KYC utilities offer a refreshing approach for APAC

I recently had the privilege of participating in roundtables hosted by Deutsche Bank and HSBC in Singapore and Hong Kong. Other local banks and corporates also attended to discuss some of the challenges and regional issues they face around KYC.

One of the interesting topics debated – KYC isn’t a top priority in Asia. Or is it? Depends on who you ask. Regulators such as the HKMA and MAS have placed a significant focus on managing KYC and money laundering risks.  Corporates on the other hand see it more as a necessary prerequisite to doing business across all of their banking relationships. Different banks have different requirements, making it tough to keep up with ‘who needs what, when’. In addition, the entire onboarding process is often measured in weeks not days and becomes a paper chase nightmare reducing speed to market to be ready to invest.   

Banks in turn are looking to mitigate costs, streamline operational efficiency and reduce the time associated with KYC, AML and regulatory mandates. One local financial institution attending the event said that up to 80% of its onboarding resources are dedicated to servicing existing customers. This resource allocation is compounded by the fact that many jurisdictions within Asia require original documentation or a certified true copy.

In addition, customer information needs to be refreshed between one to three years depending on risk profile. A recent survey revealed that 58% of APAC firms refresh data based on customer risk. The other 42% will refresh annually or as and when it is needed. Regardless of the refresh cycle, the top priority for all firms combined is to obtain missing KYC information for higher risk customers. This highlights the importance of conducting refreshes but also recognises the disparity in timeframes for capturing the data.

Adoption of an industry standard for Asia is needed, to drive a greater demand for compliance, innovation and efficiency. There is an easier way, by moving to a shared utility to mutualise efforts, reuse information and be ready to transact. The bottom line – utilities shouldn’t replace engagement or the client relationship. Instead it should simplify the processes so banks can be more customer centric and corporates and investment managers can focus on the transactions that are essential to their businesses.