however, a nuanced solution that requires skillful deployment to be serviceable.

Are you looking to leverage hyperautomation to transform your AML-KYC process? Click here

WNS, a global business transformation partner, supports leading banks and financial institutions worldwide through a team of 3,000+ professionals across the end-to-end value chain of financial crime operations. It was ranked as a Star Performer in Everest Group PEAK Matrix® Assessment 2022 for Financial Crime and Compliance Operations.

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